How Business Leaders Can Adapt to Trade Uncertainty

From the outside looking in, supply chain issues seem to have decelerated in the past few years. But as savvy business leaders know, these complications haven’t disappeared completely. Manufacturers and retailers are still dealing with persistent supply chain challenges that range from transportation bottlenecks to delivery delays.

Already in 2025, developments like U.S.–Russia relations, ongoing labor shortages, and the Los Angeles fires are disrupting trade routes, creating holdups, and compromising material availability. The new U.S. presidential administration is expected to further reshape the supply chain landscape as it proposes changes to trade policies like tariffs and Section 321.

Business Challenges Posed by Tariffs and Trade Regulations

As manufacturers and retailers play a wait-and-see game to determine how tariffs and trade regulations will shake out, there are many challenges to recognize and prepare for.

• The cost of imported goods may rise. This could increase production costs and sale prices. Products are not only more expensive to manufacture but also more expensive to stock.
• Consumer prices will rise in sync with manufacturing and retail prices. This often leads to a reduction in consumer spending and demand.
• Sourcing certain materials or products from specific countries may be difficult. This could create additional delays or shortages.
• Compliance requirements might change. This will influence documentation, day-to-day business practices, and administrative workloads.

Amid this uncertainty, where should manufacturers and retailers focus their efforts to alleviate risk and contain costs?

With so many variables out of your hands, risk reduction comes down to controlling what you can. This mindset allows you to direct attention to priorities you can influence — instead of being distracted by situations beyond your reach.

6 Tips to Strengthen Supply Chains and Manage Costs

There are steps manufacturers and retailers can take to help balance ambiguity with profitability. Here are six areas where you may be able to exercise more control over your supply chains and costs:  

1. Stay Informed About Potential Changes

Form a team of experts from across the company who represent all critical functions: legal, procurement, pricing, strategy, etc. The team should meet regularly and share what’s happening on the supply chain front from their various perspectives. The group can discuss possible implications and brainstorm potential actions and their outcomes.

For example, if the team identifies a geopolitical conflict that could disrupt the supply of a critical raw material, they can evaluate practical options. Is working with alternate suppliers from other regions a possibility? Is there time, space, and room in the budget to increase safety stock now? Can production schedules flex to accommodate delays — and what will the consequences be?

Enlist advanced technologies like AI and global trade intelligence to monitor disruptions in real time. The trends they reveal can help you predict and respond to disruptions.

2. Diversify Your Supplier Base

Manufacturers and retailers can better manage costs and endure disruptions if they reduce dependency on a single region. When one region experiences a disaster or labor strike, for instance, supplies can keep flowing from other regions to close the gap. Sourcing from different regions can also insulate against unpredictable price fluctuations or sudden inflation in a single region.

Take a look at domestic suppliers as well. Can they meet your needs? Tapping into domestic suppliers can reduce lead times and transportation costs; they are less likely to experience disruptions caused by geopolitical tension or delays with customs.

3. Negotiate with Foreign Suppliers.

To keep your business, foreign suppliers may be willing to absorb some of the cost increases brought on by tariffs or other price increases. Their ability to do so will depend on many factors, such as the status of your business relationship, market competition, and contract terms.

Discuss whether they might be willing to share some of the burden or offer concessions, such as volume discounts, extended payment terms, faster delivery, early-payment discounts, or price freezing.

4. Increase Inventory if It’s Subject to Tariffs

Many details about tariffs are in flux. But if you know or suspect that certain goods or materials will be subject to higher tariffs, consider building up your inventory if you or your third-party logistics (3PL) provider has the space and staff to do so.

Weigh this strategy carefully: Holding extra inventory can increase costs, such as for storage, insurance, and taxes, so make sure it won't jeopardize cash flow. It’s also important to determine whether these additional costs will be higher or lower than expected tariff rates.

5. Pass Costs on to Customers

To control costs and guard against risk, another option is to pass increased costs on to your customers. The ability to do this depends on many factors, such as:

• How in-demand is your product?
• How price-sensitive are your customers?
• Can you raise prices without significantly impacting sales volume?
• Where do competitors stand on pricing?

Using customer feedback and data about purchase history, demographics, and purchase behavior can help you answer these questions and make informed decisions about whether your customers would be willing to help absorb price increases.

6. Implement Sales Inventory Operations Planning (SIOP)

Consider updating your operations plan regularly to align with changing conditions. If you do, your company can better predict supply and demand and allocate resources effectively. Efforts aren’t wasted on producing or promoting goods that aren’t in demand.

SIOP requires your sales, marketing, operations, R&D, and finance teams to come together to work toward company objectives. It can help you:

• Discuss and prepare for new opportunities
• Create a plan for the products you plan to sell and when
• Manage change
• Prepare operations for what’s ahead
• Anticipate storage, distribution, and transportation needs.

Focus on the Controllables

Remember: Risk reduction comes down to taking charge of what’s within your power. This includes the people you hire, the companies you work with, the products you produce and sell, and the processes you implement.

Using the tactics covered here can help you diversify your supply chain, find alternative markets, and optimize financial strategies that soften cost increases.

Old National can help you manage cash flow and unlock profitability, even when supply chain disruption is at its peak. Learn more at Commercial Banking | Old National Bank.