With the new Trump Administration continuing to threaten steep tariffs on Mexico, Canada, and China as early as February 1, supply chain organizations preparing for that economic shock must be prepared to make strategic responses that go beyond either absorbing new costs or passing them on to customers, according to Gartner Inc.
But even as they face what would be the most significant tariff changes proposed in the past 50 years, some enterprises could use the potential market volatility to drive a competitive advantage against their rivals, the analyst group said.
Gartner experts said the risks of acting too early to proposed tariffs—and anticipated countermeasures by trading partners—are as acute as acting too late. Chief supply chain officers (CSCOs) should be projecting ahead to potential countermeasures, escalations and de-escalations as part of their current scenario planning activities.
“CSCOs who anticipate that current tariff volatility will persist for years, rather than months, should also recognize that their business operations will not emerge successful by remaining static or purely on the defensive,” Brian Whitlock, Senior Research Director in Gartner’s supply chain practice, said in a release.
“The long-term winners will reinvent or reinvigorate their business strategies, developing new capabilities that drive competitive advantage. In almost all cases, this will require material business investment and should be a focal point of current scenario planning,” Whitlock said.
Gartner listed five possible pathways for CSCOs and other leaders to consider when faced with new tariff policy changes:
Retire certain products: Tariff volatility will stress some specific products, or even organizations, to a breaking point, so some enterprises may have to accept that worsening geopolitical conditions should force the retirement of that product.
Renovate products to adjust: New tariffs could prompt renovations (adjustments) to products that were overdue, as businesses will need to take a hard look at the viability of raising or absorbing costs in a still price-sensitive environment.
Rebalance: Additional volatility should be factored into future demand planning, as early winners and losers from initial tariff policies must both be prepared for potential countermeasures, policy escalations and de-escalations, and competitor responses.
Reinvent: As tariff volatility persists, some companies should consider investing in new projects in markets that are not impacted or that align with new geopolitical incentives. Others may pivot and repurpose existing facilities to serve local markets.
Reinvigorate: Early winners of announced tariffs should seek opportunities to extend competitive advantages. For example, they could look to expand existing US-based or domestic manufacturing capacity or reposition themselves within the market by lowering their prices to take market share and drive business growth.
With the hourglass dwindling before steep tariffs threatened by the new Trump Administration will impose new taxes on U.S. companies importing goods from abroad, organizations need to deploy strategies to handle those spiraling costs.
American companies with far-flung supply chains have been hanging for weeks in a “wait-and-see” situation to learn if they will have to pay increased fees to U.S. Customs and Border Enforcement agents for every container they import from certain nations. After paying those levies, companies face the stark choice of either cutting their own profit margins or passing the increased cost on to U.S. consumers in the form of higher prices.
The impact could be particularly harsh for American manufacturers, according to Kerrie Jordan, Group Vice President, Product Management at supply chain software vendor Epicor. “If higher tariffs go into effect, imported goods will cost more,” Jordan said in a statement. “Companies must assess the impact of higher prices and create resilient strategies to absorb, offset, or reduce the impact of higher costs. For companies that import foreign goods, they will have to find alternatives or pay the tariffs and somehow offset the cost to the business. This can take the form of building up inventory before tariffs go into effect or finding an equivalent domestic alternative if they don’t want to pay the tariff.”
Tariffs could be particularly painful for U.S. manufacturers that import raw materials—such as steel, aluminum, or rare earth minerals—since the impact would have a domino effect throughout their operations, according to a statement from Matt Lekstutis, Director at consulting firm Efficio. “Based on the industry, there could be a large detrimental impact on a company's operations. If there is an increase in raw materials or a delay in those shipments, as being the first step in materials / supply chain process, there is the possibility of a ripple down effect into the rest of the supply chain operations,” Lekstutis said.
New tariffs could also hurt consumer packaged goods (CPG) retailers, which are already being hit by the mere threat of tariffs in the form of inventory fluctuations seen as companies have rushed many imports into the country before the new administration began, according to a report from Iowa-based third party logistics provider (3PL) JT Logistics. That jump in imported goods has quickly led to escalating demands for expanded warehousing, since CPG companies need a place to store all that material, Jamie Cord, president and CEO of JT Logistics, said in a release
Immediate strategies to cope with that disruption include adopting strategies that prioritize agility, including capacity planning and risk diversification by leveraging multiple fulfillment partners, and strategic inventory positioning across regional warehouses to bypass bottlenecks caused by trade restrictions, JT Logistics said. And long-term resilience recommendations include scenario-based planning, expanded supplier networks, inventory buffering, multimodal transportation solutions, and investment in automation and AI for insights and smarter operations, the firm said.
“Navigating the complexities of tariff-driven disruptions requires forward-thinking strategies,” Cord said. “By leveraging predictive modeling, diversifying warehouse networks, and strategically positioning inventory, JT Logistics is empowering CPG brands to remain adaptive, minimize risks, and remain competitive in the current dynamic market."
With so many variables at play, no company can predict the final impact of the potential Trump tariffs, so American companies should start planning for all potential outcomes at once, according to a statement from Nari Viswanathan, senior director of supply chain strategy at Coupa Software. Faced with layers of disruption—with the possible tariffs coming on top of pre-existing geopolitical conflicts and security risks—logistics hubs and businesses must prepare for any what-if scenario. In fact, the strongest companies will have scenarios planned as far out as the next three to five years, Viswanathan said.
Trade and transportation groups are congratulating Sean Duffy today for winning confirmation in a U.S. Senate vote to become the country’s next Secretary of Transportation.
Once he’s sworn in, Duffy will become the nation’s 20th person to hold that post, succeeding the recently departed Pete Buttigieg.
Transportation groups quickly called on Duffy to work on continuing the burst of long-overdue infrastructure spending that was a hallmark of the Biden Administration’s passing of the bipartisan infrastructure law, known formally as the Infrastructure Investment and Jobs Act (IIJA).
But according to industry associations such as the Coalition for America’s Gateways and Trade Corridors (CAGTC), federal spending is critical for funding large freight projects that sustain U.S. supply chains. “[Duffy] will direct the Department at an important time, implementing the remaining two years of the Infrastructure Investment and Jobs Act, and charting a course for the next surface transportation reauthorization,” CAGTC Executive Director Elaine Nessle said in a release. “During his confirmation hearing, Secretary Duffy shared the new Administration’s goal to invest in large, durable projects that connect the nation and commerce. CAGTC shares this goal and is eager to work with Secretary Duffy to ensure that nationally and regionally significant freight projects are advanced swiftly and funded robustly.”
A similar message came from the International Foodservice Distributors Association (IFDA). “A safe, efficient, and reliable transportation network is essential to our industry, enabling 33 million cases of food and related products to reach professional kitchens every day. We look forward to working with Secretary Duffy to strengthen America’s transportation infrastructure and workforce to support the safe and seamless movement of ingredients that make meals away from home possible,” IFDA President and CEO Mark S. Allen said in a release.
And the truck drivers’ group the Owner-Operator Independent Drivers Association (OOIDA) likewise called for continued investment in projects like creating new parking spaces for Class 8 trucks. “OOIDA and the 150,000 small business truckers we represent congratulate Secretary Sean Duffy on his confirmation to lead the U.S. Department of Transportation,” OOIDA President Todd Spencer said in a release. “We look forward to continue working with him in advancing the priorities of small business truckers across America, including expanding truck parking, fighting freight fraud, and rolling back burdensome, unnecessary regulations.”
Port Houston has awarded more than $1.1 billion to date in contracts with Small, Minority, and Women-Owned Business Enterprises (S/MWBEs), helping to fuel collaboration and to build economic wealth in its communities, the port said today.
According to Port Houston, its Business Equity Program provides resources, mentorship, and access to procurement opportunities, helping businesses thrive. That initiative has been driven by the collective impact of Port Houston’s Small Business Development Program, established in 2002, and its Minority and Women-Owned Business Enterprise (MWBE) Program, launched in 2021.
Those practices make a large economic impact, since Port Houston ranks as the nation’s fifth-largest container port by twenty-foot equivalent units (TEUs), handles 73% of U.S. Gulf Coast container traffic, is the largest port in the U.S. for waterborne tonnage thanks to its traffic in petroleum tankers, and generates nearly 20% of the state of Texas’ gross domestic product (GDP) by revenue.
However, the announcement comes in the context of rising tensions between federal contractors and many of the businesses that provide the services they need. Port Houston’s press release came out just days after the new Trump Administration announced policies to end diversity, equity, and inclusion (DEI) practices in federal agencies. Trump made that policy change in a January 20 executive order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing” and in a January 22 statement titled “Fact Sheet: President Donald J. Trump protects civil rights and merit-based opportunity by ending illegal DEI.”
Although it revealed a philosophical gulf between the executive branch and a major player in U.S. private industry, the port’s announcement focused solely on the economic value of its practices. “This monumental milestone represents more than just dollars awarded—it’s a testament to Port Houston’s dedication to supporting jobs and creating opportunities for small and diverse businesses,” Charlie Jenkins, CEO at Port Houston, said in a release. “These programs are designed to build capacity, foster inclusivity, and empower businesses to succeed and grow.”
Likewise, the port said its contracting practices were the fruit of years of strategic planning and collaborative efforts across the organization. “Our commitment to expanding opportunities for S/MWBEs remains steadfast,” Carlecia Wright, Port Houston’s Chief Business Equity Officer, said. “In 2024 alone, we awarded $181.1 million to S/MWBEs, building on more than two decades of commitment to economic opportunity. We are proud to continue driving equitable outcomes and ensuring that Port Houston remains a vital economic engine for businesses of all sizes and backgrounds.”
Sean Duffy won approval before a Senate Committee today to draw closer to becoming Transportation Secretary in the new Trump Administration, putting him on track to replace Pete Buttigieg in that job thanks to bipartisan support in Congress and calls from the freight business community for a quick confirmation.
Those steps earned Duffy support from members of the Senate Commerce, Science and Transportation Committee, as well as from his home state senators, Tammy Baldwin (D) and Ron Johnson (R), according to the National Motor Freight Traffic Association (NMFTA). In an analysis of Duffy’s stance in that hearing about some of the higher-profile issues before the DOT, the NMFTA said: Duffy expressed a belief that there’s space for both electric vehicles (EVs) and gas-powered vehicles; he committed to improving the apprenticeship program allowing truck drivers under age 21 to haul freight across state lines; and he said that the patchwork of state laws on autonomous vehicle technology was preventing further rollout and adoption of the technology.
In a statement today before the Senate Committee vote, the National Association of Waterfront Employers (NAWE), an organization representing U.S. marine terminal operators and stevedores, called for a quick confirmation of Duffy to the post. “Mr. Duffy’s extensive experience in public service, coupled with his deep understanding of the complexities of multimodal transportation systems, uniquely positions him to lead the DOT at this pivotal moment,” NAWE President Carl Bentzel said in the release. “His demonstrated commitment to fostering collaboration among government, industry, and labor stakeholders aligns closely with NAWE’s mission of promoting safety, efficiency, and sustainability within the U.S. maritime sector.”
Among the flurry of orders he issued in the hours after his inauguration, incoming President Trump has named new leaders for two critical federal agencies overseeing transportation and freight flows.
In a statement, rail industry group the Association of American Railroads (AAR) applauded the appointment. “Chairman Fuchs has proven to be a thoughtful, solutions-oriented leader who lets data drive the decision-making process,” AAR President and CEO Ian Jefferies said in a release. “Throughout his career, he has been committed to maintaining the balanced regulatory framework that allows railroads to invest while also offering appropriate remedies for rail customers. America’s railroads look forward to working with him as we advance our shared goal of a thriving, vibrant rail network that helps businesses and our economy continue to grow.”