Understanding Tariffs
Tariffs are essentially taxes imposed on imported goods. While they aim to protect domestic industries, they can also raise costs for businesses that depend on international suppliers or customers. These costs can cascade through the value chain, impacting margins, pricing strategies, and customer relationships. Tariffs are associated with products based on a Harmonized Tariff Schedule (HTS) code. Each code is linked to a certain percentage of the cost to be paid as a tariff on the imported product.
Navigating Tariffs and Building Supply Chain Resiliency Effectively
To protect profitability and ensure continuity, businesses must integrate tariff planning into their broader supply chain strategy. Here are some ways Tenet Consulting can help:
- Identify and Implement New Suppliers
Tenet Consulting has extensive experience locating and implementing new suppliers globally. Our 7-step sourcing process provides clients with a comprehensive view of the global landscape for a given product, including tariff impact. Our experienced team collaborates with clients to understand company strategy, risk appetite, and other factors to establish a strong supply chain. - Diversify Sourcing Locations
Single-supplier or single-country sourcing, particularly from high-risk regions, may no longer be a viable approach. Tenet has helped clients achieve a broad range of supply chain goals, including:- Offshoring: Establishing an out-of-country supply chain to gain access to new suppliers, typically at a more competitive price point.
- Nearshoring: Building a supply base closer to end destinations to reduce transportation risks and costs while improving continuity of supply.
- Friendshoring: Establishing a supply chain in economically “friendly” countries by leveraging free trade agreements or special economic zones to capture tariff reductions, tax incentives, or duty-free benefits.
- Dual/Multi-Sourcing: Implementing bespoke strategies such as “China +1,” where secondary sources are established to insulate the company from volatile trade policies while still benefiting from lower-cost products.
- Analysis of Tariff Exposure – Substantial Transformation
Tenet can help identify and implement suppliers with business models that allow production in cost-advantaged locations while performing substantial transformation in lower-tariff countries, thus benefiting their end customers. We can also conduct make vs. buy analyses to help clients determine if some form of substantial transformation can be achieved within their own facilities, thus avoiding tariff costs. - Negotiating for Supply Chain Resiliency
Tenet has experience negotiating on behalf of clients to enhance their supply chain resiliency. Gaining visibility into tier 2 suppliers can facilitate advanced planning in the event of shortages (e.g., semiconductors).
Conclusion: A Competitive Advantage in Uncertainty
Global supply chains are under unprecedented pressure, but with strategic foresight and investment, businesses can turn volatility into a competitive advantage. By proactively managing tariffs and designing supply chains for resilience, companies can ensure operational continuity, protect profitability, and build trust with customers and investors.
Contact Tenet Consulting today to discover how we can help you navigate tariffs and establish a resilient supply chain tailored to your organization’s needs. Together, we can transform challenges into opportunities for sustainable growth.
