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Companies are being urged to review their procurement and supply chain strategies in the wake of the US government’s tariff programme, as concerns grow over shipping costs and price rises across a range of goods. 

US President Donald Trump’s imposition of sweeping tariffs on imports, and retaliatory measures from trading partners across the world, has left companies scrambling to secure the supply of crucial inputs, materials and manufactured products. 

Around half of procurement professionals are already reviewing relationships with existing suppliers and seeking to source from alternative countries, according to a survey of 65,000 members of the UK’s Chartered Institute of Procurement and Supply (Cips), based around the world. 

Many respondents are also looking to hold more inventory, Cips says. More widely, the survey found members’ anxiety over supply chain disruption over the next 12 months has reached the highest level ever recorded. 

The findings mark “a critical tipping point” for supply chain reconfiguration, says Cips chief executive Ben Farrell. 

“The combination of rising protectionism, new tariffs and ongoing geopolitical shocks are reshaping global supply strategies in real time,” he says. “Our members aren’t just predicting disruption, they’re living through it and rapidly adjusting their operations.” 

A report published by Dun & Bradstreet last week says businesses’ optimism for Q2 this year has dropped 1.3% – which follows a 12.9% slump in Q1 – amid trade-related policy uncertainty and its economic implications. 

“Export-driven sectors such as automotive, electricals and metals saw sharp declines in optimism levels, particularly in the US, Mexico, South Korea and Japan, where rising tariffs and shifting trade policies have fuelled cost pressures and created demand volatility,” it says. 

“Financial risk perceptions remain elevated as businesses contend with high borrowing costs, persistent inflation expectations and tightening liquidity conditions, with fewer firms anticipating near-term rate relief.” 

 

Shipping chaos 

So far, supply chain shifts appear to have been short-term in nature, with importers seeking to stockpile goods before tariffs take effect.  

In the US, for example, copper imports soared in March amid fears levies on refined metal, raw materials, concentrates and scrap could be introduced much sooner than previously expected. 

US-based ITS Logistics says containerised trade also surged last month as companies looked to secure goods quickly – but that this phenomenon is likely to reverse in the coming weeks. 

“The industry should see strong import volumes through April as containers with front-loaded inventory, which was loaded by April 9, reach the US,” it says. 

“Throughout May and possibly into June, import and export volumes should see a cliff event similar to the impacts felt during the immediate Covid response.” 

These patterns could drive up shipping costs for certain routes, says Peter Sand, chief analyst at freight analytics platform Xeneta. 

“Japan, for example, is one of the key trade partners with the US, so a rush to frontload goods could put upward pressure on spot rates on this trade,” he says. 

But looking ahead, Sand says companies had “better have a plan” for insulating their business from the impact of tariffs. 

“It is impossible to downplay the significance of the tariffs imposed by President Trump because they are on a scale never seen before, both in terms of geography and financial severity,” he said in an article following the US’ so-called ‘Liberation Day’ tariff announcement on April 4. 

“The tariffs will shift global trade on its axis and the impact will be profound and lasting. The journey to overcome these challenges will be painful, but it must start today.  

“If shippers have the right tools at their disposal and are willing to adopt new approaches to supply chain setups and freight procurement, perhaps they may be all the stronger for it in the long term.” 

Sand suggests companies carry out simulations of alternative supply chain arrangements, scrutinise data on freight rates across major and secondary trade routes, and consider port infrastructure, capacity and reliability if seemingly more favourable options are found. 

Jackson Wood, director of industry strategy for Descartes’ Global Trade Intelligence unit, says that for companies shifting sourcing strategies, “trade-offs are always going to depend on a company’s time horizon”. 

“Are they thinking in yearly, five-year, or even decadal terms? Is it even possible to become fully US-sufficient from a supply standpoint?” he says. 

“The baseline assumptions companies have long held about how global trade works are now completely outdated – we’re operating in a new paradigm and, in many ways, starting from scratch.”