Retailers Prepare New Supply Chain Strategies Ahead of Potential Tariffs

US retailers and manufacturers are preparing for President-elect Donald Trump’s second presidential administration, where the incoming president will likely fulfill one of his campaign promises: proposed universal tariffs. Tariffs are effectively a tax on imported goods paid by the importing entity to the US government. 

Here are some key elements of the proposed tariffs so far: 

While there have been additional statements and speculation around 2025 tariffs, it is uncertain what tariff levels will look like and to which countries they will be applied.

A variety of industries will be affected by the proposed tariffs. Unless otherwise cited, the following data reflects scenarios described by EMARKETER based on National Retail Federation (NRF) data or data provided by the NRF in a recent report. 

Tariffs will potentially affect other consumer categories as well. For example, grocery prices may increase. The total value of food imported into the US in 2023 neared $190 billion, and the US is reliant on produce grown abroad. Tariffs also place pressure on grocery prices by increasing the cost of imported manufacturing equipment, agricultural chemicals, and packaging materials. 

Supply chain leaders will experience a variety of short and long-term tariff effects—and must plan accordingly.  

Over the next 3-6 months, expect both international and domestic freight rates to spike as import volumes increase as companies forward stock inventories, like what occurred after the Trump administration increased tariffs on Chinese imports in its first term. Spikes in import volume may ultimately be short-lived, however. Higher tariffs discourage imports and slow shipping volumes over time. Once tariffs are implemented, importing goods to the US will increase costs.  

Many companies hope to reduce tariff exposure in the short-term by creating inventory stockpiles. If stockpiled inventory volumes increase significantly, that may subsequently increase warehousing and shipping costs. Some supply chain leaders may seek to optimize and expand warehouse footprints and carrier partnerships to support larger inventories.  

Many organizations focused on supply chain diversification over the past decade, shifting or adding sourcing and manufacturing to their portfolios to mitigate risks and improve supply chain flexibility. With looming tariff changes, supply chain leaders will continue to restructure and evolve their supply chains to optimally source materials and manufacture goods. For example, some manufacturers already shifted from China to Mexico under the Trump-negotiated USMCA trade deal. Apparel, sportswear, and footwear manufacturers currently leverage a diverse production portfolio from Vietnam to Bangladesh and beyond.  

Moving forward, supply chain leaders will seek to diversify their partner portfolio across the globe, with many relying on partnerships that already exist in East Asia and the Americas. Some companies may pursue US-based manufacturing, trading off higher costs if their products require both the intellectual capital and high automation available in the US. 

There are a variety of short and long-term supply chain strategies designed to mitigate tariff risks. They include forward stocking inventories, raising prices for consumers or accepting lower margins, and diversifying product sourcing and manufacturing.  

In the short-term, many US businesses are returning to strategies leveraged during Trump’s first term. Brands like Stanley Black & Decker plan to forward stock inventories with imported goods before tariffs are enacted. Chinese exports surged in October, rising nearly 13% year-over-year, and this surge may have been driven partially by frontloading activities ahead of the US election. Organizations will likely expand inventories further in December. 

Forward stocking inventories can create bandwidth for retailers to plan long-term tariff strategies. Organizations can import key products and materials early to avoid cost increases, then explore additional methods to curb tariff impacts, like price changes and sourcing diversification.  

Increasing inventories ahead of Q1 2025 has its risks: 

Some examples of brands forward stocking inventories include: 

Many retailers will be forced to assess their pricing strategies to absorb increased tariff costs. Many will choose to pass costs on to the end consumer or deal with lower margins. 

Some examples of brands already considering price changes:  

Many logistics leaders will continue to diversify their supply chains to minimize tariff impacts. Per a Bain survey, 81% of companies plan to bring supply chains closer to home markets over the next three years. The process will be challenging, however. Only 2% of respondents have completed onshoring or nearshoring plans. Twenty-three percent are evaluating options and 36% are currently in the planning stage.  

Previous tariffs caused many retailers to begin diversifying sourcing away from China. For example, many sportwear and footwear brands shifted to Vietnam due to 2018 tariffs. While tariffs can spur domestic manufacturing, companies may find relocating manufacturing to the US difficult, given the high cost of wages and shortage of skilled workers relative to other countries. 

Some examples of brands that plan to diversify sourcing and manufacturing due to tariffs: 

The supply chain landscape will shift under new US tariffs, and trusted logistics partners can help retailers navigate as they implement updated strategies in 2025 and beyond. In addition to determining short and long-term tariff strategies, supply chain leaders can connect with new or existing logistics partners to assess freight brokerage, transportation, and warehousing/storage needs. These partners leverage their expertise and core competencies to expand logistics options and build further flexibility for retailers amid tariff changes.  

Retailers don’t have to navigate tariff changes alone. Supply chain leaders can work with a trusted 3PL partner like Radial to manage uncertainty, mitigate risks, and create the bandwidth necessary to build long-term tariff strategies.  

Radial offers an on-demand solution designed to give retailers the warehouse capacity needed to forward stock surplus inventories ahead of tariff changes. Retailers leverage Radial’s strategically located facilities across the US to access inventory quickly. Our solution includes on-demand storage options, fast onboarding, critical inventory visibility, and flexible pricing. All with a logistics partner leveraging 30+ years of experience and a leadership team dedicated to helping clients navigate new logistics challenges.  

For current Radial clients, we can work with your supply chain leaders to securely store additional inventories in current facilities. That means seamless access through the trusted partnership we already share. 

While forward stocking key inventory is a short-term strategy leading into 2025, it can benefit retailers by providing a buffer at current costs to manage margins. Retailers buy time to determine ideal long-term strategies.  

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