©Alexey_Lesik via Canva.com
May 20, 2025
What Tactics Beyond Price Hikes Can Mitigate Tariffs?
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.”
Discussion Questions
What’s your tariff-mitigation playbook?
Beyond raising prices, what creative or underutilized tactics should retailers and vendors explore to reduce the burden of tariffs on consumers?
Poll
Loading …BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
Scott Benedict
Founder & CEO, Benedict Enterprises LLC
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Recent Discussions
More Discussions
Has Maverik Made a Mistake on its Kum & Go Rebrand?
Maverik has completed its rebranding of Kum & Go, folding the stores into its own banner…Is Guilt Messaging the Path To Influencing Consumer Behavior?
A university study has found that telling consumers their returned items will be “kept out of…How Great of an Advantage Do Low-Price Leaders Like Walmart and Aldi Have?
Low-price leaders like Aldi and Walmart, among others, are vying for an increasingly savvy consumer. How…
There are many levers retailers can pull. They can lean more heavily on suppliers; shift production to lower tariff locations; find greater general efficiencies and cost savings within the business; eat some of the tariffs themselves; and so on. However, none of these things changes the fact that costs for retailers will rise and there is only so much that can be done without pushing prices higher. Walmart ran the math and determined that price increases had to be used to balance the equation. If Walmart is in that position, many others will need to follow suit.
Agree Neil. When costs rise, retail prices will need to rise. Perhaps gradually. Perhaps selectively. Perhaps even strategically. Raise prices in some categories but hold the ground on more highly competitive and compared categories until competitors make the first move. A retailer like Walmart with a lot of items in a lot of categories can take this strategic approach more easily than a category specialty retailer.
The most underutilized tactic, in my view, is the diversification of sourcing strategy. In other words, looking for markets from which you can source finished goods or product components, that are not subject to the tariffs currently pointed at Chinese goods. Obtaining goods from multiple markets and diverse factories can ease the impact on supply chains.
It would also be great if Congress regained its oversight and control over tariff and trade policy.
Certainly agree re Congressional oversight. As to the sourcing dilemma, it’s not so simple in categories like toys without an alternative country of origin.
I mean, the Constitution makes it very clear the power to levy tariffs and duties vests in Congress. The President can only do it based on delegated authority like national security grounds under the International Emergency Economic Powers Act. In theory, Congress could revoke these delegations. I also think there are some court cases being brought under things like the Nondelegation Doctrine. But the Founders clearly did not intend for the President to set tariffs in this way.
This seems like the old joke about economists stranded on a desert island: “assume we has a boat”…only in this case it’s “assume we had a
boatresponsible Congress”Neil is right; retailers have many options. They’ll be exploring all of them. Meanwhile, the immediate response must be to protect margin and keep the company afloat through higher prices.
Yes, including not losing customers due to higher prices and poor communication. I think Walmart’s strategy, including recent communication, is on point.
Why is “pulling inventory forward” (even) still being discussed when it’s been pointed out it’s basically useless? (unless tariffs prove to be only a momentary distraction…go wish!)
The problem with all of these, is that all of them depend upon some degree of certainty to work…which of course is the one thing utterly lacking.
In order to diversify the supply chain, materials are sourced from countries with lower tariffs or no tariffs at all. Besides tariff engineering, companies can redesign products to qualify for lower tariff classifications.
U.S. import duties can be deferred or reduced by establishing foreign trade zones.
In order to reduce reliance on international sources and mitigate tariffs, retailers and vendors can form strategic alliances with local suppliers. Collaboration with domestic suppliers can make companies’ supply chains more resilient to fluctuations in international trade.
In addition, these partnerships can result in cost savings and faster turnaround times, which ultimately benefits consumers.
All of the stated options are available to most retailers to consider, some options are less realistic than others for certain retailers, and this is very dependent on product categories. Despite the options, if we see Walmart communicating that price increases are inevitable, then we can expect most retailers to follow their lead, Walmart being best positioned to leverage most of the other options. Clearly they’ve calculated that no matter how well they execute the other options, that simply isn’t enough in some cases. The biggest challenge for retailers in any of these scenarios is time. Most of them require more time and are longer term options rather than short term solutions, apart from pulling inventory forward, and let’s face it, that ship has already sailed – quite literally.
“Time waits for no one…”
Moving production on-shore takes years, commits capital and confines future strategic decisions. Shifting to alternative export suppliers might be a little quicker. Walmart can usually out-muscle its competitors when it comes to sourcing, but its cost of doing business will still increase. Prices must follow.
How can anyone plan something when no one knows what the situation will be tomorrow?
To counter the effects of tariffs, retailers can launch new revenue streams, uncover efficiencies and adjust their assortment strategy.
Retailers can add revenue drivers like membership subscriptions, business e-commerce and retail media networks.
Efficiencies come from exiting underperforming markets, automating retail processes and rationalizing SKUs.
Agile, in-demand assortments include value-tier products, private labels and local brands.
Yes, but aren’t retailers supposed to be expert in the sourcing, movement and distribution of tangible goods?
How about zeroing out political contributions to the political party that caused this train wreck, as well as membership dues to the trade organizations who helped get them into office? Not only was it an utter waste of funds vis a vis the cost disaster and demand bust about to befall the industry, but it also signals to the Republicans they’d better get real serious, real quick, or else get thrown out en masse.
Prices are going to have to rise, that’s a given. As noted in the article, most of the suggested alternatives are not short-term viable. All of this suggests that non-price mechanisms, namely enhanced customer service, may mitigate some of the expected sticker shock.
This is a clear business cost. Tariffs are the cost of doing business for a retailer. If they can find a lower cost alternative domestically, then they should use it. However, basic economics has show us for hundreds of years, that the cost of a product is determined by the costs going into fabricating/importing that product, including any taxes, tariffs, fees, etc. The strength of global trade has been proven for hundreds of years, that if you can produce wine cheaper in Italy, and wheat can be grown cheaper in the USA, then Italy should sell their wine to the USA, and the USA should sell their wheat to Italy. The economic advantage is obvious. Implementing tariffs (which are a tax on imports) simply shifts the burden to the consuming country, and they must build these costs into their business model per John Locke. Clear and simple.