Manufacturers brace for tariff impacts on supply chains next week

Manufacturers are facing a supply chain cost double-whammy shortly with tariffs on Canadian and Mexican imports beginning March 4 and steel and aluminum tariffs taking effect globally from March 12.

Tariffs front-and-center: The moves—along with tariffs on imports from China, and a similar proposal targeting the European Union—are part of President Donald Trump's assertive approach to flexing America's global trade muscle.

Looking for answers: Trump's policies have already begun impacting global supply chains. James Mancini, Vice President, North American Surface Transportation at global logistics provider C.H. Robinson, said on LinkedIn the business had been "inundated by questions" from customers in the automotive sector about the impact of the tariffs.

Understand your risks: In a post, Mancini set out several steps auto companies could take to prepare themselves for the impact of tariffs, including evaluating the supply chain risks they were exposed to. "While the tariffs above are not in effect yet, you can identify where your supply chain may be exposed to the potential tariffs - including impact on raw materials, components, and finished products. Understanding your exposure will help you mitigate risks," he said.

Evaluate supply options: Businesses should consider diversifying their supplier base to reduce their reliance on imports from just one or two countries. "Pivoting sourcing locations can come with a high cost of change due to capital, retooling and labor expense," Mancini admitted. "So, many supply chains have limited ability to pivot sourcing locations in the short-medium term, but there is value in looking for alternative suppliers to better protect your supply chain long-term."

Take stock of your inventory: He also suggested companies investigated how they could adjust their inventories. "Since increasing inventory is typically not an option for automotive supply chains due to its just-in-time nature, collaborate with your logistics partner to think through other inventory strategies to consider helping you alleviate potential cost increases and provide a buffer while you adjust your supply chain."