Navigating Tariffs: Strategies to Adjust Your Supply Chain

On February 1, 2025, President Donald Trump signed executive orders imposing the following tariffs¹:

• Mexico and Canada: A 25% tariff on all goods, with Canadian energy resources (including oil, natural gas, and electricity) subject to a lower 10% tariff. Originally planned for February 4, 2025, these tariffs took effect on March 4, 2025.

• China: An additional 10% tariff on top of existing duties, affecting a broad spectrum of goods which took effect as scheduled on February 4, 2025.

Canada and China have announced retaliatory tariffs already, while Mexico will announce their plans at an event on Sunday:

• Canada: Effective 12:01 a.m. EST on March 4^th, Canada responded with 25% tariffs against $155 billion of American goods – starting with tariffs on $30 billion worth of goods immediately, and tariffs on the remaining $125 billion on American products in 21 days’ time.²
• China: On March 4th, China introduced tariffs on a range of U.S. agricultural goods, including specific meats, grains, cotton, fruits, vegetables, and dairy items. Additionally, Beijing imposed export and investment limitations on 25 U.S. companies, citing national security concerns. China’s Ministry of Commerce stated that the U.S. tariffs breach World Trade Organization regulations and “undermine the foundation for economic and trade cooperation between China and the United States.

Impact on Supply Chains and Market Conditions

The enforcement of these tariffs has led to several notable consequences³:

• Increased Costs: Strategic manufacturing processes involve the movement of raw materials, assemblies, and components between countries, a characteristic of North American manufacturing that formed the foundation of NAFTA and the USMCA. The new tariffs will reshape manufacturing practices and impact the cost of goods sold.
• Inflationary Pressure: The tariffs are driving up costs for imported goods, potentially contributing to higher prices for consumers on essential products. Companies will need to evaluate the competitiveness of their pricing, their capacity to absorb the increased costs, their ability to share these costs with vendors, and decide whether to pass the higher costs onto consumers through increased prices.
• Supply Chain Disruptions: Businesses dependent on imports from the affected countries are experiencing disruptions, prompting a reevaluation of sourcing and manufacturing strategies.

So, how can TRAFFIX help with tariff management?

Assess your Supply Chain to Offset Tariffs

Almost every manufactured product today depends on collaborative production processes, where raw materials, components, and sub-assemblies are produced by different parties and then assembled into the final product. These components may cross multiple borders before the product is completed. A thorough analysis of your supply chain is essential to fully understand the impact of the tariffs and the potential need to shift manufacturing and sourcing strategies.

Supply chain mapping is the process of visually documenting and analyzing the flow of goods, information, and resources across the entire supply chain—from suppliers to manufacturers, distributors, and customers. It provides a clear overview of how products move, where potential bottlenecks or inefficiencies exist, and where opportunities for cost savings and risk reduction can be found.

Key Benefits of Supply Chain Mapping:

• Visibility & Transparency – Helps businesses understand their entire supply network, including suppliers, transportation routes, and distribution channels.
• Identifying Inefficiencies – Highlights delays, redundancies, and high-cost areas that could be optimized.
• Risk Management – Uncovers potential disruptions due to tariffs, geopolitical issues, or supplier dependencies.
• Cost Reduction – Identifies opportunities to streamline operations, reduce waste, and lower expenses.
• Improved Decision-Making – Empowers companies to make strategic adjustments for greater efficiency and resilience.

By mapping out your supply chain, you can develop strategies to optimize:

• Transportation modes
• Routing
• Consolidations
• Utilization of FTZs

These strategies can help offset the impact of increased tariffs, improve overall performance, and maintain or enhance existing service levels. Meet with TRAFFIX supply chain experts for a North American supply chain mapping session. Our team will conduct a thorough analysis of your current operations to uncover inefficiencies and identify cost-saving opportunities to help mitigate the impact of rising tariffs. Schedule your session today!