April 8, 2025 Navigating The Tariff Landscape With Lessons From COVID

Tariffs are transforming supply chains; manufacturing companies can thrive by applying pandemic lessons and adopting advanced technologies.

The United States has recently implemented sweeping tariffs affecting its major trading partners. These include a 25% tariff on numerous Canadian and Mexican imports, a 20% tariff across all Chinese imports, and a global 25% tariff on aluminum and steel. These measures have not gone unanswered, with Canada, Mexico, the European Union, and China all imposing retaliatory tariffs of their own.

These policies have also changed quickly. In just two days, the blanket 25% tariffs on Mexican and Canadian goods were revised to exempt products covered under the United States-Mexico-Canada Agreement (USMCA). The U.S. briefly increased tariffs on Canadian steel to 50% before reducing them back to 25% after Canada removed a retaliatory excise tax on energy exports. Additional tariffs may be forthcoming in April, creating an environment of uncertainty for businesses dependent on international supply chains.

The Multifaceted Impact on Manufacturing

For manufacturers, the implications of these tariffs are both immediate and potentially long-lasting. Most directly, they’re witnessing significant increases in inventory costs, particularly for specialized components and raw materials that are not readily available domestically. If these tariffs persist, suppliers may eventually establish operations within U.S. borders, potentially alleviating some cost pressures for U.S. manufacturers. However, for raw materials that aren’t naturally abundant in America, price increases could become permanent fixtures.

In the near term, manufacturers face the prospect of shortages as suppliers in non-tariffed regions experience demand surges. This domino effect will likely create extended lead times and rippling disruptions throughout supply chains. Already, many companies are stockpiling materials in anticipation of further price increases and supply constraints.

The North American manufacturing ecosystem presents a unique challenge. Decades of trade agreements have created deeply integrated supply chains between the U.S., Canada, and Mexico. Products and components often cross borders multiple times during production, compounding the tariffs’ impact at each crossing. Untangling these complex supply networks would require substantial time and capital investment—a step many businesses are hesitant to take without certainty about the tariffs’ permanence.

Lessons from the Pandemic: A Blueprint for Resilience

This isn’t the first time manufacturers have faced rapid market disruptions. The COVID-19 pandemic created remarkably similar conditions: wild demand fluctuations, sudden material shortages, and volatile pricing. The parallels are striking, and the strategies manufacturers developed during that crisis provide valuable insights for navigating today’s tariff challenges. Indeed, many in the industry have come to accept that supply chain instability is the new normal.

The pandemic taught manufacturers that agility isn’t optional—it’s essential for survival. Those that emerged stronger from the pandemic developed the capability to quickly adapt their supply chains, production schedules, and customer relationships to rapidly changing conditions. These same capabilities will distinguish the winners in the current trade environment.

Technology: The Key to Manufacturing Agility

In responding to today’s tariff complexities, technology can provide manufacturers the visibility and flexibility they require to adapt quickly. Strategic investments in digital capabilities now will not only help weather current uncertainties but will also position these companies for greater competitiveness once these trade disputes eventually resolve.

Revolutionizing Supplier Management

The need to diversify supply sources beyond traditional partners has become urgent. Manufacturers must now source materials from a broader range of suppliers to secure favorable pricing, quality, and delivery timeframes. However, the more suppliers a manufacturer must manage, the greater the complexity, and it increases exponentially.

AI and machine learning technologies can deliver transformative value for supply chain management. By automating the multi-sourcing process, manufacturers can rapidly identify suppliers who can provide the optimal combination of price, quality, and rapid delivery. Companies implementing these advanced supplier management systems will gain a significant competitive advantage over those still relying on manual sourcing processes.

Harnessing Predictive Analytics for Inventory Optimization

Just as during the pandemic, manufacturers need supply chain visibility to plan and adjust as new disruptions arise. Predictive analytics and AI solutions can process vast amounts of internal and external data to detect potential inventory shortfalls before they manifest as crises. This foresight empowers management to implement preventive measures instead of constantly fighting fires in crisis mode.

These same tools help prevent the opposite problem—excessive inventory buildup due to overcautious ordering. By balancing supply against accurately predicted demand, manufacturers can optimize inventory levels even amid market volatility.

Demand forecasting represents another crucial application of predictive AI. No manufacturer wants unfulfilled orders or warehouses filled with unsold inventory. Advanced AI models can analyze complex market signals to generate demand forecasts with unprecedented accuracy, providing essential guidance for production scheduling.

Building Flexibility into Production Operations

Insights gained from analytics are valuable only if manufacturers can operationalize them. With raw material shortages likely to emerge suddenly in the early days of new tariff implementations, production flexibility becomes essential.

Technologies enabling rapid scenario planning allow management to test various responses to potential disruptions before they occur. Similarly, systems capable of dynamically rescheduling production around material shortages help maintain operational continuity despite supply chain uncertainties.

Elevating Quality Management

As manufacturers forge relationships with new suppliers—a necessity if tariffs remain in place—quality assurance takes on heightened importance. Companies need robust systems to track supplier performance and identify substandard materials that could compromise product integrity.

Quality Management Solutions (QMS) provide the monitoring capabilities and data analytics needed to maintain product standards while adapting to new supply partners. These systems help manufacturers make informed decisions about supplier relationships based on documented performance rather than assumptions.

Building on Pandemic Resilience

The parallels between pandemic disruptions and today’s tariff challenges offer valuable perspective. Many manufacturers have already developed playbooks for operating amid supply chain volatility, demand uncertainty, and rapid price changes. These existing capabilities provide a foundation upon which to build tariff-specific strategies.

Companies that successfully navigated the pandemic demonstrated several key attributes: transparent communication throughout their supply networks, data-driven decision-making processes, and an organizational culture that embraces change rather than resist it. These same characteristics will define successful responses to tariff disruptions.

As manufacturers implement short-term responses to immediate tariff impacts, they should simultaneously develop longer-term strategies accounting for various trade policy scenarios. Some may find strategic advantage in reshoring certain operations, while others might benefit from establishing manufacturing presences in multiple regions to provide options as trade policies evolve.

Whatever approach they choose, manufacturers should resist making permanent structural changes based solely on potentially temporary tariffs. Instead, they should focus on building flexibility that allows rapid adaptation to changing conditions, whatever form those changes might take.

Those that embrace this moment as an opportunity for innovation rather than merely a challenge to endure will emerge with strengthened capabilities and competitive advantages. Just as the pandemic accelerated digital transformation across industries, today’s tariff situation may ultimately catalyze manufacturing modernization that delivers benefits long after trade disputes resolve.

About the Author:
Kevin Bell is SVP of business development at SYSPRO, where he has served for 20 years, previously as a VP of pre-sales, partner sales executive and direct sales. He holds a BA from Virginia Tech.

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