Exiger Taps Kit Conklin for SVP, Risk and Compliance

Weathering the Tariff Storm: Strategies for Supply Chain Resilience

January 29, 2025

Article

Introduction

A flurry of new tariffs threatens to disrupt global supply chains, increase costs, and create uncertainty for businesses worldwide. With proposed tariffs as high as 25% on U.S. imports from Canada and Mexico, possibly 60% on goods from China, and 10–20% on goods from other nations, companies must act swiftly to understand their exposure and mitigate risks.

This article explores possible supply chain impacts, strategies to adopt, and how Exiger’s technology solutions can help your organization navigate this challenging landscape.

Expect Far-Reaching Impacts

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Of U.S. supply chains are exposed to Canada, China, and Mexico.

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Estimated inflation rise with 10% on all U.S. imports.

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Supply chains tracked by Exiger AI.

Tariffs are not just a political tool — they have direct and immediate consequences for businesses. According to recent data, approximately 40% of U.S. supply chains are exposed to Canada, Mexico, and China, putting many companies in a precarious position. These tariffs could lead to increased costs of goods sold, pushing businesses to decide whether to absorb the expense or pass it on to consumers, potentially driving inflation. The proposed 10% tariff on all imports, for example, could raise inflation by 0.8%.

The magnitude of exposure for many industries is evident in this chart:

Taking cars and trucks imported into the U.S. from Mexico as an example, Exiger’s Supply Chain Explorer identified over 1,400 companies that will be affected — including several major auto manufacturers. In the past 12 months alone, per Exiger data, the U.S. imported ~$13.7 billion in vehicles and related products from Mexico, primarily passenger vehicles. A 25% tariff on Mexican products could result in cost increases of ~$3.4 billion for importers of these goods.

Moreover, the complexity of trade policies, often influenced by broader political agendas, compounds the challenge. Brandon Daniels, CEO of Exiger, believes that tariffs could allow companies to adjust their dependencies and build supply chain resilience — if the tariff strategy is surgical.

“Blanket tariffs on raw materials or components could backfire, raising costs for U.S. manufacturers and slowing progress in critical sectors,” he says. “Targeting finished goods or strategically vulnerable areas, on the other hand, could actually drive more local production while maintaining supply chain integrity.”

Supply Chain Visibility Is Key

Operating without a clear understanding of your supply chain risks will bring unexpected financial impacts, making it essential to stay informed and prepared.

“Visibility is key,” says Daniels. “If you’re not mapping your supply chain down to tier three, four, or five, you’re flying blind. You need to know where your supply chain may feel a tariff crunch.”

Experts expect the Trump administration will push forward with new tariffs, but there is a high degree of uncertainty on the scope and magnitude of what will ultimately be enacted. This leaves supply chain executives in a difficult position as they try to prepare for what is to come. Many companies are proactively seeking alternate sources of supply within the US or in countries less exposed to the proposed tariffs.

“If you’re looking to reshore supply chains, you need to be armed with data,” says Derek Lemke, SVP of Product Level Intelligence at Exiger. “You need to know exactly across your multi-tiered supply chain the dependencies that exist for raw materials and critical components and how much volume your supply chain is consuming. These common inputs are the best target to turn risk into reward and to ensure that you have established a closed-loop supply chain.”

Exiger’s SVP of Manufacturing and Energy, Jason Clark, highlights the need for companies to be proactive in developing strategies for a range of potential outcomes. “Agility matters. The reality is there will be limited options for companies to restructure their value chains so moving quickly once policies are enacted is critical. Companies that proactively diagnose which categories of goods are most exposed and identify qualified alternative suppliers will have an edge over those that sit back and wait for the dust to settle.”

Strategies for Managing Tariff Risks

To prepare for a trade landscape with new and changing tariffs, here are five strategies that will help you adapt and maintain supply chain resilience.

Understand Tariff Exposure
Start by identifying both direct and indirect tariff exposure. While many supply chain leaders know the costs associated with their own imports, few have insight beyond their Tier 1 suppliers’ exposure, which can cascade into their operations. Comprehensive supply chain mapping is critical to having a holistic assessment of tariff exposure to better inform strategic decision making. Exiger can build and tailor an automated tariff dashboard to help each client understand its own risks, exposure, and opportunities for strategic benefit.
Exiger Tariff Impact Analysis Dashboard via DDIQ Analytics.
Leverage Scenario Planning
The evolving nature of trade policies makes it vital to plan for different outcomes. By modeling various scenarios — such as changes in tariff rates or exclusions — you can better understand potential impacts and prepare accordingly. This could also uncover opportunities for material demand aggregation, which has helped some OEMs reduce procurement and raw material costs by up to 25%.
Reassess Value Chain Strategies
Tariffs compel companies to rethink their make-versus-buy decisions and influence strategic choices on the structure of their global value chain network. Armed with visibility to multi-tier supply networks and their associated risk profiles, companies can make informed make vs buy decisions for critical product value streams. Strategic options like vertical integration, directed-buy programs to secure constrained input materials, single vs. multi-source, and inventory strategies can be evaluated to optimize cost and resilience.
Diversify Suppliers
Supplier diversification is a key strategy to reduce dependency on tariff-affected regions. When evaluating alternative suppliers, companies typically focus on cost, quality, financial health, and basic compliance checks. As new risks emerge in today’s geopolitical environment companies should consider a holistic view of risk factors including tariffs, ESG, cyber security, FOCI (foreign ownership, control, and influence) and operational risks when making these decisions.
Engineer Resilience
Redesigning products to reduce reliance on tariff-sensitive materials, or materials subject to export controls, can help you avoid excessive costs and improve resiliency in the long term. For example, using alternative raw materials or modifying production processes can ensure supply chain continuity. It can also enhance compliance, as one government agency discovered in identifying sterilization alternatives for healthcare equipment.

How Exiger’s Technology Solutions Can Help

Technology in the 1Exiger platform offers end-to-end visibility down to the Nth tier of suppliers, revealing risk insights at the item, part, and raw material levels of the supply chain. This visibility matters because supply chains are item-specific, and being able to track the provenance of all materials in the supplier ecosystem from end products to the hole in the ground builds resilience.

What’s more, Exiger uses proprietary AI and machine learning technology to track nearly 10 billion supply chains, and our extensive database aggregates 7 billion source records of supply chain installations and 1.3 billion contract records. These capabilities — along with our shipping record database, the largest in the world — give you the necessary visibility to monitor your supply ecosystem in real time. Exiger also provides industry leading holistic risk assessments to provide companies with a comprehensive understanding of risks in their supply chain.

Exiger’s solutions also help tackle the challenges posed by tariffs with:

Tariff exposure assessments: Exiger’s tools analyze both direct and indirect tariff risks across multi-tier supply chains, providing a comprehensive picture of potential impacts.
Scenario planning: With Exiger’s platform, you can simulate different tariff scenarios and adjust their strategies dynamically.
Supplier discovery tools: By leveraging extensive trade data, Exiger identifies alternative suppliers in non-affected regions, enabling you to diversify supply chains effectively.

Exiger combines these technological capabilities with expert guidance from a team of in-house analysts, helping you not only understand the risks but also take proactive measures to mitigate them.

Take a Programatic Approach to Build Lasting Capability

The current tariff proposals are just the most recent event in a broader shift away from global trade agreements toward more regional, bilateral, and multilateral trade agreements. To thrive in this environment, companies should invest in solutions that provide them holistic supply chain visibility and risk assessments to increase agility as they navigate this uncertain environment.

Taking a programmatic approach and integrating tariff risk into broader enterprise risk and planning processes will help organizations proactively manage supply chain cost, availability, and quality risks on an ongoing basis. Exiger partners with clients to rapidly deliver insights within a matter of weeks while also building a long-term sustained capability as outlined below.