Supply Chain Diversification‍

Companies are shifting production to countries less affected by tariffs. For instance, Nike has historically relied heavily on Vietnam for manufacturing, with 50% of its footwear and 28% of its apparel produced there. However, recent tariffs have prompted the company to consider diversifying its supply chain to mitigate risks. Source

Tariff Engineering and Free Trade Zones‍

Businesses are exploring tariff engineering by modifying product designs or sourcing materials differently to qualify for lower tariffs. Additionally, utilizing Free Trade Zones allows companies to defer or reduce tariff payments by storing or assembling products in designated areas. Source

Passing Costs to Consumers‍

Some companies are adjusting pricing strategies to offset increased costs due to tariffs. The Consumer Technology Association has warned that tariffs effectively act as a tax on American consumers, leading to higher prices for goods. Source

Reshoring and Automation‍

To reduce dependency on foreign manufacturing, some businesses are bringing production back to the U.S. However, higher domestic labor costs are leading companies to invest in automation to maintain efficiency. Despite these efforts, tariffs have created supply chain uncertainties, affecting investments in robotics and automation. Source

Strategic Stockpiling‍

Businesses are increasing inventory levels of key products or materials before tariffs take effect to delay the impact. This approach provides a buffer period to adjust operations and pricing strategies accordingly.

Leveraging Trade Agreements‍

Companies are exploring existing Free Trade Agreements (FTAs) to source goods tariff-free. By building relationships with regions that offer favorable trading conditions, businesses can reduce reliance on tariff-impacted markets.

By combining these strategies, businesses aim to navigate the complexities of tariffs and maintain their market positions. Continuous assessment and adaptation are crucial as trade policies evolve.