By Rosita Johnson
As of February 2025, many businesses are facing new challenges due to changing U.S. tariff policies. A 25% tariff on imports from Mexico and Canada has been implemented, along with a 10% tariff on Canadian energy products and a 10% tariff on goods from China. While the tariffs on Mexico and Canada have been paused for 30 days during negotiations, the tariffs on China took effect on February 4, 2025. These new trade policies are aimed at addressing economic concerns, but they also create supply chain disruptions and added costs for businesses that rely on international trade.
To stay ahead, companies must rethink their supply chain strategies to handle these shifts. Below, we explore the strategies that businesses can utilize to manage tariff impacts across four critical areas: procurement, warehousing, inventory management, and transportation coordination. Making these changes can help businesses reduce risks and keep operations running smoothly.
Sourcing and Procurement
Tariffs can drive up the cost of imported goods, making it crucial for businesses to adjust their purchasing strategies. Companies can:
Find Alternative Suppliers:Â Seek vendors in countries not affected by tariffs to lower costs.
Negotiate Better Terms:Â Secure long-term pricing agreements or volume discounts.
Consider Domestic Sourcing:Â Working with U.S. suppliers may help avoid tariff-related expenses.
Stay Updated on Trade Policies:Â Monitoring tariff changes helps businesses plan ahead.
Under ASCI's GSA contract, we source a variety of supplies including office materials, tools, hardware, and cleaning products. By leveraging multiple sources and alternative suppliers, we ensure continuous availability of inventory despite fluctuations in trade policies. Our supplier network includes domestic manufacturers, wholesalers, and commercial vendors, allowing us to mitigate tariff-related cost increases while maintaining timely delivery to federal agencies.Â
Inventory Management
Good inventory management helps businesses avoid shortages and reduce costs. Companies can:
Optimize Stock Levels:Â Increase reserves for essential items but avoid overstocking.
Identify Alternative Materials:Â Source different materials if tariffs make current ones too expensive.
Use Demand Forecasting:Â Track trends to predict how tariffs may impact purchasing patterns.
In response to anticipated tariffs, many U.S. manufacturers have begun stockpiling imported parts and raw materials. A survey by GEP and S&P Market Intelligence revealed a surge in purchasing activity among North American manufacturers, particularly for critical items like emulsifiers and flavor enhancers. This proactive approach aims to avoid cost increases and ensure a steady supply before tariffs take effect. By increasing inventory levels ahead of time, these companies strive to stabilize costs and prevent disruptions in their production processes.
Warehouse Operations
Changes in tariffs can impact demand, making efficient warehouse operations essential. Companies can prepare by:
Expanding Warehouse Space:Â If a tariff hike is expected, businesses may need to purchase key materials ahead of time to save costs, which could require additional warehouse space.
Strategic Warehouse Locations:Â Warehouses near free trade zones or major markets can minimize transportation expenses.
Using Bonded Warehouses:Â These facilities allow businesses to defer tariff payments until goods are sold.
In response to anticipated tariffs, many U.S. companies have begun stockpiling goods to mitigate potential cost increases. This proactive approach has led to a surge in inbound shipments, resulting in increased warehousing and shipping costs due to the need for additional storage space and handling capacity. Companies are optimizing and expanding their warehouse footprints and carrier partnerships to support larger inventories and ensure business continuity.
Transportation Coordination
With tariffs affecting shipping expenses, businesses should look for ways to optimize transportation. Key strategies include:
Adjusting Shipping Routes:Â Selecting less expensive trade routes can lower costs.
Leveraging Trade Agreements:Â Using free trade benefits can help reduce tariff impact.
Consolidating Shipments:Â Grouping multiple shipments together reduces logistics costs.
Exploring Duty Drawbacks:Â Some businesses can get refunds on tariffs paid for imported goods that are later exported.
Different countries have varying tariff-related documentation requirements, and missing details can cause costly delays. To stay compliant, many logistics companies work with customs brokers who specialize in navigating trade regulations, securing the necessary permits, and ensuring smooth processing at borders. Investing in compliance training for staff and leveraging experienced customs professionals can help businesses reduce shipping delays and unexpected costs.
Conclusion
Trade policies will continue to evolve, making it essential for businesses to remain flexible and proactive. Organizations can benefit from investing in compliance training, leveraging technology for real-time supply chain monitoring, and strengthening partnerships with reliable suppliers and logistics providers. By implementing these strategies, businesses can better navigate trade changes and maintain operational stability. By staying informed, optimizing supply chain operations, and adapting procurement, warehousing, inventory, and transportation strategies, companies can minimize the impact of tariffs and maintain business continuity.
ASCI specializes in helping businesses like yours to address supply chain management challenges. Visit our website to learn more and to arrange for a free consultation.
