Navigating Trump’s Tariffs: What Retailers Can Do to Protect Their Bottom Line

Navigating these new tariffs means understanding the impact across key areas and adjusting supply chain strategies accordingly. Here's how retailers can strengthen their operations and protect their bottom line in preparation for the seismic shifts poised to hit the global trade system this year.

1. Make supplier diversification a non-negotiable.

They say you shouldn’t put all your eggs in one basket.

With tariff pressures mounting, supplier diversification is no longer optional. The best way for brands to respond depends on their existing operations.

Moving Manufacturing Away From China

Many retailers have already begun diversifying their manufacturing outside of China, moving production to countries such as Vietnam, Indonesia, and India. We can expect this trend to accelerate in 2025.

However, shifting to neighboring countries won’t be without challenges. Many of these countries have different regulatory environments than China, so brands will need to factor in higher transportation costs, production delays, and local labor market limitations before moving to these regions.

Related story: Retailers, the Clock is Ticking: Optimize Your Supply Chains for the Holiday Shopping Onslaught Now

Onshoring Production Domestically

Reshoring production to domestic suppliers is another strategy, but it may not be practical or cost effective for those dealing in labor-intensive or low-margin products.

The U.S. lacks the infrastructure and skilled workforce needed to take on the vast amounts of goods historically produced abroad. Additionally, high labor costs mean that brands deciding to onshore will face premium operational costs, which must be accounted for to protect their bottom line.

2. Recalibrate pricing models to stay competitive and profitable.

While some retailers may absorb the higher costs from tariffs, most will pass them onto inflation-wary consumers. Price sensitivity could result in fewer sales for brands.

The ripple effect won’t stop there. In retaliation, other countries may impose tariffs on U.S. goods, further raising the cost of imported raw materials and finished products. This could kick off a global cycle of price increases as countries retaliate by raising their own import costs.

For retailers, this means recalibrating pricing models and adjusting profit margins to remain competitive while keeping sales steady.

3. Monitor exposure to international market risks.

Beyond the immediate financial and operational impacts, tariffs will affect global diplomatic relationships and trade dynamics as countries seek new alliances and partnerships.

Retailers with significant exposure to international markets need to monitor the geopolitical landscape for any changes in trade agreements or diplomatic ties that could affect the availability, pricing and reliability of critical goods.

Brands with a global footprint must build resilience into their sourcing strategy and be prepared to pivot quickly in response to evolving political and economic realities.

Supply Chain Resilience Transforms Uncertainty Into Opportunity

The only constant in the global trade landscape is change. The best way to prepare for the unknown is to maximize optionality and resilience throughout the supply chain.

Daunting as they may be, these new tariffs provide a masterclass in supply chain resilience. They're a call to action to turn uncertainty into opportunity. Retailers must take a proactive approach to diversifying supplier networks, strengthening supplier relationships, and ensuring real-time visibility into end-to-end supply chain operations so they can identify risks and adjust quickly before they materialize.

Rodney Manzo is the CEO of Anvyl, a supply chain visibility platform that helps consumer brands manage and automate their entire PO process.