In corporate suites around the world, executives are desperately trying to determine how their businesses will be affected and what they need to do in the face of President Donald Trump’s frenzied tariff barrage.
As Trump’s trade was heat up, bringing retaliation and threats of more, some companies are forming “tariff task forces” to count the potential cost of the levies and weigh the impact on sales, profits and market shares.
The biggest challenge is also taxing but hard to put a price tag on: low visibility into the future. How do you find some clarity for long term planning when the tariff “playing field is changing so rapidly ?
Global sourcing turmoil in new tariff environment
With global commerce now almost inextricably intertwined, the outcome of any effort to impose tariffs has become incredibly hard to decipher. As the Michelin CEO Florent Menegaux told us, for a vehicle assembled in the US, parts can cross borders 53 times — making such levies a logistical nightmare.
But even as the picture remains murky, companies are beginning to realize that sitting still is not available option. Global sourcing teams are again being called upon to identify a pathway forward, stabilising supply routes and tariff impacts where possible. Building resilience and sourcing market options into company sourcing strategies.
Defending margins and building competitive advantage is still possible
European auto-parts makers like Continental, Valeo and Schaeffler say they’re going to have to pass on the higher costs to customers. Carmakers like Stellantis and Volkswagen that face intense competition and overcapacity and can’t pass on the higher costs, are staring at potential hits to earnings.
Chinese retailers like Shein and Temu are trying to find other ways to supply their customers in the US to try and mitigate the impact of the tariffs. The maker of Cetalphil skincare products, Galderma, is in a quest for other markets to offset some of the effects of tariffs.
Building a response to tariff price rises
For many companies they have limited options for manoeuvre as near shoring manufacturing capability can be cost prohibitive and take significant time.
- Passing costs on to the end customer or consumer. The success of this is dependent upon market competitiveness and price elasticity
- Rapidly finding alternative sourcing markets that are more tariff friendly. Achievable more quickly with the right teams on the ground to support the search
- Doubling down on current supply base. Creating a dedicated team on the ground in market to build margin, supplier relationships and quality and compliance. Creating partnerships for growth
- Negotiate deeper pricing discounts from current suppliers to remove tariffs impacts which could be as high as 25%. A challenging task for any supplier to be able or minded to deliver.
ET2C International Global sourcing experts
ET2C International are a British owned global sourcing company with over 23 years’ experience working with our international clients to make sourcing simple. Our 200 colleagues are based in 7 offices in emerging and developed sourcing markets.
- China
- India
- Vietnam
- Turkey
- Mexico
Tariff avoidance dedicated buying office team
As part of our wider tariff avoidance programs we are delivering with clients we offer our unique buying office model giving you a rapid risk free team on the ground in your sourcing markets. Giving you rapid and risk free set up nad delivering
- Rapid margin growth
- Faster time to market fro new products
- Improved quality and compliance
- Enhanced supplier relationships
Tariff avoidance task force summary
As the tariff continues on a daily basis companies need to act to bring some planning , structure and stability to their sourcing. Protecting their supply, margin and competitive advantage. Waiting to see what may happen next is becoming an untenable position as the turmoil unfolds. A tariff response that is built on a range of options outlined above can provide the most robust solution to scenario planning the future.
Rapid establishment of a dedicated buying office team on the ground can yield extremely fast results in a risk free model. To learn more about how we could help with a sourcing strategy to bring stability to your global sourcing and procurement please contact@etc2int.com
