Given the chaos and uncertainty triggered by it is difficult, if not impossible, for companies that participate in global supply chains formulate even medium term strategies. To find out how companies are dealing in the short term, we interviewed supply chain leaders from more than a dozen manufacturers and retailers inside and outside the United States.
These conversations have provided insights on the measures that companies are taking to mitigate adverse effects on their business, including employee morale. Here are six of them who shared with us.
There is a lot of uncertainty in the supply chain and the companies caused by trade war and how it changes overnight. The leadership that communicates this open and transparently, both internally and with partners near the supply chain, can eliminate much fear and anguish that distract and hinder action. People from a company told us that they have held general meetings with employees to openly address the situation, and managers from another company said they were promoting similar discussions with key suppliers.
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Organize-se
React the war room created during the Covid-19 pandemic and gather functional experts for finance, marketing, engineering and supply chain. Perform a detailed analysis of costs and sources to obtain a detailed financial and spatial understanding of how tariffs will impact raw materials, components or products by a place of origin.
Understanding this at granular level – by product and market – prepares the company to take action targeted to solve specific problems, rather than making broad decisions to redesign the supply chain. In anticipation of tariffs, a food manufacturer, for example, increased their volumes of selected key market ingredients that identified as particularly sensitive to tariffs.
Consider product formulation options
By evaluating the materials that make up each product from the cost -adjusted cost perspective, companies can identify viable alternatives and make proper adjustments. Managers of a medium -sized manufacturer shared with us who, by increasing the aluminum content of a product and reducing steel, were able to reclassify the product in a category subject to much smaller tariffs. (Although steel and aluminum imports are taxed at 25%, selected specifications of articles and products are exempt under the harmonized tariff table. President Donald Trump announced on May 30 that he was folding tariffs to 50%, from June 4.)
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Consider location options
Several manufacturers have shared how they have worked with suppliers to develop new warehouse operations designed to avoid higher rates, changing the location of the work. They imported semi -meal products, completed the final assembly of the product and packaged the finished products within local warehouses. Another company now has installations on both sides of the US-Mixic border to provide similar flexibility and agility to deal with the dynamic tariff environment.
Consider grouping options
When several items are packaged and sold together as a product package, the tariff classification becomes more complex. The “essential character” of items grouping determines the tariff, but this assessment may be subjective.
A retail supplier took this opportunity by changing an individual item to a gift package by adding a celebration card. With this change, the supplier managed to successfully reclassify the gift package as “stationery”, a classification subject to a smaller fare than the item would have.
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Based on previous actions
A manufacturer shared that a few months before the trade war has decided to replace a Chinese supplier with a US -based supplier to increase local purchase and reduce dependence on Chinese supplies. When tariffs came into force, managed to take advantage of this previous change and expand their purchases from the US supplier. While competitors struggled to ensure continuity of supply and absorb the highest costs of critical components, the manufacturer increased production to take advantage of the lack of inventory and the price increases of competitors.
Another US manufacturer began to develop a local supplier during the pandemic as a way to reduce the dependence on the global supply lines interrupted. The company initially provided space for its supplier in its own operations, coated on equipment and collaborated to help the supplier grow and become highly productive. This productivity, combined with logistics economies because it is located in the US, allowed the supplier to compete with suppliers from low -cost countries. When tax rates on imported products came into force, the company found itself in an even more favorable situation and was able to further increase the amount acquired locally.
It is not feasible to redesign an entire chain of supply during a commercial war that evolves rapidly. Therefore, do not try to do more than it can and do not seek perfection. Keep in mind that your competitors face uncertainties, fluctuations, and similar dynamics. Those who take prudent and moderate measures will better face the storm and will come out stronger than those who adopt a waiting posture to see.
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c.2025 Harvard Business Review Distributed by New York Times Licensing.
