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According to a survey of supply chain executives by Gartner, renegotiating supplier contracts (cited by 47%) was the primary supply chain initiative being used to mitigate tariffs.
That was followed by:
- Exploring collaboration opportunities with suppliers, 43%
- Addressing country of origin, valuation, and other trade management tactics, 40%
- Adjusting supply locations outside the U.S., 39%
- Adjusting production locations outside of the U.S., 26%
- Pulling inventory forward, 23%
However, the survey of 126 supply chain leaders from March 17 through April 7 found that passing costs to customers was the most common primary strategy for mitigating new tariff costs, cited by 45%, slightly exceeding exploring supply chain initiatives at 43%. Ranking significantly lower as a first option to reducing the impact of tariffs was absorbing the costs, cited by 7%; passing the costs to suppliers, 5%; and reducing headcount, 1%.
In a statement, Vicky Forman, senior director analyst in Gartner's Supply Chain practice, urged firms to fully explore supply chain efficiencies given the potential customer backlash coming from higher prices. She said, “While supply chain leaders have multiple initiatives underway to potentially lessen the impacts, many of these actions have yet to be completed.”
In a blog entry, Moody’s list of tariff-mitigation tactics included proactive supplier monitoring in addition to renegotiating contracts and pursuing collaborative planning. Moody’s stated, “With tariffs creating uncertainty, it is essential to know your supplier risk baseline, including financial health, operational risks and regulatory compliance of key suppliers.”
Other advice from Moody’s included conducting scenario analyses to best adjust to worst-case scenarios as well as establishing contingency plans, such as alternate supply routes or production adjustments, to optimally react to unexpected shifts in trade policies.
Moody’s likewise cited the benefits of supplier diversification, although it believes such moves might be limited not only by costs and risks of developing new partners but also by some regions becoming less viable amid the trade war. Moody’s stated, “For instance, once an attractive nearshoring destination, Mexico’s appeal is likely fading amid the threat of U.S. tariffs.”
Deloitte’s suggestions included front-loading imports before the tariffs are imposed, renegotiating supplier contracts, and pursuing duty-reduction strategies that may include applying for exemptions and exclusions, implementing available customs valuation planning strategies, and evaluating transfer pricing.
Deloitte said that although it will take time, reshoring might make sense, particularly for “higher-value, complex products” that support elevated pay levels. For labor-intensive or lower-value goods, Deloitte suggests sourcing from countries that “offer labor cost advantages — and minimize the long-term risk of supplemental tariffs, trade tensions, and geopolitical friction.”