Key takeaways:
- Diversify sourcing and manufacturing: Organizations are accelerating shifts away from China, exploring manufacturing in Mexico, Southeast Asia, and the U.S., while balancing labor, infrastructure, and potential new tariffs.
- Negotiate supplier contracts to offset rising costs: Supply chain leaders are securing better pricing and long-term agreements with suppliers to mitigate tariff impacts while evaluating how much cost can be absorbed or passed to customers.
- Build inventory and adapt logistics: Many are stockpiling critical inventory, shifting to alternative ports, and adjusting transportation routes to prepare for potential strikes and trade bottlenecks.
The evolving landscape of U.S. trade policies has left many supply chain leaders navigating significant uncertainty. With new tariffs announced, others rescinded, and ongoing geopolitical tensions, companies must proactively mitigate disruptions.
Supply Chain Planning & Logistics Board members – all heads of supply chain at the world’s largest companies – recently shared insights to adapt to these changes while managing risk.
We’ll explore the top insights our members shared and how you can navigate the current landscape.
1. Understand the Impact of New U.S. Trade Policies
Tariff Uncertainty and Supply Chain Risks
Recent trade policies have introduced tariffs ranging from 10% to 25% on various imports, including products from China, Mexico, and Canada. The lack of clarity on long-term policy direction has forced supply chain leaders to assess their exposure and build contingency plans.
One member noted, “If we just go by the minute and how the stories change, we cannot always shift the supply chain like that.”
Global Trade Shifts and Retaliation Concerns
Many companies are evaluating the risks of dependency on certain countries. One supply chain leader emphasized that their organization is preparing for potential retaliatory tariffs by diversifying their supplier base.
Political Influence on Trade Regulations
Post-election policy shifts could further alter the trade environment. Supply Chain Planning & Logistics Board members are closely monitoring government announcements and engaging with policymakers to stay ahead of changes.
One member explained that they’re in direct contact with trade organizations and government representatives to ensure their teams have insight into upcoming policy changes before they take effect.
2. Mitigate Tariff Impacts in Your Supply Chain Operations
Diversification of Supply Sources
To reduce dependence on any one region, supply chain leaders are increasingly exploring nearshoring and friendshoring strategies. Members shared that their companies have shifted some manufacturing to Mexico to mitigate tariff exposure, while others are considering Southeast Asia and India.
“We’ve been diversifying for the last two years,” one supply chain leader mentioned. “It’s been slow going, but we’re trying to pick up the pace right now to move to the usual places, like Southeast Asia.”
Building Supply Chain Resilience
Scenario planning has become a key tool for supply chain teams. Most members said they have “war rooms” or “tiger teams” that regularly bring together legal, compliance, supply chain, and operations leaders to stay aligned.
Decision trees also help to categorize items into risk buckets and differentiate between “must have” items and those that are less critical.
Cost Mitigation and Financial Planning
Companies are negotiating long-term contracts with suppliers to lock in stable pricing and hedge against potential cost increases. One supply chain leader mentioned successfully negotiating lower costs with suppliers in exchange for longer-term commitments.
3. Partner with Legal Experts to Explore Alternative Strategies
Engaging with Trade Organizations
Many are leveraging industry associations and trade councils to stay informed and advocate for policy considerations. One member highlighted the importance of these organizations in navigating complex regulations and influencing policy discussions.
Legal and Policy Monitoring
To track evolving trade policies, companies are working closely with legal teams and external trade advisors. One member noted that their organization has partnered with legal experts to explore potential tariff exemptions and alternative compliance strategies.
“We stay in constant communication with our legal and compliance teams to ensure we are fully prepared for any trade policy adjustments.”
4. Navigate Logistics and Transportation Challenges
Adapting to Supply Chain Disruptions
The combination of new tariffs, port congestion, and potential labor strikes has intensified logistics complexities. Some companies have preemptively rerouted shipments and diversified their transportation partners to minimize disruptions.
Inventory Management Strategies
Many supply chain leaders have adopted a pre-build strategy, increasing inventory levels ahead of potential tariff hikes. A member mentioned that their company built up safety stocks to hedge against uncertainty while balancing the risk of excess inventory.
5. Consider Contracts Amid Trade Policy Shifts
Reviewing Supplier Agreements
Companies are revisiting their supplier contracts to include flexible pricing clauses that account for potential tariff changes. One leader explained that they are incorporating tariff-sharing agreements to distribute cost burdens more equitably across the supply chain.
“We are renegotiating contracts to include contingency clauses that protect against sudden cost increases due to regulatory shifts,” that member said.
Risk-Sharing Contracts
To avoid unexpected financial strain, organizations are negotiating contingency clauses in supplier agreements. One supply chain leader noted that their legal team is working on new contract terms that protect against sudden cost increases due to regulatory changes.
“Our new contracts ensure that both parties share the financial risk of tariff hikes, creating a more sustainable supply chain partnership.”
6. Prepare for Future Trade Policy Changes
Post-Election Supply Chain Planning
As trade policies continue to shift post-election, supply chain leaders are continuously refining their strategies. One member said their company has created multiple contingency plans to respond quickly to any policy adjustments.
Continuous Scenario Modeling
Given the fluidity of global trade policies, ongoing scenario modeling has become essential. Companies are developing adaptable supply chain frameworks that can pivot based on new tariffs, trade restrictions, or economic conditions.
Get More Exclusive Peer Insights in the Supply Chain Planning & Logistics Board
The Supply Chain Planning & Logistics Board is the only place where you can have real-time, candid conversations with your peers on breaking issues that impact your operations at scale.
When major trade policy shifts occur, we spring into action by setting up exclusive benchmarking sessions, gathering firsthand insights, and providing immediate support. Whether it’s navigating new tariffs, addressing vendor instability, or responding to regulatory changes, our members rely on these crisis response moments to adapt quickly.
Apply to join your peers today to ensure you have the insights and support when it matters most.
