Decision-Making of Transnational Supply Chain Considering Tariff and Third-Party Logistics Service

ABSTRACT

Countries’ economic policies, such as tariff barriers, have a profound impact on the global economy and international trade. The imposition of tariffs seriously disturbs the global trade and supply chain operations. This paper studies a supply chain composed of an overseas manufacturer, a domestic supplier and a third-party integrated international logistics service provider. A three-level decentralized leader-follower decision-making model and its variant--leader-follower alliance decision-making models are established, and the influences of revenue sharing and cost sharing on the three-level decentralized decision-making are analyzed. The results show that it is difficult for the supply chain to achieve coordination when the transportation and insurance costs are considered in the tariff cost. The increase of tariff rates will reduce the profits of all parties and the overall profit of the supply chain, and weaken the dominant position of the supplier in the supply chain. Revenue sharing can improve the supply chain performance;the performance of the whole supply chain cannot be improved or may even deteriorate by sharing the transportation cost alone. The study can provide practitioners with implications for how to carry effective cooperation and coordination in the supply chain and how to effectively reduce the influence of tariffs in the global trade system.