The ongoing tariff saga continues, as the topic returns with renewed vengeance this week. After the roller coaster of announcements, delays and policy reversals during President Trump's early weeks in office, the sheer volume of information has certainly been challenging to monitor. Along the way, the ASCM Tariff Tracker has provided key insights to keep you well-informed. Still, there’s no doubt that these shifting dynamics are having a profound impact on global operations.
Trump has now announced that the trade war with China is “done,” per CNBC. He claimed that the tariffs on Chinese goods will remain at the current rate of 55%, with no future increases. What will change is suppliers’ relationships with businesses: “The damage to the supply chain, the U.S. consumer and the economy will remain,” the article continues. “Most companies are working on a 40-60% gross margin, which will cause either substantial price increases or substantial cutting of expenses to survive.”
A very timely piece also released this week is a Harvard Business Review report that offers strategies for managing delicate supplier relationships in a chaotic landscape. HBR interviewed supply chain leaders across industries to understand how they handle the many challenges of the trade war. They specifically asked for practices that can be swiftly put into place for more immediate results. Here are some of their suggestions:
Be honest. Transparency with stakeholders is crucial. Address the situation openly to demonstrate the kind of leadership that fosters lasting trust. This proactive communication will help you maintain stable relationships through uncertain times.
Rethink product composition. Not every product can be materially adjusted and remain viable; but some can. If possible, switch to using materials that are not taxed as heavily. For instance, one manufacturer explained that increasing an item’s aluminum content and reducing the amount of steel enabled the company to reclassify the product in a category that’s subject to much lower tariffs.
Understand the details. Take a cue from the past — namely, the struggles during the pandemic — and gather subject-matter experts in every department to help you better understand the particulars through both data and discussion.
Consider nearshoring or reshoring. While changing manufacturing locations isn’t always feasible, it may be possible to import pieces of goods and finish assembly in a local facility. As another idea, one company reported that it now has facilities on both sides of the U.S.-Mexico border to provide similar flexibility and agility.
Swap suppliers. Sometimes the best solution is the most obvious: Source from a local partner. This represents a fundamental shift in supply chain design, moving away from purely cost-driven decisions to prioritizing more stability and fewer liabilities. It also likely requires careful planning and a thorough assessment of new supplier capabilities to maintain product quality and delivery schedules.
Invest in a resilient supply chain — and yourself
Holistic supply chain expertise is more critical than ever, and the APICS Certified Supply Chain Professional (CSCP) program is the way to get there. It provides essential knowledge to navigate global supply chains, covering everything from managing demand and global networks to sourcing products and services to fostering solid supply chain relationships.
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And as a valuable benefit, professionals holding an ASCM credential report a median salary 8% higher than those without, according to ASCM's latest Supply Chain Salary and Career Report. Those with a bachelor's degree and a credential earn an impressive 18% more.
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