Tariffs are a persistent challenge for brands that rely on global supply chains. Whether due to geopolitical tensions, trade disputes, or shifting economic policies, tariff increases can significantly impact profit margins. To remain competitive, brands must proactively strengthen their supply chains. This means auditing suppliers, negotiating smarter contracts, and optimizing logistics costs. Here’s how brands can build a more resilient supply chain in the face of rising tariffs.
1. Audit Your Suppliers for Cost Efficiency and Compliance
Understanding your supply chain’s exposure to tariffs is the first step toward minimizing their impact. Conducting a supplier audit can help identify risks, inefficiencies, and cost-saving opportunities.
- Evaluate Geographic Risks – Assess where your suppliers are located and determine if certain regions are more vulnerable to tariff hikes.
- Diversify Supplier Base – Avoid overreliance on a single country. Exploring alternative sourcing locations, such as Vietnam, India, or Mexico, can reduce exposure.
- Assess Production Costs Beyond Tariffs – Factor in labor, shipping, and regulatory costs when considering new suppliers. A country with lower tariffs may still have higher total costs.
- Verify Compliance and Stability – Ensuring suppliers follow international trade regulations and have strong financial standing reduces the risk of unexpected disruptions.
Pro Tip: Many brands fail to account for secondary tariff impacts, like increased costs on raw materials sourced by their manufacturers. Dig deeper into your suppliers’ supply chains.
2. Strengthen Vendor Negotiations to Offset Cost Increases
When tariffs rise, negotiating smarter with vendors can help brands absorb some of the financial impact. Here’s how to approach it:
- Leverage Volume for Better Terms – If you have multiple SKUs, consider consolidating orders to negotiate bulk discounts.
- Explore Multi-Year Agreements – Locking in pricing for an extended period can shield you from sudden cost spikes.
- Negotiate Payment Terms – Extending payment windows can improve cash flow, giving you flexibility to manage increased costs.
- Push for Tariff Sharing – Some suppliers may be willing to absorb part of the tariff cost to maintain long-term business relationships.
Pro Tip: If your supplier isn’t open to pricing adjustments, look for value-added services they can provide at no additional cost, like improved packaging, quality control, or faster turnaround times.
3. Optimize Logistics to Reduce Costs
Tariffs aren’t the only cost pressure brands face—rising fuel prices, labor shortages, and shipping delays all contribute. Fine-tuning logistics operations can help mitigate these challenges.
- Optimize Freight Routes – Work with logistics providers to find the most efficient routes that minimize duties and fees.
- Use Duty Drawback Programs – If applicable, brands can recover import duties paid on goods that are later exported.
- Nearshoring as a Solution – Manufacturing closer to key markets (e.g., Mexico for U.S. brands) can reduce shipping costs and lead times.
- Leverage 3PLs for Cost Efficiency – Third-party logistics (3PL) providers often have volume discounts and expertise in navigating tariff regulations.
Pro Tip: Investing in digital supply chain tools can help brands model different scenarios, predicting how tariffs will impact costs and allowing for proactive adjustments.
Conclusion: Proactive Supply Chain Management is Key
Tariff increases will continue to be a challenge for brands operating in global markets. However, brands that take a proactive approach—by auditing suppliers, negotiating vendor agreements, and optimizing logistics—can minimize disruptions and protect their margins. The key is to treat supply chain management as a strategic function, not just an operational one.
Need help building a more resilient supply chain? Contact us to discuss solutions tailored to your business.
