Minimizing the Tariff Impact on Supply Chain Performance
June 27 2025 | By Jabil Procurement & Supply Chain Team
Understanding the Hidden Costs, Risks, and Opportunities in a Shifting Trade Environment
Tariffs have always been part of the global trade landscape. But recently, they’ve evolved from background policy to front-page disruptor. For procurement and supply chain leaders, the real issue isn’t the headlines. It’s the uncertainty, the ripple effects, and the pressure to adapt quickly without sacrificing efficiency.
What makes tariffs so challenging today is how deeply they intersect with the complexity of modern supply chains. As production networks span continents, even small adjustments to tariff structures can trigger significant downstream effects. A single component might cross multiple borders before reaching its final destination, and each stop introduces new variables in cost, compliance, and timing.
This interconnectedness means tariff strategies can no longer be reactive or isolated. They must be built into the very architecture of procurement and supply chain planning.
The Strategic Weight of Tariffs
Tariffs aren’t just financial line items, they’re operational disruptors. A single policy shift can upend sourcing strategies, destabilize supplier relationships, and force costly recalculations across global landed cost models.
The real complexity lies not just in volatility, but in navigating layers of classification, jurisdiction, and documentation. With supply chains more isolated and geographically dispersed than ever, even small missteps in the harmonized tariff schedule (HTS), value-added thresholds, or country-of-origin documentation can flip a product from duty-exempt to high-penalty. And when components cross borders multiple times, the margin for error narrows even further.
Recent geopolitical events underscore this risk, prompting 63% of procurement leaders to diversify their supplier bases, and leading 57% to increase nearshoring and reshoring efforts as proactive responses to potential tariff impacts. This strategic shift highlights how deeply tariffs influence supply chain decisions, compelling businesses to rethink sourcing structures for greater resilience and agility.
Here some of the key tariff types supply chain professionals should consider:
- Ad Valorem Tariffs: Duties based on a percentage of declared value, sensitive to valuation disputes and requiring airtight documentation.
- Specific Tariffs: Fixed charges applied per unit, volume, or weight, disproportionately impacting low-margin, high-volume goods.
- Compound Tariffs: A hybrid of ad valorem and specific tariffs, introducing complexity in forecasting and compliance.
- Retaliatory Tariffs: Reactive measures targeting politically or economically strategic imports, often with little warning and high volatility.
- Tariff Rate Quotas (TRQs): Lower tariffs on imports within a set volume, followed by steep increases once quotas are exceeded, challenging for seasonal and high-demand products.
- De Minimis Thresholds: Value-based exemptions for low-cost imports that, when lowered or removed, can significantly disrupt small-parcel and e-commerce strategies.
Organizations must now treat trade policy as a dynamic force that requires legal fluency, financial modeling, and operational agility to manage effectively. Jabil’s Market Intelligence services help teams model these dynamics in advance, aligning sourcing strategy with real-time policy changes before they impact performance.
Decoding the Tariff Impact on Supply Chain Networks
Tariffs may be assessed at the point of entry, but their operational footprint extends across the entire value chain. From supplier negotiations to inventory strategy, their influence demands enterprise-wide recalibration. Here’s how:
Margin Compression Through Elevated Landed Costs
Tariffs often nullify negotiated savings by inflating landed costs at the point of import. This puts businesses in a difficult position. They can absorb the costs and erode their margins or pass them on to customers and risk losing market share. In many cases, there’s little lead time to prepare or adjust financial forecasts.
Erosion of Forecasting Accuracy
Unpredictable tariff regimes undermine the integrity of demand planning and sales forecasts. Shifts in policy introduce volatility into lead times, sourcing strategies, and replenishment models, complicating everything from safety stock levels to S&OP alignment.
For example, a recent spike in trade policy uncertainty in late 2024 directly corresponded with a sharp increase in overall U.S. imports, indicating importers accelerated purchases as a proactive measure against anticipated tariff hikes and potential supply disruptions.
Supplier Instability and Network Redesign
Tariffs can instantly alter a supplier’s competitiveness or viability, particularly in labor-intensive sectors like textiles, electronics, and agriculture. This leads to rushed supplier exits, renegotiations, or shifts to unvetted alternatives, all of which carry quality, compliance, and timeline risks.
Escalating Customs Complexity
Every change in tariff policy requires scrutiny of product classification (HTS codes), valuation practices, and rules of origin. Misalignment can trigger costly delays, secondary inspections, or penalties, particularly for goods crossing multiple borders during assembly.
Retaliatory Tariffs and Market Access Risk
When tariff measures escalate into trade disputes, exporters often bear the brunt. Retaliatory tariffs can erode access to key international markets, disrupt long-standing customer relationships, and leave companies exposed to politically charged trade restrictions.
When Tariffs Strike: Common Risks Companies Face
Tariffs have the power to reshape global supply chains. Below are common scenarios companies face and and opportunities to evaluate.
Scenario 1: Sudden Import Tariffs on Raw Materials
Risk: A new import duty on critical inputs, like steel, semiconductors, or textiles, can quickly erode margins and destabilize production budgets. This is especially disruptive in sectors with thin margins or complex multi-tiered sourcing structures.
Sectors to Watch: Automotive, Electronics, Aerospace, Industrial Manufacturing
Common Market Responses:
- Identify alternate sourcing from low-tariff or FTA-aligned regions to reduce exposure.
- Reclassify goods where legally appropriate to align with HTS codes that carry lower duty rates.
- Recalculate landed costs and adjust pricing strategies to maintain profitability.
Scenario 2: Retaliatory Tariffs on Exported Goods
Risk: When one country imposes tariffs, others often respond in kind by targeting politically or economically significant exports. These retaliatory duties can shrink market access, disrupt trade routes, and result in canceled contracts or financial penalties. Without proactive mitigation, businesses risk losing footholds in key markets.
Sectors to Watch: Agriculture, Consumer Goods, Industrial Equipment, Medical Devices
Common Market Responses:
- Reroute or duplicate replicate production closer to target markets to potentially minimize cross-border tariff exposure.
- Diversify customer portfolios to potentially reduce dependence on any single export market.
- Invest in compliance documentation and labeling to ensure uninterrupted customs clearance and mitigate regulatory scrutiny.
Scenario 3: End of De Minimis Exemptions
Risk: Small-parcel, cross-border e-commerce strategies are particularly vulnerable when duty-free thresholds are eliminated. This drives up per-unit costs and threatens shipping timelines.
Sectors to Watch: Consumer Electronics, Apparel, Direct-to-Consumer (DTC) Brands, Health & Beauty
Common Market Responses:
- Consolidate low-value shipments into bulk imports to potentially reduce administrative burdens and spread out tariff costs.
- Digitize customs documentation to streamline clearance and potentially reduce delays.
- Collaborate with 3PL partners on landed cost modeling and duty optimization strategies.
At Jabil, our Supply Chain Consulting services help companies navigate these exact challenges, from real-time reclassification to landed cost simulation, so your operations stay agile, your compliance stays airtight, and your customers stay happy.
Lower Supply Chain Cost Considerations Associated with Tariffs
When tariff exposure can’t be eliminated, the most resilient companies turn inward, optimizing operations, tightening controls, and reengineering cost structures. A recent study from Procurement Magazine revealed that 68% of procurement leaders rank cost reduction and efficiency as top strategic priorities for their procurement functions over the next 12 to 18 months, underscoring the urgency to proactively tackle tariff-related expenses.
Here are proven strategies to reduce total landed cost without compromising continuity:
- Apply Tariff Engineering: Modify sourcing routes, component origin, or assembly locations to legally minimize duty obligations. Small shifts in supply chain routing can deliver significant savings.
- Redesign SKUs Strategically: Adapt product specifications or manufacturing steps to alter country-of-origin determinations and take advantage of preferential trade agreements.
- Revisit Contract Terms: Negotiate shared tariff responsibilities with suppliers or explore duty drawback programs to recover overpaid customs duties.
- Use Advanced Procurement Tools: Deploy technology platforms that simulate tariff scenarios, track HTS changes, and alert teams to cost fluctuations in real time.
- Automate Compliance and Customs Processes: Streamline documentation, valuation, and classification workflows to reduce manual errors, avoid penalties, and accelerate clearance.
Our Procurement Managed Services combine advanced analytics and on-the-ground expertise to help reduce costs across sourcing, vendor contracts, and regulatory navigation.
Ready to Build a More Resilient Supply Chain?
Few factors influence modern supply chains as profoundly, or as unpredictably, as tariffs. Businesses that treat them as strategic signals rather than operational setbacks are the ones that will emerge stronger, more agile, and better positioned for global growth.
At Jabil, we partner with global supply chain leaders to turn complexity into competitive advantage. Whether you're evaluating sourcing shifts, navigating regulatory turbulence, or modeling cost impacts in real time, our Procurement and Supply Chain Services team brings the experience, tools, and insights to help you lead with confidence.
Let’s explore what’s possible. Contact us today to future-proof your supply chain.
Disclaimer: The content published on this blog is intended for general informational purposes only and does not constitute professional advice. While we strive to ensure the accuracy and relevance of the information shared, we make no representations or guarantees. Any actions taken based on this content are at your own risk, and Jabil is not liable for any losses or damages resulting from its use.