Trade Shifts, Smarter Strategies: Business Competition and Teamwork in a Reconfigured Global Economy

By Lorenzo Bona

Many economic analyses are currently highlighting what might be described as a situation of radical uncertainty for the future of global trade.

There is an almost unanimous consensus among economists that this situation – characterized by the imposition of tariffs on imported goods – is translating into a reconfiguration of international commerce, with a series of economic frictions that may hinder economic growth and development across nearly all industrialized countries.

Beyond these broad macroeconomic considerations, it becomes equally important to explore a more specific question: how can individual companies preserve, and even strengthen, their capacity to compete and prosper within this reconfigured global context?

A possible answer could perhaps be organized around a pro-market and pro-business perspective that can be largely linked to the teachings of Nobel Prize-winning economist Friedrich von Hayek. In this light, it could be observed that tariffs – though usually intended to protect domestic industries – may generate unintended opportunities for foreign firms through shifts in consumer and firm behavior. On the other hand, the protection from foreign competitors – although initially, apparently beneficial for domestic firms – may, in the long run, unintentionally contribute to creating a less challenging environment, reducing incentives for continuous innovation and making it harder for domestic companies to maintain market leadership in ways that also benefit consumers and society.

Hayek emphasized that knowledge in an economy is largely dispersed and that individual actors constantly adapt to local conditions based on price signals and constraints.

This can suggest that when a country imposes tariffs, it disrupts established patterns of consumption and production, prompting consumers to seek substitutes and alter their preferences in response to higher prices or reduced availability of certain goods.

Building on this, it could be observed that these behavioral shifts have the potential to translate into informational signals that may not be fully visible to policymakers or incumbent domestic firms, which may continue to operate based on pre-tariff routines. At the same time, it may happen that foreign firms, particularly those that are entrepreneurially alert to market movements and trends, may find themselves better positioned to recognize and respond to these emergent gaps.

For example, by observing consumer frustration with rising prices or declining quality, a foreign entrant might identify opportunities to introduce a differentiated product, form a strategic partnership, or localize part of its production to minimize the impact of tariffs. In doing so, the firm capitalizes not despite the tariff, but precisely because the intervention has restructured incentives and revealed new niches and profit opportunities.

This conceivable process aligns with Hayek’s view of the market as a discovery mechanism: tariff-driven scenarios could unintentionally set the stage for foreign firms to engage in adaptive learning and opportunity recognition faster than domestic incumbents.

Thus, while tariffs tend to be usually designed to insulate and protect local producers, they can paradoxically invite more agile foreign competitors who interpret and act upon the market’s newly emergent signals more effectively.

To foster innovation and resilience in this evolving environment, international cooperation between foreign entrants and domestic firms can become a vital strategy. By combining localized knowledge with external capabilities, firms on both sides can co-create solutions that address consumer needs, reduce exposure to potential policy-related risks, and maintain competitive advantage.

Collaborative strategies for both foreign and domestic firms – a few ideas:

·        Form joint innovation ventures or co-development partnerships: for example, pool complementary expertise, share market insights, and jointly develop products or services tailored to the protected market.

·        Create cross-border learning platforms and supply chain collaboration: for example, establish collaborative processes (which could include formats such as knowledge-sharing workshops or webinars ) that allow for shared experimentation, agile adaptation, and flexible allocation of production or distribution tasks based on comparative advantages, while helping domestic firms mitigate potential supply chain disruptions.

·        Engage in strategic local production alliances: for example, foreign entrants could partner with domestic producers to establish partial local manufacturing or assembly, allowing them to minimize the impact of tariffs or other non-tariff barriers while sharing technological know-how and benefiting from local market familiarity. 

This cooperative approach not only seems able to enhance businesses’ innovation capabilities but also appears able to build more adaptive, knowledge-rich ecosystems that may help firms better navigate scenarios, such as those we appear to be experiencing, characterized by policy shocks and institutional complexity. In addition, by fostering collaboration and information sharing, the economy may benefit from reduced inflationary pressures, while consumers gain access to a wider range of products at more stable and competitive prices.