Tariffs Are Back — And So Is Supply Chain Uncertainty
Cost vs. Uncertainty: The Unseen Supply Chain Risks
President Trump's return to office has reignited trade tensions, triggering sweeping tariff increases — ranging from 10% to as much as 50% on imports, particularly from China[1]. These tariffs are more than just cost burdens; they introduce significant uncertainty, creating turbulent conditions for global supply chains.
Most of the public debate on tariffs focuses on the direct cost increases — and indeed those are significant. A 25% duty can easily shave a few percentage points off profit margins unless passed to consumers. These spikes are forcing companies into tough choices: raise prices, swallow the costs, or radically restructure sourcing[2]. Each of these choices carries implications not just for cost, but for long-term supply chain resilience.
But seasoned supply chain professionals know that cost isn’t the only — or even the biggest — concern. Increased lead times can inflict even greater damage. Extended, unpredictable delivery windows not only raise operating costs but disrupt end-to-end supply chain performance, driving inventory imbalances and lost revenue — a double blow[3].
When deliveries that once took eight weeks begin taking twelve — with no certainty of arrival — companies are forced to carry more buffer stock at every stage to meet demand. Inventory piles up not only for the delayed parts but across the entire bill of materials and throughout multiple echelons of the supply chain.
The resulting chaos — delayed production, unfulfilled customer orders, erratic upstream supplier demands — intensifies the notorious bullwhip effect.
How Tariffs Are Shaking Up Key Industries
The impact of tariffs is rippling across a broad spectrum of industry sectors but in subtly different ways. Below, we briefly explore how this dynamic is unfolding in three key sectors: consumer goods, pharmaceuticals, and chemicals.
Consumer goods and retailers, already operating on thin margins, are facing abrupt shifts in sourcing strategies. Major retailers historically dependent on Chinese imports are urgently reshoring and diversifying suppliers. In 2024 alone, around 10% of U.S. and EU sourcing relocated closer home to mitigate tariff impacts. These sudden pivots have triggered erratic inventory patterns — massive stockpiles followed by abrupt lulls, congested warehouses, and increased logistics complexity. Consumer goods manufacturers are now frequently grappling with doubled lead times as they source from new, untested suppliers across unfamiliar geographies, creating logistical bottlenecks and forecasting challenges.
Pharmaceutical companies, despite initial tariff exemptions, are facing severe uncertainty due to heavy reliance on imported Active Pharmaceutical Ingredients (APIs). Even the suggestion of tariffs on these critical inputs has triggered widespread stockpiling of top generics, straining storage capacity[4]. Merck, for example, forecasts a $200 million tariff-related cost, while Johnson & Johnson anticipates a $400 million impact in 2025[5]. Pharma companies are also contending with rapidly shifting demand patterns, complicated by regulatory hurdles in shifting supply bases. Thus, even absent immediate tariffs, the looming threat alone is disrupting drug supply chains.
Chemical manufacturers, foundational to countless industries, are experiencing complex disruptions due to tariffs. Imported chemicals now carry significant additional costs, and niche materials unavailable domestically pose unavoidable financial burdens. These companies face volatile demand as downstream industries alternately panic-buy or abruptly cancel orders. This demand instability, combined with extended lead times due to reshored or rerouted sourcing further complicates production planning, intensifying supply chain instability.
Across industries, global transportation is in flux. Container bookings from China to the U.S. plummeted over 60% within three weeks of the April tariff hike, according to freight forwarder Flexport[6]. West Coast ports are bracing for a sharp drop in incoming containers through May and June as the slowdown continues. But while volumes from China are collapsing, demand is surging elsewhere. Hapag-Lloyd reported a “massive increase” in cargo from Thailand, Vietnam, and Cambodia as shippers scramble to reroute supply chains. This kind of whiplash — one lane empty, the other overflowing — makes business planning extremely difficult and highlights the urgent need for greater supply chain resilience.
Navigating the New Normal: Why AI and Agility Are Essential
Facing this storm of volatility, one thing is clear: traditional supply chain planning is outmatched. The old playbook — monthly S&OP cycles, deterministic plans, and manual spreadsheet analysis — was already straining under the pressure of the pandemic. In today’s “wild west” of renewed trade wars, it simply won’t cut it. As Mike Tyson famously stated, "Everyone has a plan until they get punched in the face.”
With lead times and demand swinging 50% or more within a matter of weeks, that punch in the face can quickly turn into a knockout. Companies need agility and speed at a level beyond human capacity. This is where AI-powered decision intelligence becomes not just useful, but indispensable.
What makes decision intelligence uniquely suited to navigate this volatility?
- Tailored responses at scale. One size does not fit all — especially when exceptions are the norm. Decision intelligence empowers each product category, region, and customer tier to respond in ways tailored to their unique circumstances, enabling precise, segment-specific decisions at scale.
- Unconventional problem-solving. Thinking outside the box is essential when standard playbooks fall short. Decision intelligence evaluates creative and non-traditional solutions — like inventory rebalancing, demand shaping, alternative transport modes, and product substitutions — that conventional planning often overlooks.
- Strategic focus through automation. By automating routine decisions and exception handling, decision intelligence allows planners to focus on higher-value, strategic initiatives. This shift moves teams from reactive firefighting to proactive orchestration.
- Enterprise-wide visibility. High-quality decisions require connecting the dots across the enterprise. Decision intelligence integrates data from ERP, APS, WMS, TMS, third-party sources, and even unstructured formats like emails and PDFs — creating a unified view that powers informed, cross-functional action.
- Actionable intelligence. It’s not enough to ask “What happened?” Decision intelligence also answers the “So what?” and the “Now what?”, helping organizations separate the signal from the noise and act — or consciously choose not to — with confidence.
- Fast time-to-value. Decision intelligence enables organizations to build and deploy decision models in weeks, not months. That speed allows teams to hit the ground running in agile delivery modes, continuously refining as the environment evolves.
- Fit-for-purpose intelligence. The right tool for the right job matters. Decision intelligence brings flexibility — whether it's machine learning, optimization, simulation, agentic AI, or heuristics — ensuring each challenge is met with the most effective technique, not a one-size-fits-all solution.
The proof of the pudding, as they say, is in the eating:
- A global consumer packaged goods company increased service levels by 3% by generating an ML-driven, daily retailer-level forecast that integrates point-of-sale (POS) data, promotions, and syndicated sources.
- A large life sciences company reduced backorders by 28% by using automated Capable-To-Promise (CTP) recommendations to replace its previous manual and inefficient ATP process.
- A top tier technology hardware company shifted from reactive pricing changes to proactive demand shaping that reduced excess inventory risks while aligning with market-facing strategies.
- A global spirits manufacturer reduced forecast error by 50% leading to $68M in inventory reductions. Advanced ML models selected the most accurate forecasts per SKU, while scenario planning and sensitivity analysis were applied to key forecast drivers. Actual consumption data from distributors further refined the forecast.
- A leading beverage manufacturer optimized global container utilization using mathematical optimization models that balanced service levels and delivery constraints. The solution automated container utilization planning by evaluating alternatives — substituting products, adding fillers, adjusting delivery dates, and more.
This is but a short list of how leading companies are using decision intelligence across their supply chains. And it doesn’t stop there. These organizations now understand the broader power of data-driven decision making, applying decision intelligence across business functions to build end-to-end resilience — from manufacturing to claims management to contract compliance and beyond.
The Path Forward
Don’t bring a knife to a gunfight. Spreadsheets and gut-feel heuristics, no matter how seasoned the planners behind them, are the knife — and today’s tariff-driven volatility is the Wild West. Traditional supply chain strategies, built for stable forecasts and predictable lead times, can’t survive in this environment.
Surviving — and thriving — demands a shift to dynamic, data-driven decision-making powered by AI-driven decision intelligence. Real-time responsiveness, proactive collaboration, and outside-in planning are no longer luxuries. They are the building blocks of agility — and the foundation of true supply chain resilience in an era defined by uncertainty.
1"Global tariffs impacting supply chains”, Maersk News Advisories, May 15, 2025
2“Gartner Survey Shows Supply Chain Leaders Plan to Pass Costs to Customers as Top Tariff Mitigation Strategy”, Gartner, April 30, 2025
3“The Economy Can Handle Steel and Aluminum Tariffs. The Real Risk Is Erratic Policy,” The New York Times, May 31, 2018
4“Pharmacists stockpile most common drugs on chance of targeted Trump tariffs,” NPR, 2025
5“Drugmakers brace for Trump tariffs, while weighing numerous other worries,” Reuters, 2025
6“Industry Leaders Warn of Supply Chain Crisis as Trump Tariffs Hit US-China Trade,” GCaptain, April 23, 2025
