How to Adapt Sourcing Strategies for Tariffs

📦 Navigating Ongoing Tariffs: Strategies for Resilient Supply Chains The impact of ongoing Section 301 tariffs—particularly those targeting U.S.-China trade—continues to challenge global supply chains, especially in high-complexity industries like MedTech and Pharma. For procurement and operations leaders, the question isn’t if tariffs will affect your cost structure, but how prepared your organization is to respond. Forward-looking companies are adopting a multi-layered approach to mitigate tariff risk: ✅ Geographic diversification – Shifting production and sourcing from China to Vietnam, India, Mexico, or Eastern Europe to reduce tariff exposure. ✅ Tariff engineering – Reclassifying product components or altering designs to fit under lower-duty classifications. ✅ Contract restructuring – Negotiating supplier terms to share or offset tariff-related cost increases. ✅ Nearshoring & FTZs – Leveraging free trade zones, bonded warehouses, and regional production models to defer or avoid duties. ✅ Scenario planning – Embedding tariff impact into total cost models and proactively simulating “what-if” supply scenarios. In today’s climate, tariff mitigation is not a one-time event—it’s a strategic discipline. It demands cross-functional collaboration between sourcing, legal, tax, and logistics teams, paired with agile decision-making and up-to-date market intelligence. 🎯 Whether you're reshaping your supplier footprint or designing a more resilient operating model, it's clear that proactive tariff strategy is a critical lever for cost optimization and risk mitigation. 🔍 Want to learn more? Here are some helpful resources: - USTR Section 301 Updates - PwC Trade Insights - Bloomberg Tariff Tracker Let’s connect—what mitigation strategies are working for your organization?

As Tariffs Disrupt the Flow, 4 Supply Chain Moves Every Executive Should Make: Tariffs aren’t just a trade issue, they’re a leadership one. As an executive coach, I work with leaders navigating disruption to become more effective in how they think, decide, and lead so their organizations and teams perform at the highest level. Right now, global supply chains are under pressure from shifting tariffs, reshoring mandates, and geopolitical realignment. What used to be a smooth, just-in-time operation is now a daily exercise in adaptability. Here are four strategic shifts every executive should be considering: 🔍 1. Audit Hidden Dependencies Most leaders track Tier 1 suppliers—but disruptions often originate in Tier 2 or Tier 3. Map the full supply chain to understand where risks lie beyond what’s immediately visible. 🌎 2. Go Beyond “China-Plus-One” Relocating from China to Vietnam or Mexico may ease tariff exposure, but true resilience requires a multi-regional approach. Diversify sourcing and distribution to withstand geopolitical shocks. ⚙️ 3. Align Procurement with Enterprise Strategy It’s no longer just about cost. Factor in tariffs, political stability, and fulfillment risk. Ensure procurement and strategy functions are working in tandem—not in silos. 🧠 4. Embrace Supply Chain Intelligence AI tools and digital modeling can help you simulate scenarios and plan proactively. Today’s smart supply chains aren’t static—they’re dynamic, data-driven, and decision-ready. Executives who succeed in today’s environment are the ones who build resilience into their operations and clarity into their leadership. Tariffs may be the current headline, but adaptability, foresight, and strategic alignment are the lasting differentiators. If you are looking for a partner to support you in making your supply chain and your leadership more future-ready, let's connect.

𝗖𝗠𝗢’𝘀 𝗣𝗲𝗿𝘀𝗽𝗲𝗰𝘁𝗶𝘃𝗲: 𝗖𝗮𝗻 𝗖𝗣𝗚 𝗯𝗿𝗮𝗻𝗱𝘀 𝗽𝗿𝗼𝘁𝗲𝗰𝘁 𝗺𝗮𝗿𝗴𝗶𝗻𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗻𝗲𝘄 𝘁𝗿𝗮𝗱𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝘆? (Welcome to 2nd Trump Tariffs Era) Tariffs are back, and they are hitting the bottom line harder than ever. With new trade barriers on China, Canada, and Mexico, CPG brands face a triple threat: rising costs, shrinking consumer demand, and disrupted supply chains. But here’s my question: Are we playing defense, or are we strategically pivoting? From what I can see, data tells us a clear story. Historically, high tariffs = lower trade competitiveness. Let's take a look at the U.S. Average Tariff Rates (1821-2016) and trade balance trends: ✅ When tariffs were high (pre-1940s), trade was limited, and the U.S. maintained a surplus. ✅ Post-1945, lower tariffs (via GATT & WTO) fueled economic expansion and trade growth. ❌ After the 1971 Bretton Woods collapse, trade deficits deepened as low tariffs persisted. 🚨 Today, reintroducing high tariffs could lead to cost-driven inflation, supply shocks, and loss of global competitiveness. ++ 𝗪𝗵𝗮𝘁 𝗧𝗵𝗶𝘀 𝗠𝗲𝗮𝗻𝘀 𝗳𝗼𝗿 𝗖𝗣𝗚𝘀 & 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗲 ++ - Higher Input Costs → Tariffs on raw materials (aluminum, steel, packaging) increase COGS, cutting into margins. - Consumer Price Sensitivity → Higher shelf prices = lower demand. Consumers switch to private labels, local substitutes, or DTC (Direct-to-Consumer) models. - Erosion of Market Access → Retaliatory tariffs make U.S. brands more expensive abroad, favoring European and Asian competitors. - Disrupted Global Supply Chains → Companies must rethink sourcing, warehousing, and last-mile logistics. ++ 𝗖𝗠𝗢 & 𝗖𝗙𝗢’𝘀 𝗣𝗹𝗮𝘆𝗯𝗼𝗼𝗸 𝗳𝗼𝗿 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗧𝗮𝗿𝗶𝗳𝗳𝘀 ++ 1️⃣Pass-Through Pricing? Be Selective. Don’t just raise prices. Instead, optimize pack sizes, value-tiered offerings, and bundling strategies to maintain affordability. 💡Data-driven pricing elasticity is key—test price sensitivity before making abrupt hikes. 2️⃣ De-Risk Your Supply Chain Nearshoring & Friendshoring → Reduce tariff exposure by shifting suppliers to Mexico, Vietnam, and Eastern Europe instead of China. 💡Dual-sourcing strategies ensure supply continuity amid trade wars. 3️⃣ Digital Commerce is the Safety Net DTC & eCommerce are the antidotes to tariff turmoil. 💡Selling via Amazon, Shopify, or localized fulfillment centers avoids tariff-heavy distribution routes. 💡Localized production + micro-fulfillment hubs = reduced cross-border shipping costs. 4️⃣ Work Capital & FX Strategy Matters More Than Ever Hedging currency risks & cash flow forecasting is critical when tariffs disrupt inventory costs. 𝗧𝗼 𝗮𝗰𝗰𝗲𝘀𝘀 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗼𝗹𝗹𝗼𝘄 ecommert® 𝗮𝗻𝗱 𝗷𝗼𝗶𝗻 𝟭𝟯,𝟱𝟬𝟬+ 𝗖𝗣𝗚, 𝗿𝗲𝘁𝗮𝗶𝗹, 𝗮𝗻𝗱 𝗠𝗮𝗿𝗧𝗲𝗰𝗵 𝗲𝘅𝗲𝗰𝘂𝘁𝗶𝘃𝗲𝘀 𝘄𝗵𝗼 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲𝗱 𝘁𝗼 𝗲𝗰𝗼𝗺𝗺𝗲𝗿𝘁® : 𝗖𝗣𝗚 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗚𝗿𝗼𝘄𝘁𝗵 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿. #tariffs #CPG #FMCG #CMO

Dollar Tree’s $200M tariff problem is a preview of what’s coming for all U.S. retailers and Dollar Tree responded with a masterclass in real-time supply chain strategy. Tariffs added $70 million in unexpected costs last quarter for Dollar Tree Stores. Over the full year, they expect the impact could hit $200 million. For any business, that’s a massive blow to profitability. But what stood out wasn’t the challenge, it was the response. To mitigate these pressures, Dollar Tree is activating a five-pronged strategy it has refined over the past several years. These levers include: → Negotiating with suppliers → Respec’ing, or modifying, products to lower the cost → Shifting country of origin → Dropping noneconomic items → Leveraging their expanded multi-price capabilities to pass along selective increases Dollar Tree used these levers to offset 90% of the initial 10% tariff announced in February and is actively applying the same strategy to subsequent tariff changes. The company’s approach is a good example of how agility is not optional, it’s existential for many companies. Especially in a world where policy risk, geopolitical shifts, and supply chain disruptions continue to arrive unannounced. At the heart of Dollar Tree’s strategy is its longstanding commitment to sourcing products at the lowest landed cost. While China remains an important part of its supply chain, the company is actively diversifying its sourcing footprint and is prepared to further shift origin points as tariff conditions evolve. Despite rising tariffs, global sourcing remains a foundational pillar of its business model, enabling Dollar Tree to consistently deliver value, convenience, and discovery to its customers regardless of the broader macroeconomic or policy landscape. Lesson: When the storm hits, it’s too late to build a boat. Build your playbook in calm waters.

What are Fashion Companies really doing to offset the impact of Tariffs? (Spoiler: It's much more than just moving sourcing out of China.) Tariffs remain a critical factor in fashion logistics and finance, but the strategies brands use to mitigate them continue to evolve. As we navigate the current trade risks, here’s a look at the sophisticated approaches companies are employing: - Diversifying Sourcing Strategically: The shift continues. While China represented 37% of U.S. fashion imports in 2018, current trends and projections place that closer to 26% for 2025. This involves not just moving, but building robust vendor relationships across diverse regions and fostering capabilities like cut & sew in emerging markets. - Disciplined Inventory Management: Smart planning via open-to-buy strategies is key to limiting overstock, minimizing markdowns, and protecting margin. Less inventory means fewer surprises—and less risk of deep discounting. - Tariff Engineering & Trade Program Mastery: Proactively redesigning products, adjusting materials, or changing assembly methods to qualify for lower duty rates. Simultaneously, maximizing the benefits of Free Trade Agreements (FTAs) and other preferential trade programs. - Optimizing Freight Costs: From maximizing PO efficiency to fully utilize ocean containers, to consolidating shipments at origin and securing favorable contracts, companies are focused on driving down freight costs and eliminating avoidable fees like detention and demurrage. - Rethinking Incoterms for Flexibility: Exploring various incoterms, including modified DDP (Delivered Duty Paid) variations, allows for more adaptable cost-sharing agreements between buyers and sellers. However, some incoterms come with varying degrees of risk. - Leveraging Bonded Warehouse Strategies: Using bonded warehouses allows importers to defer duty payments until goods enter the domestic market. This improves cash flow and better aligns tariff expenditures with actual consumer demand. - Implementing Strategic Surcharges / Cost Sharing: While often complex, some companies are implementing targeted tariff surcharges or negotiating specific cost-sharing mechanisms with supply chain partners to mitigate direct margin hits transparently. Similar to how we think about fuel surcharges and freight. What tariff mitigation tactics are proving most effective for your business right now? Share your insights in the comments below! #FashionIndustry #SupplyChain #GlobalTrade #Tariffs #Sourcing #Logistics #ImportExport #RetailStrategy #CostManagement #FashionBusiness #ApparelIndustry

4 Tariff Strategies That Might Save Your Company If you're importing from China, your margins might be getting destroyed overnight. But there's a strategy that many don’t know about—and it can reduce your tariff bill by 15–25%. It's called “Unbundling Non-Dutiable Costs.” Here’s how it works: Let’s say you import a product from China for $100. That invoice includes: $85 in actual product cost $15 in IP, design, or non-dutiable labor Most companies pay tariffs on the full $100, but you don’t have to. ✅ Properly documented, you can pay tariffs only on the $85. 📉 That’s a 15% reduction in your dutiable value—and you still pay the $15 separately to your supplier (same total cost, lower tariff exposure). Here are 3 other options smart brands are using right now (each with a $100 example): 🔹 First Sale Rule If you buy through a middleman but can prove the first sale (say $80) is valid, you can base the tariff on $80 instead of $100. ➡️ Tariff applied to $80 instead of $100 = 20% savings. 🔹 Computed Value Method If your supplier will open up their books, you may be able to report the real cost to produce (e.g., $70 in materials + labor + profit). ➡️ Tariff based on $70 instead of $100 = 30% savings. 🔹 Tariff Engineering Change the product slightly to reclassify it under a lower-tariff category. Say you remove a component that bumps it into a lower code. ➡️ Product still sells for $100, but now tariff is 5% instead of 25%. Share this post if you think it can help a friend 👉 If you're a brand owner dealing with rising tariffs and want help evaluating these options, send me a DM. I’ll point you in the right direction. #Tariffs #ChinaTrade #Ecommerce #SupplyChain

It is now clear that peak globalization is over and that the upcoming decade will be defined by mercantilist industrial policy on all sides. While we can argue about what tools of industry policy are appropriate for the US and how they should be applied, the bottom line is that we are officially in a new era. Leaders and supply chain execs need to quickly move past “what is happening” and “why is this happening” to “what do I need to do about this to ensure the success of my business for the next 25 years.” These are some of the best practices we are seeing:  • Wait and see is the wrong strategy. Speed to relationship with new suppliers is critical, especially in categories where there is limited domestic capacity.  • Lean in to relationships with your current US suppliers, they are getting more inbound demand and you need to stay a priority. • Dual source or align secondary sources of supply on as many components as possible. Single-source is too big of a risk, even for your US suppliers. • Weigh production ramp lead times vs. total cost of ownership with overseas purchases to prioritize the highest-impact work transfers. • Look at your team and processes to ensure you have the ability to get quotes from multiple suppliers quickly. Agility will be key as tariff rates continue to shift. Don’t miss the moment, market share will be won and lost in the next 3-6 months. Read our full perspective here: https://lnkd.in/gJHXYFcF

🌎 Tariffs are squeezing pharma. Quality leaders? You hold the line. 👇 The challenges: • Sourcing disruptions • Rising costs • Supplier instability • Pressure from every angle COVID was a shock. Tariffs are a slow grind, but just as dangerous. 📈 How pharma is fighting back: ➡️ Onshoring U.S. manufacturing ➡️ Scaling AI + supply chain visibility ➡️ Lobbying for tariff relief In the short term: • Qualify backup suppliers • Build safety stock • Stress-test your risks For the long haul: • Localize production • Upgrade digital systems • Align quality, supply & procurement 💡 The truth: Compliance checks the box. Quality protects. Here’s how to act: ✅ Prevent quality drift during supplier shifts ✅ Lead cross-functional risk assessments ✅ Push back when cost cuts threaten compliance ✅ Audit like your license depends on it, because it does For execs: one miss = $$$ in recalls + brand damage. For teams: speed matters, but never at quality’s expense. ⚠️ Patients don’t see tariffs. They see results. Every batch. Every dose. Every time. Markets shift. Tariffs rise. But quality holds the line. ♻️ If this resonates, share it with your team. 📬 Want leadership insights without the noise? Subscribe to The Beacon Brief—delivered monthly, always free. Link: https://lnkd.in/gNXeXDzH

📦💥 TARIFF WARS: What is your plan when the rules change overnight? What do you do then?   Another day, another tariff. Rare earths? Taxed. Semiconductors? Taxed. Predictability? No more.   If your company depends on a global supply chain, this isn't just noise, it's your new reality. So let's talk strategy, so there's no panic at this cautious time:   ⏰ Audit your exposure as soon as possible → If your list of SKUs is related to China and involves essential inputs (such as lithium, chips or rare metals), expect tariffs. The cost will be higher and you need to be prepared.   🌏 China + 1 is old. China + MANY is the change. → Vietnam, India, Mexico - even Mars, if it's shipped in time. Diversify your sourcing as you do your investment portfolio. You need to keep an eye on all markets to take advantage of opportunities that arise.   📝 Reorganize your contracts. → Tariff clauses are no longer optional. Flexibility is an advantage. That five-year contract with the supplier? Rethink it.   🤝 Bring production closer to the market. → Nearshore. If you sell in the US, build in the US. If you sell in Europe, move closer. Global agility is the name of the game.   💻 Commercial technology is your advantage. → There are AI tools for tariff classification and tax optimization. If you're not using them, customs will - and not in your favor.   ✏️ Redesign the product to avoid the tariff. → Change parts, alter specifications or get creative. Your engineering team loves a challenge. So does your CFO.   🖥️ Create a real-time dashboard. → “Tariff Tracker 3000” isn't just a fun name. It's your visibility tool for material costs, policy changes and delivery times.   Conclusion: The tariffs are here. You can't control the storm - but you can come down hard.   At Drummond Advisors, we support businesses navigating the intersection of tax, trade, and regulation across jurisdictions. Our multidisciplinary team helps clients: ✅ Analyze and document transfer pricing in line with OECD standards ✅ Develop global tax strategies across the U.S., Latin America, and Europe ✅ Minimize the impact of tariffs through trade planning and structuring ✅ Stay compliant - and competitive - in a changing global economy Ready to rethink your global position? Let's connect.   #SupplyChainHumor #TariffTrouble #RareEarths #ResilienceByDesign #GlobalLogistics #ManufacturingLife #SourcingStrategy #TradeWarSurvivalKit

Tariffs just changed. Is your supply chain ready? Graphs see what spreadsheets miss. Tariffs and disruptions can ripple through your logistics network, but most organizations don’t have the insights to respond fast enough Knowledge graphs and graph databases provide a better way. Here's how: 📍 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗩𝗶𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆: Track inventory movement across multiple tiers of suppliers while highlighting tariff-impacted routes. 🚦 𝗢𝗽𝘁𝗶𝗺𝗶𝘇𝗲𝗱 𝗥𝗼𝘂𝘁𝗲 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴: Graph algorithms can quickly calculate compute tariff-efficient routes and alternative paths, factoring in tariff zones and free trade agreements. 🔍 𝗧𝗮𝗿𝗶𝗳𝗳 𝗖𝗹𝗮𝘀𝘀𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗜𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲: Graphs help reveal potential classification alternatives, preferential trade agreement eligibility, and historical classification patterns that spreadsheets would miss. 🤝 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗡𝗲𝘁𝘄𝗼𝗿𝗸 𝗜𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲: Visualize deep supplier relationships to discover tariff-advantaged sourcing options that would remain hidden. ⚖️ 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗠𝗼𝗻𝗶𝘁𝗼𝗿𝗶𝗻𝗴: Track changing tariff regulations by linking product data with country-specific trade agreements. 📦 𝗔𝗱𝗮𝗽𝘁𝗶𝘃𝗲 𝗦𝘂𝗽𝗽𝗹𝘆 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴: Run numerous 'what-if' scenarios for tariff changes based on real-time, connected data sources. Connected data is driving the future of logistics and supply chain planning. And it is more necessary today than ever. This is why at data² we have built the reView platform on the foundation of graphs. We know that organizations need to be able to see the connections deep in their supply chain to ensure it is cost efficient, robust, and secure. ♻️ Know someone struggling to manage new tariff requirements? Share this post to help them out. 🔔 Follow me Daniel Bukowski for daily insights about delivering value from connected data.