The US tariff reforms enacted in early 2025—dubbed the “Liberation Day” measures—have reshaped global sourcing and trade dynamics, triggering volatility in markets, supply chains, and corporate sourcing strategies worldwide. Tariffs now spanning 10% to 104% on all imports, with the threat of more targeted tariffs on specific industries prompting urgent adaptations from businesses and governments alike.
Global Sourcing 2025: Challenges for US Companies: Defending Margins in a Landscape of increasing cost and uncertainty
US businesses face mounting pressure as tariffs disrupt global supply chains and inflate costs. Key challenges include:
1. Rising Input Costs and potential for Consumer Price Increases
The Federal Reserve Bank of Richmond have projected the average effective tariff rate on US imports to surge to 22%—the highest in a century. Industries reliant on global supply chains, such as automotive and machinery, are particularly vulnerable. A 25% tariff on Mexican and Canadian imports threatens Midwest manufacturers dependent on cross-border components. Over 30% of US firms now rank tariffs as their top concern, with many reporting plans to reduce hiring or diversify suppliers. Putting global sourcing and procurement as a business-critical priority.
2. Profit Warnings and Market Uncertainty
Despite widespread discussion of tariffs, few companies factored them into Q1 2025 earnings forecasts. Analysts anticipate a wave of profit revisions , especially in consumer discretionary and tech sectors, where firms lack pricing power to pass costs to inflation-weary customers.
3. Global sourcing challenges, Supply Chain Reconfigurations and Tariff avoidance response
The initial round of tariffs was of an order of magnitude sufficient for companies to rapidly look at moving supply from China. Moving fully away or implementing a China +1 approach to reduce the overall tariff cost impact. However, the staggering increases post “Liberation day” have been sufficiently large to halt all trade between China and the US. Whilst companies wait for certainty on the future cost landscape for global sourcing and procurement.
Accelerating nearshoring was the previous go to strategy to avoid increased China tariffs. The imposition of heavy tariffs across all trading partners make the move much more difficult for many companies. The final sourcing strategy being very product and industry specific. The 20 year investment in manufacturing capability and infrastructure in China has created a hugely effective manufacturing system that cannot be replicated in a few months.
Short term margin defence plan to enable long term business and sourcing strategy Implementation.
Strategic planning for US based companies with developed global sourcing and supply chains in place will be desperate for more longer term certainly on the extent, depth and longevity of the current tariffs. Until they have more certainty short term planning will be focused on delivering
- Supply certainty-ensuring continued supply of key product lines or components
- Range management-removing from sale products that become unprofitable
- Increasing pricing-passing on as much cost as the market can stand
- Margin defence-moving supply to lower tariff countries like India and Turkey
ET2C International global sourcing experts
ET2C International are a British owned global sourcing company with over 23 years working with our international clients to make their sourcing simpler. Our 200 colleagues are based in 7 global offices in developed and emerging markets giving you rapid access and deep insight into markets and manufacturing capability.
- India 27% tariff
- Turkey 10% tariff
- Vietnam 46% tariff
- China 104% tariff
We can help you to rapidly identify supply partners in low tariff markets to offset a significant proportion of tariff on-cost. Providing a strong component of a wider margin defence plan.
To learn more about our strategic sourcing work, supplier identification and validation and unique buying office model drop us a line contact@et2cint.com to talk to one of our experts.
Emerging Global Sourcing Opportunities for Non-US Companies
While the tariffs create cost headwinds for many, they also create opportunities for agile firms outside the US. As the demand reduction from US creates supply side over capacity. Many exporters will focus on re directing capacity to Middle east and European markets. Fast moving companies could benefit from improved pricing as manufacturers re adjust capacity models.
Conclusion: A New Era of Trade & Global Sourcing Realpolitik
The 2025 US tariff regime has thrust globalization and global sourcing and procurement into uncharted waters. While US firms grapple with margin erosion and volatility, the policy inadvertently fuels opportunities for competitors in Asia, Latin America, and Europe.
Whilst Canada and China have requested dispute resolutions from the WTO in their ongoing trade war with the US. The WTO announced potential reduction in roles this week citing lack of funding (US have withheld funding since 2024).
As we look at the global sourcing landscape today April 9th it appears the global trading and sourcing system we have worked with for over twenty years is crumbling. Within this market turmoil opportunity always presents itself for the agile and critical thinkers. India and Turkey look well positioned to prosper in this new global sourcing paradigm.
Businesses that diversify sourcing markets, optimize supply chains, and embrace flexibility will not only survive but thrive in this fragmented landscape. Yet, with the global economy facing up to $1.4 trillion in losses, the stakes for coordinated policy responses—and corporate resilience—have never been higher.
For tailored insights on mitigating tariff risks or capitalizing on emerging opportunities, contact our team at contact@et2cint.com
