When President Donald Trump imposed tariffs on countries around the world this spring, banks had to help their business clients manage the disruption. A top trade finance executive details how she's working with customers to keep shipments moving. See Marissa Adams' conversation with Chana Schoenberger, Editor-in-Chief of American Banker.
Transcription:
Chana Schoenberger (00:10):
Hello, I'm Chana Schoenberger. I'm the editor in chief of American Banker and I have with me here Marissa Adams who is the Europe and Americas regional head of Global Trade Solutions from
Marissa Adams (00:22):
So much, Chana, for having me.
Chana Schoenberger (00:23):
So now are you based in London now?
Marissa Adams (00:26):
I'm still in New York, so I'm a bit bicoastal, bicontinental at the moment, which has actually been really exciting. We decided to bring our Europe and Americas business together mainly because we're seeing a lot of the businesses, obviously in the current geopolitical environment, in the current tariff environment and macroeconomic environment. Really looking at trade flows in a way that where we see similarities and where we can help clients. So it's been really great to bring Europe and Americas together. So yeah, I get to spend some time in New York, in London and all around Europe.
Chana Schoenberger (00:55):
So you live on a plane, essentially?
Marissa Adams (00:56):
Yes, yeah, unfortunately for now.
Chana Schoenberger (00:59):
So it's been a bit of a spring. It's been a bit of a first half. And what sort of macroeconomic and geopolitical issues are you seeing right now that are affecting global trade?
Marissa Adams (01:11):
So look, we certainly saw obviously a really big change with global trade with Liberation Day at the beginning of April. And I think that one of the things that we would say is that global trade has always been changing, but actually now it's sort of the shape of trade. So it's not going away, but the shape of trade is changing. And when we're talking to clients, we're seeing that they're looking at new markets both from a demand side and a supply side. So that's sort of uncertainty. These other opportunities is something that we're seeing. Obviously from a geopolitical perspective, the risks are really quite numerable. And the interesting thing that we've seen, we obviously see also the disruption of COVID. We've seen other sort of financial disruptions in the past, but not to the scale of the different polarities. So companies are really going to have to think about risk in a very different way and international trade in ways that they hadn't previously.
Chana Schoenberger (01:59):
Okay. So what are some other dynamics affecting the market? Obviously there's President Trump's tariffs, there's all the retaliatory tariffs. We don't really know who our allies are in the various trade wars. What do companies need to think about?
Marissa Adams (02:14):
So three things really. So one, companies need to think about their supply chains, and I think it's been depending on the industry too. So if you look at shorter order cycle industries like consumer retail where actually things like tariffs or cost changes can be passed on quite quickly to consumers and actually suppliers are more fungible. So if you're in the business of producing t-shirts, actually it's quite easy necessarily to change to another supplier. So your key suppliers might actually now be in more demand, which could lead to cost increases. So that's one thing, looking at that supply chain resiliency. The second is actually around new markets. And we actually recently did this
Chana Schoenberger (03:10):
Interesting.
Marissa Adams (03:11):
Yeah, it was really interesting. And so we see this thing where you obviously look at the media and the news and we've seen what's happened to markets where markets have reacted quite dramatically to a lot of the uncertainty, but actually our customers and clients are much more measured around how they're reacting. And the third thing I say is this idea of looking for new markets in a way that is quite different than before. So how do we look at maybe producing things in two different markets? How are you regionalizing? So in the pharmaceutical market as an example in healthcare, they've already moved from COVID to a region by region model, so US production for US consumers. And so we're seeing a little bit more of that, which is really interesting.
Chana Schoenberger (03:50):
I wonder how inflation fits into all of this. It seems like there was a lot of anger. We're going through the stages of grief, right? There's a lot of anger, there was denial, and now there's some sort of acceptance. People see that prices are higher on many things and they seem to be okay with it. So if your business, I wonder if you feel you can just raise prices.
Marissa Adams (04:10):
I think it really depends industry by industry and how replaceable those goods are. So when we look at industries that have a longer order cycle or a longer contract cycle, so looking at potentially infrastructure type transactions, those ones where they've already locked in those contracts, they're not going to see those price increases later where there's more consumer demand. The question is that what stage can they accept it? And I think the interesting thing as we look at that is that actually things like sustainability and elements that are important around where you're producing your goods and what your brand values are will be more important to consumers on that angle. So inflation has sort of tempered a little bit as we film this today, but it's also consideration for clients when they're looking at their own suppliers. So if you're a large anchor multinational here in the us, if you need a little bit more financing because of inflation, you can probably go to your bank to do that. If you're a supplier in Asia, the Middle East, Latin America, you might not have that same access. So it's really a story of two halves.
Chana Schoenberger (05:10):
Interesting. Okay. So what worries you the most? You sound pretty optimistic about this whole situation.
Marissa Adams (05:16):
So I think that, and I've been talking to customers all over Europe and the Americas, and so I've been really pleased with their confidence. I've been pleased with the fact that they are looking at innovation. And I think one of the other things I'd say is that we had the dress rehearsal with COVID.
Chana Schoenberger (05:32):
Yes.
Marissa Adams (05:33):
And so this was an interesting experience where there was this big shock to the supply side, not the demand side, because actually we saw in COVID particularly for certain industries, demand increase,
Chana Schoenberger (05:41):
Toilet, paper,
Marissa Adams (05:42):
Toilet. Yes, exactly. So all of those sort of elements were really, they're prepared for. So I think companies have a bit of a playbook, but my biggest concern is that we stay in a period of uncertainty. So one of the things we've been speaking to our clients both here in the United States and around the world, is the fact that uncertainty leads to a pause in decision making. So pretty much all the clients that we're speaking to are going, we're going to hold off on making big investment decisions. So for us, it's not so much what the outcome is, but if the period of prolonged uncertainty continues, that for me is a concern because those investments, the longer that you wait on longer term investments, that will have more of an impact on the business cycle and just it doesn't kind of help that growth and innovation mindset.
Chana Schoenberger (06:28):
So in a volatile situation like we have now, what would make things more certain? What are these CEOs waiting for?
Marissa Adams (06:35):
So if you look at tariffs, what is the ultimate landing point? So today we've got a 10% baseline tariff. And I think that's really important to note is that yes, there's been some negotiation back and forth, but that's been in effect since April 2nd. And that has led to an increase in costs for a lot of corporates. So we've seen that 70% of corporates that we've surveyed have said they've seen an increase in their cost base and they expect that to continue. So the answer is not so much, obviously people don't want super high levels of it, but once we get to a certainty element where they know what it is that is then where the turning point is, if it is sort of still uncertain for the next six, 12 months where those tariffs will land, how they will land, which products they'll land in, how long they'll last for, that's the major concern from an ongoing growth perspective.
Chana Schoenberger (07:19):
What about the sort of rise in isolationism and nativism you see in a lot of countries in the world buy local, the maple leaf signs up all over Canada. How is this affecting trade?
Marissa Adams (07:32):
So it's really interesting and I think that if you look at supply chains in general, and trade has actually gotten longer over the past seven years. So there has been moves to move assembly and different machinery pieces back on shore or closer to the markets. But actually a lot of the raw materials are still produced in the same markets that they were previously. So we're seeing more what I'd say, a reshaping of trade. And I expect that if you look through a lot of the negotiations thus far, there are alliances coming together. We've obviously seen corridors over the past four or five years, like the Ian Corridor really growing a lot of trade with the Middle East through to Asia. But actually interestingly again to the US corpus we've talked to, they've actually said, I want to double down more on US consumers. And it's still the largest consumer market in the world. So that's been quite interesting that they still see growth and opportunity here. And as we speak to US, corporates in particular, 40% of the revenue is international. So it's a big portion, but actually it doesn't take a lot to ship some of it from a demand perspective back to the us.
Chana Schoenberger (08:28):
Interesting. So they'll have to change what they make. It's obviously a different market,
Marissa Adams (08:32):
Not necessarily changing what they make, but changing in terms of how they direct it to. So some of the products are ones that are universal, but a lot of it is also just about where they assemble and how they create that certainty. And some of that's less about even the tariffs. And we saw that after COVID if you looked at other shipping disruptions. So we've seen some geopolitical and climate related effects that have harmed shipping routes. So looking at finding that certainty and certainty sometimes now is a bit more important than saving costs.
Chana Schoenberger (08:58):
Interesting, okay. Is there a risk that you're thinking about that you think people are not as worried about as they should be?
Marissa Adams (09:05):
So I'm a big proponent of every client looking at their working capital. And I think it's a really critical thing because in a time of uncertainty, what's really important is that you're preserving cash, that you're looking at your terms with your clients. Margins are really important. And so one of the things that we're talking to pretty much everybody about is how do you optimize your working capital? I sometimes get the response back from a client, they're like, we have tons of cash. I was like, you might today, but what if you have to hold a lot more inventory because you're not sure how you have to get it? And we did see a lot of front loading at the end of the year in advance of the tariffs, A number of corporates brought in inventory on shore. But that's something that I think for me, that corporates are looking at it, but they're not looking at it as seriously as I think they should be. So that's a conversation that we're certainly having both here in the Americas and also in Europe.
Chana Schoenberger (09:52):
Interesting. Do they typically push back?
Marissa Adams (09:55):
No, I don't think it's that. I think it's just that it's less familiar with it. And I think if you look at particularly treasurers, their toolkit was simplified many years ago. So if you look pre COVID, pre the rates financing was relatively inexpensive. You could do it on a straightforward bilateral basis. But if you look at the confluence now of a higher rates environment, so a lot of debt coming due
Chana Schoenberger (10:18):
27, 28
Marissa Adams (10:19):
Coming through that actually, they're looking for other solutions, what I call tools that if they need the cash in an emergency, whether that's around receivables or supporting their suppliers in a payable solution, they need to start thinking about that. So it's not that they're resistant, I think it's more of an education piece that they haven't had to in the previous environment look to this.
Chana Schoenberger (10:36):
Interesting. Okay. So you mentioned earlier that you've been going to a lot of client meetings recently. What are the clients asking you about and what sort of problems are you solving for
Marissa Adams (10:45):
That? So I think the first thing that I'd say is that, and we've certainly doubled down at
Chana Schoenberger (11:44):
Which you guys have literally been doing for 200 years.
Marissa Adams (11:46):
160 years. Yeah. Yeah, absolutely.
Chana Schoenberger (11:48):
You're almost as old as American Banker. Not quite.
Marissa Adams (11:50):
How old's American Banker?
Chana Schoenberger (11:52):
We are about 180, 185 years old.
Marissa Adams (11:55):
Okay. Well, we'll take some tips from you.
Chana Schoenberger (11:56):
Yes, definitely. We're not international though. You guys are very international. Yes. That is fun. Okay, so there's been a lot of technological change, obviously in this industry. What do you see in terms of cross border trade changing from technology and how companies are using new payments technologies to move money around?
Marissa Adams (12:18):
Yeah, it's a really good question. And I think particularly if I look at the world of trade and working capital, and I look back to 2017 when we were talking a lot about blockchain technology and how that was going to disintermediate the role of banks in international trade transactions and payment transactions.
Chana Schoenberger (12:34):
Well, there were going to be no banks.
Marissa Adams (12:36):
There was going to be no banks. There were no banks anymore. Everything would be done in Bitcoin. A hundred percent. Yeah. We would all buy pizzas through the ledger too, or even more about not just pizzas, right? Trade every kind of good we could internationally. And I think the interesting thing is is that we work together with a lot of other banks for, there's a number of consortiums that came through. There's been a lot of work with governments. But the problem is that unless everybody sort changes the rules of the game, it's really hard to get global adoption. So that sort of a number of those consortiums didn't quite work out. What I would say though is that there is now a lot of legislation being passed. There's some legislation passed in the UK around digital trade. There's hopefully going to support this electronic bills of lading. So there is some hope that we can digitize a bit more. I think though, if you look at the emergence of ai, particularly with all these data that exists in international trade and now a lot of it upload into databases, there'll be some great opportunities to optimize how fast we do things, how we check things, even from a compliance perspective, how do we scan for sanctions and such? So it's coming, it's just coming in a very different way than I thought. If I harken back to 2017,
Chana Schoenberger (13:42):
That's interesting. Yeah, we just had our
Marissa Adams (13:52):
So I think there's lots happening, we almost need a few unlocks. So I think electronic bills of lading was one of them. But equally procure to pay platforms. It's that sort of connectivity. One thing that we're particularly excited about this around embedded banking, and so we've been having a lot of conversations, it's not easy to put into place, but fundamentally even in the B2B space, customers don't necessarily want to leave the environment that they are on the procurement environment to go to a banking platform. So how do we provide some of those solutions directly to customers and actually introduce them to working capital solutions they might not have otherwise.
Chana Schoenberger (14:28):
So embedding banking directly into procurement software.
Marissa Adams (14:30):
Yes, yes.
Chana Schoenberger (14:31):
That's an
Marissa Adams (14:32):
Interesting application for, and county software too.
Chana Schoenberger (14:34):
Embedded finance, we tend to cover it mostly on the consumer side.
Marissa Adams (14:39):
Yes. But in the B2B space, it's huge too. Yeah. And actually the B2B E-commerce space is growing at five or six times the B2C space,
Chana Schoenberger (14:46):
That's where the money is.
Marissa Adams (14:47):
Yeah, absolutely. Yeah. So no matter how much we all both buy online and do things, it's still bigger in the B2B space.
Chana Schoenberger (14:52):
Yes, a lot of Amazon packages at my house. Is there an interesting customer story you can tell about how people are using that?
Marissa Adams (14:59):
Not today, but I would love to the next time we come and see you.
Chana Schoenberger (15:02):
That's amazing. Okay, tell me, so we're entering the second half of 2025, I cannot believe it, but it's true. What do you hope to accomplish in the next six months?
Marissa Adams (15:14):
So really three things from my perspective. So one,
Chana Schoenberger (16:17):
So what can bankers learn from this environment, from what you're seeing?
Marissa Adams (16:22):
So I think the first thing is that, and it sounds like a really basic thing, but truly listening to your clients as opposed to going in on a product pitch.
(16:33):
I think this is really an environment to go, what am I hearing? Where do I see some of the same trends coming up with our clients? And as I said to you around the tariff environment, clients have been a lot more measured in their responses. So you can hear one thing when you watch the news cycle around it, and it's a perspective, but actually when we speak to clients, there isn't this sense of panic. There is a very much a calm about, okay, how we're thinking about it. We're quite prepared. So I think that listening element's really important. The second thing is, is that this is a time for innovation. So if our clients are innovating, what does that mean for us? And we have to think about, again, we want to protect the financial system, we want to protect the international trade system, but actually is this an opportunity for us to develop some new products, shift a few of our old ones, and we're seeing that again around products like inventory finance, where again, now clients are going to have more inventory on shore. They can't necessarily keep it on their balance sheet. So I think identifying those opportunities. And thirdly, I think going back to the point of digitization is that we have to continue to collaborate because the more we collaborate, the more that as an industry we can become more efficient. And also for our teams it creates more exciting jobs for those bankers rather than the pieces that could easily be digitized in that sense as well.
Chana Schoenberger (17:45):
Well, which is good because AI is taking all of those lower knowledge functions and doing it all. Do you find that you see that in your organization that it's easy to digitize the jobs of the more junior people and have them do higher level things?
Marissa Adams (18:02):
So I think it's an interesting journey around AI and we have a number of internal pilots that we've been working on. And for us it's more about how do we optimize the experience they have. So as an example, we are looking at the moment around working capital analysis. So typically that would be something that you'd manually go through, you'd go through all the financials, but actually if you're able to do that, use AI to do that. And we're working through that at the moment. It gives you a lot better questions and insights to go into a meeting with a client and actually for the client, giving them that sort of pure analysis and insight piece as well. So it is changing the dynamic of how they operate, arming them with more tools, and I think giving them the bandwidth to do that, listening to ask more questions and then do that developmental activity as well.
Chana Schoenberger (18:47):
Great. So interesting. What else should I be asking you about that I'm not,
Marissa Adams (18:54):
I think you've asked quite a bit. Obviously you've prepared really well going through it. No, I think at the moment I think that covers a lot of the creativity that we're seeing with clients, the sector-based approach. And I think for me, the one thing I'd want to leave you with is that I don't think international trade is dying. I just think that the shape of it, what it looks like is changing. And so the key message for me is that how do companies adapt to that? How do we adapt to that as bankers to ultimately continue growth, innovation, and ultimately support the economy both here in the United States and abroad
Chana Schoenberger (19:31):
So the job of the international bankers is not over.
Marissa Adams (19:34):
Definitely not. I hope not.
Chana Schoenberger (19:35):
Certainly people can still aspire to that.
Marissa Adams (19:37):
They absolutely can. And actually I think that it's just that it's different. And I think that knowledge is important. And I go back to that point on AI and other digital knowledge is that a lot of people can still get a lot of information from online. But what I would say in my personal experience is that there's still something different. Speaking to a client. When I speak to a client in the same sector in Texas as I do in Italy, and sharing that knowledge across, you still have to kind of live and feel, see the customers, see their factories, see their business, and really understand what it's like. So I don't think the role of the international banker is going away anytime soon.
Chana Schoenberger (20:07):
Well that's good, but you're going to have to continue to live on a plane
Marissa Adams (20:10):
For a little bit. For a little bit. But it's exciting to get to see everybody and chat with them and gain those insights that we can really share through the economy.
Chana Schoenberger (20:17):
Great. Well thank you so much. I really appreciate you coming in. Perfect.
Marissa Adams (20:21)
Thank you, Chana. Really appreciate it.
