How to De-Commodify

Make more money by playing a bigger game.

If commodities were toys, in 2025, they’re being thrown out of the pram.

US President Trump has flagged tariffs on Australian steel¹. It’s a reminder that when businesses depend on cross-border goods, they are exposed to political shifts that directly increase cost and complexity. These frictions - whether in the form of tariffs, regulatory changes, or supply chain disruptions - typically make operations more expensive, slower, and unpredictable.

Businesses that rely on tangible goods - manufacturers, exporters, and supply chain-heavy industries - are the most affected. In contrast, those built on intangible assets - brands, licensing, proprietary knowledge, software, and intellectual property - have greater resilience.

This isn’t a theoretical argument. The Australian steel industry offers a case study in how businesses can face, adapt to, and move beyond this external risk and in-built friction. The lessons remain relevant for any business navigating protectionism and rising operational cost and complexity today.

Lesson 1: When Tangible Trade Gets Harder, Intangible Growth Becomes More Valuable

Tariffs and trade barriers directly impact goods that must physically cross borders. The steel industry has long operated in this high-friction space, with the industry worldwide experiencing repeated battles, including over anti-dumping measures, recent U.S. tariffs, and Chinese subsidies.

For years, steelmakers were caught in a cycle of boom-and-bust pricing, export dependence, and high fixed costs. Those that stayed in commodity production remained highly vulnerable to external shocks. BHP, and later its spin-off BlueScope Steel, took a different path.

In 1966, BHP developed COLORBOND® steel - a pre-painted, corrosion-resistant product tailored for Australian conditions. This marked an early shift from commodity steel to branded, IP-driven solutions. When BlueScope spun off in 2002, it expanded this strategy, taking COLORBOND® and other proprietary products global. This long-term focus on intangible assets and differentiation proved a strong hedge against trade disruptions.

Rather than relying on bulk steel exports, BlueScope moved up the value chain with high-margin, branded products like COLORBOND® and ZINCALUME® steel. More than just metal, they offer licensing, partnerships, and long-term contracts - business models far less vulnerable to short-term trade disputes.

When I negotiated BlueScope’s Free Trade Agreement terms for key bilateral and regional agreements, as part of Australia’s push for closer economic integration with Asia, the company was Australia’s third-largest non-government producer and exporter of IP. Australian government officials would ask how much more steel would be exported as a result of an FTA under negotiation. The answer was always: zero. Bluescope would generate foreign revenue from almost every corner of the planet, albeit with virtually no steel loaded onto a shipping vessel.

Takeaway for today’s businesses: If you’re exposed to tariffs or increasing cost and complexity in business operations, ask yourself:

• Are you selling a commodity that competes on price?

• Can you transition to an offering that includes branded, proprietary, or licensed elements?

• Are there ways to create intangible value - data, IP, expertise - that reduces reliance on physical movement?

Lesson 2: The More Your Business Relies on Borders, the More It’s at Risk

Protectionism and tariffs create uneven playing fields. Worldwide, commodity steel producers have long faced unpredictable pricing and demand cycles because they depended on exporting raw materials into markets with changing rules, often resulting from countries responding to a global oversupply of the commodity.

BlueScope reduced its exposure by establishing manufacturing facilities within key markets - including in the U.S. - allowing it to operate under a multi-domestic model.

Businesses that don’t produce commodities can still learn from this. Whether you’re in manufacturing, consumer goods, or technology, the question is: How much of your business is tied to cross-border trade?

For businesses dealing with increased complexity:

• Assess the feasibility of shifting from exporting to operating - local partnerships, licensing agreements, or direct presence in key markets reduce exposure to tariffs.

• Explore asset-light expansion models - licensing, franchising, and digital delivery can bypass trade barriers.

• Consider moving from physical dependency to platform or service models - where value is in expertise, knowledge, or branding.

Lesson 3: The Most Resilient Revenue Models Are Built on Intangibles

The Australian steel industry’s biggest shift wasn’t just in moving from commodity to branded products - it was in recognising the power of intellectual property and licensing as revenue streams.

COLORBOND® steel is an example. The product is a metal sheet and it also a technology and a brand that is licensed, with additional production process-related IP. This allows BlueScope to generate revenue without the need for constant physical trade. The company has remained in the steel industry yet saw an opportunity to de-risk and diversify to drive global growth.

This thinking applies across industries, such as:

• Fashion brands moving from selling clothing to licensing their designs.

• Software companies shifting from product sales to cloud-based subscription services.

• Manufacturing firms monetising patents rather than just selling equipment.

If your business model still depends entirely on physical goods moving from A to B, it’s time to rethink.

Final Thought: Reduce Friction, Increase Control

Tariffs, whether we like them or not, are part of a broader trend of increasing economic nationalism, rising compliance costs, and supply chain disruptions. They are a lever for political control that forms part of a zero-sum game. For businesses that rely on the free and fair flow of goods, this generally means higher costs, greater uncertainty, and lower margins.

In contrast, businesses that leverage intangible assets - brand, IP, licensing, knowledge, software, and networks - gain flexibility, reduce risk, and scale more sustainably. The world’s most successful companies make the majority of their money this way (see Further Reading articles below).

When we see the bigger picture, we can play a bigger game.

In 2025, intelligence, IP, and intangibles are harder to throw out of the pram. It’s a more grown-up game.

Final questions to consider:

Are you building a business that gets slowed down by friction - or one that moves faster because it’s built on assets that flow freely?

What could you leverage - based on past or current success, your expertise, networks, and assets - to sell an intangible that is less affected by political decisions?

What would the value be to your business if you could avoid the impact of the toys bring thrown out of the pram over the next four years?

Share your comments here.

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Further Reading:

1. https://amp.abc.net.au/article/104918434