Transshipment export or local production? Supply chain reconstruction strategies under tariff and demand uncertainty

Under the wave of anti-globalization, tariff barriers have emerged as a critical factor influencing the restructuring of global supply chains. In this study, we develop a game-theoretic model that considers an exporting manufacturer and a local manufacturer from the importing country, with the two manufacturers competing in the importing country's market. The exporter first decides on its market entry mode (i.e., direct export, transshipment export, or local production), after which both manufacturers decide whether to disclose their private demand information before engaging in quantity competition. By endogenizing information sharing within the entry mode decision, we show that supply chain structure plays a pivotal role in shaping information disclosure incentives. Our analysis reveals that the choice of export mode is driven by a combination of information sharing incentives, tariff differentials, and fixed investment costs. Specifically, local production enhances the exporter's standing, promoting a cooperative equilibrium where both manufacturers share information. Conversely, transshipment exporting weakens its position, making a non-cooperative outcome more likely. Furthermore, we characterize the equilibrium conditions for different information sharing scenarios and find that higher brand acceptance for the exported product strengthens the incentive to share. This study contributes to the literature on global operations strategy and horizontal information sharing, offering new insights for firms' strategic decision-making in a complex trade environment.