How Tariffs Are Forcing a Strategic Reset Across the Retail Supply Chain

The global supply chain has been tested repeatedly in recent years, from pandemic shortages to disruptions in the Suez and Panama Canals. While many retailers made progress managing their supply chains after those challenges, now tariffs are testing them again.

Before the United States’ new trade policy, many brands were not confident that they could even face disruptions. Sage Supply Chain Intelligence’s 2025 State of Supply Chain report found that only 21 percent of brands are extremely confident in navigating supply chain disruptions today. That low level of confidence reflects years of volatility, and now tariffs are leading to a market reset as brands pause to reassess this new reality.

Companies are delaying orders to evaluate how the new trade policy could erode margins or spike production costs. However, pulling back on purchasing triggers ripple effects across the system. Suppliers stop producing. Inventory replacement slows. If demand rebounds before supply can catch up, delays, congestion and stockouts follow.

The harshest effects will hit companies overexposed to a single sourcing region, primarily in countries with higher tariffs. The report found 78 percent of brands consider supplier location and logistics to be the top focus when selecting their network, and the tariffs are exacerbating that importance.

Fluctuating tariffs on certain Chinese goods, from 10 percent to more than 100 percent with no clear endpoint, may be too much for some retailers to handle. It certainly makes supplier diversification non-negotiable. Businesses relying on one partner in China are now exploring alternatives in Malaysia, Taiwan, or switching to entirely new vendors in Mexico or the United States. But switching isn’t a simple fix. Every shift in sourcing demands a full evaluation of how products are made, moved and delivered. The economics don’t always justify the move, and without visibility into the full supply chain, brands are left guessing.

According to the report, 59 percent of brands say they still struggle to get a clear picture of cost, production and logistics. Tariffs only amplify the consequences of that visibility gap. If you can’t forecast how a change will impact your cost or demand, you're exposed.

Some brands are making investments in smarter, more adaptive operations. They’re integrating ERP systems across suppliers, logistics providers, and finance tools to improve coordination. Others are building real-time dashboards that highlight disruptions as they unfold and give a clear picture of how to respond more effectively. Artificial intelligence forecasting tools are helping predict changes and recommend actions like switching shipments from ocean to air when a port bottleneck emerges. These systems are essential for brands trying to operate with any degree of certainty.

Still, progress is slow — 43 percent of brands continue to rely on manual processes and outdated systems, leaving businesses exposed just as external risks are mounting. Businesses need to make their supply chains more resilient by digitizing their operations and diversifying suppliers to reduce risk.

No single solution will eliminate that risk, but brands that invest in technology and rethink their strategies now will be better positioned to adapt to any change. Disruptions during the pandemic forced businesses to put protocols in place to reduce exposure to risk, and those changes are paying off now. Tariffs are just the latest stress test. Retail leaders who treat this moment as a catalyst for long-term supply chain transformation will thrive beyond the current volatility.

Rodney Manzo is senior director of global operations for Sage Supply Chain Intelligence, a platform that helps consumer brands reduce costly PO errors, accelerate order cycle times, and boost efficiency without extra headcount.