Strong international alliances between countries can make supply chains up to eight times more resilient against trade disruptions, while diversification alone offers little protection against tariffs and quotas, according to University of British Columbia Okanagan research.
The study, published in Transportation Research Part E: Logistics and Transportation Review, shows that while spreading operations across countries can help during natural disasters or local shutdowns, it does little against systemic and intentional actions such as tariffs or quotas. In those cases, alliances like joint ventures or long-term agreements significantly reduce risk.
“When countries like the United States and Canada cooperate through strong alliances, supply chains can be up to eight times more resilient,” said Dr Amin Ahmadi Digehsara, assistant professor in UBCO’s Faculty of Management. “Without that cooperation, even moderate disruptions can cut profits by 20 to 30 per cent.”
The research was partly inspired by trade barriers introduced by US President Donald Trump’s administration, which disrupted industries almost overnight. In 2018, when China raised tariffs on US-built SUVs, BMW’s joint venture with Brilliance Automotive allowed it to shift production locally and keep record sales, while other vehicle manufacturers without similar alliances struggled.
Two types of global disruption
Ahmadi Digehsara explained that major global supply chain disruptions fall into two categories: natural interruptions, such as extreme weather events or pandemics, and human-caused disruptions caused by deliberate or unintended actions by state and non-state policymakers.
The study was a collaboration between UBCO researchers Ahmadi Digehsara and Dr Amir Ardestani-Jaafari, as well as Dr Sam Aflaki from HEC Paris Business School. They developed a two-stage model that simulates strategic alliances and includes long-term planning for facility location and capacity.
“Using both real and simulated data, our modelling demonstrates that strategic alliance structures significantly improve worst-case scenarios, particularly in high-uncertainty environments,” said Ardestani-Jaafari. “Even a single strategic alliance between two countries can boost profits by 50 per cent. These findings highlight the value of incorporating strategic alliances into global supply chain network design.”
Ardestani-Jaafari advised that alliances do not need to happen only at the government level. Individual companies should prioritise partnerships through co-production, shared logistics networks or long-term contracts to protect their operations in politically uncertain times.
“Global supply chains are increasingly fragile,” he said. “The companies that will thrive are the ones that build strong, flexible relationships to keep goods moving and markets stable. Every dollar invested in these alliances cuts disruption costs two to three times more than just holding extra inventory. These partnerships offer backup plans when trade policies shift, keeping goods flowing and supporting both customers and employees.”
Creating strong global supply chain networks requires countries to make strategic decisions about facility locations, how to allocate capacity and how to manage operations across international markets. While globalisation has improved efficiency and geographic reach, it has also made supply chains more vulnerable to large-scale disruptions.
