Growing Through Tariff Uncertainty

Many executives and managers describe today’s business environment as “tariff Jenga”—where each sourcing decision is a delicate block in a fragile tower, and a single tariff-related policy shift can send the whole structure wobbling. Some companies are paralyzed by the uncertainty; others are racing to redesign supply chains midstream to try to stay competitive.

While business leaders have always had to plan for an unknown future, the current tariff landscape is changing how they must do so. It has exposed challenges that are likely to persist for a very long time, regardless of what happens with political elections, the renegotiation of the United States–Mexico–Canada Agreement (USMCA), and other geopolitical moves.

The rules of the game have changed, and fast-paced volatility is here to stay. However, there is a significant silver lining. Namely, companies can use this environment as a catalyst to transform into more vigilant and nimble organizations. Business leaders who shift their focus from short-term cost control to long-term resilience may find themselves better positioned for durable growth and competitive advantage.

That’s not to suggest cost control isn’t important. It’s still crucial, of course, but leaders who have historically focused mainly on achieving the lowest costs in their supply chains must now prioritize establishing the lowest risk. That’s a new perspective for many. It requires them to think long-term, but act in small, incremental steps that let them minimize risk and pivot quickly.

Take Incremental Steps 

One big misconception companies should guard against is the belief that tariffs don’t affect them if they work only with U.S. suppliers. In truth, global supply chains make it almost impossible for tariffs to have no effect whatsoever. Therefore, no company can afford to sit back and do nothing to minimize risk and foster supply chain flexibility. 

At the same time, it’s a mistake to alter too much, too fast. For example, most companies don’t need to stop sourcing all their supplies immediately from locations subject to high tariffs. They should look for the middle ground instead; for now, perhaps find new sources for the company’s highest-cost or highest-volume supplies.

The best path forward comprises an ongoing series of small strategic adjustments followed by periods of measurement and reassessment. Leaders shouldn’t expect to see significant results from each change overnight, but they should find their businesses in a more resilient place over time. 

The key is to get creative and comfortable acting with limited information. A different approach is necessary; one that prioritizes a “think outside the box” mindset. Future success is likely to belong to companies with a culture that encourages everyone—not just the logistics team—to rethink strategy, uncover new markets, and drive innovation. 

In the meantime, companies can take a few universal actions to strengthen their decision-making. Those actions start with assessing tariff impacts, then developing tariff mitigation and optimization strategies.

Conduct Impact Assessments 

It’s no longer enough to make supply chain and other decisions based chiefly on the profit and loss (P&L) statement. Companies now must also understand their tariff exposure risk. Ongoing tariff assessments might reveal that tariffs have a minimal effect on the business, or they might uncover substantial hidden risks. Either way, these assessments should become as fundamental to business management and decision-making as financial statements, sales projections, and budgets.

An impact assessment should be among the first actions taken whenever a new tariff is announced or an existing tariff is revised, and should be updated routinely. Although the assessment doesn’t need to be elaborate—it can be a simple Excel spreadsheet—accurate data is essential. Executives and managers should work with their teams to gather and validate details such as parts numbers, bills of materials (BOM), countries of origin, HTS codes, duty rates, and volume of spend. 

Think of an assessment as a periodic effort to document the tariff “current state” vs. “future state.” Be sure it digs as deep into each tier of the supply chain as possible. That means trying to collect information about the origins of second-tier and third-tier inputs (i.e., your suppliers’ suppliers, and their suppliers)—and perhaps even deeper for more complex products.

Admittedly, such conversations aren’t always easy. However, they might strengthen business relationships if framed in terms of looking out for each other. Perhaps the initial question to suppliers could be, “Have you identified any areas of tariff risk within your supply chain?” 

With the improved visibility generated by an impact assessment comes a greater awareness of any previously “hidden” risks and the ability to respond more quickly to policy shifts.

Gather Knowledge 

In tandem with conducting an impact assessment, companies should educate themselves on how tariffs work so they can build greater flexibility and more effective tariff optimization strategies into their supply chains. The education should start with a working knowledge of the different types of tariffs.

Tariffs can be imposed in a variety of ways. Many recent headlines have highlighted those levied under the International Emergency Economic Powers Act (IEEPA), Section 232 of the Trade Expansion Act of 1962, and Section 301 of the Trade Act of 1974. However, these are not the only tariff categories, nor are they static. Ongoing vigilance is essential to remain current with frequent updates. Yet with a better understanding of tariffs, companies can more effectively determine which modifications to products and/or sourcing locations they might want to consider. 

Once it becomes clear how various tariffs affect a business’s financial drivers, leaders can use the insight to build more flexibility into their supply chains. In some cases, that might mean leveraging foreign-trade zones. Other tariff mitigation strategies might include alternative sourcing, product redesign, or more regionalized operations.

Examine Regionalization (Carefully!)

The ongoing tariff situation has drawn more attention to the concept of regionalized operations. For example, despite the upcoming July 2026 USMCA review, companies may find North American regionalization an attractive option for reducing risk. Therefore, businesses should keep an eye on the USMCA renegotiation, whether through in-house resources, or industry associations and advisors.

The USMCA also illustrates why regionalizing operations is much easier said than done. All regions have their own distinctive problems, just as every company has its own site selection priorities. So, turning regionalization into an effective strategy to reduce tariff exposure and strengthen responsiveness requires a two-pronged approach:

Research locations. Research each region extensively to understand all its cultural and physical challenges and benefits. For example, some areas of Mexico are prone to unpredictable energy supplies, while some parts of India struggle with transportation infrastructure. Get as much information as possible about each location from local advisors with boots on the ground. Industry associations such as the National Association of Manufacturers (NAM) or the National Electrical Manufacturers Association (NEMA), for instance, may be good places to start looking for expertise.

Know the company’s needs. Each business must identify its unique priorities. Are logistics imperative to the company’s survival, for instance? Energy? Talent? Raw materials? It’s often beneficial to conduct a “red/yellow/green” analysis to determine the company’s highest-priority variables. Then, match those top-priority needs against your regional intelligence to pinpoint the most promising nearshoring opportunities. 

Fuel  Resilience and Growth

Tariffs are not just cost considerations. They are a strategic challenge that demands resilience, creativity, and foresight. Growth in this environment of uncertainty requires business leaders to constantly learn and experiment—whether with new markets, materials, processes, or business models. 

It’s easy to feel overwhelmed, but now is not the time to stand still. It’s time to gather knowledge and insights to fuel incremental changes that help companies transform uncertainty into opportunity. While the rules of global trade will continue to evolve rapidly, those companies that prioritize ongoing flexibility will be best positioned to stay competitive and thrive.