October 21, 2025 Rethinking Supply Chains Amid U.S. Tariff Shifts

Discover how manufacturing leaders can navigate tariff risks and build resilient, adaptive supply chains for long-term success.

By Lou Longo, Partner, International Consulting Practice, Plante Moran

Few manufacturing organizations remain untouched by the current tariff landscape. Some assessments suggest manufacturing as a whole faces the highest risk exposure to tariffs, with a recent report by the JPMorganChase Institute specifying that mid-sized businesses may feel the most significant tariff impacts.

With so much at stake, many business and supply chain leaders are doing one of two things:

1. Trying to stay abreast of every little change in the continuously evolving global trade picture. Although usually an admirable goal, the sheer pace and scope of change right now make this resource-intensive option unlikely to yield many strategic benefits.
2. Taking a wait-and-see attitude. This may seem like a safe route, but think again. The choice not to act is still a choice, so it should only be made after careful analysis. In the present situation, the proverbial dust probably won’t settle for a very long time—leaving organizations vulnerable in the meantime. If the decision not to act is based on inertia rather than strategic analysis, then it may carry significant long-term financial and operational risks.

There is, however, a third option that organizations can pursue: seize the opportunity to rethink the global supply chain.

This is not a time to hesitate or merely react to the latest headlines. Instead, organizations should commit to understanding their differentiators, analyzing their tariff exposure, and positioning themselves to act with clarity.  For companies focused on long-term growth and stability, this is the ideal time to consider a new, “one-size-fits-one” strategy to mitigate supply chain risk.

Define your approach

Manufacturing trends have long shaped companies’ global footprints in ways that can be described as “one-size-fits-all,” “one-size-fits-many,” and “one-size-fits-one.”

• One-size-fits-all: The historical emphasis on mass production used to favor businesses that were laser-focused simply on increasing efficiencies and lowering costs. That resulted in a fairly universal and straightforward supply chain strategy; namely, relocate everything to low-cost labor markets such as China.
• One-size-fits-many: More recently, organizations have conducted more nuanced evaluations that have resulted in supply chains centered on countries with the best materials, business environments, regulatory ecosystems, and labor forces specific to each industry (e.g., Vietnam for apparel, or Mexico for automobiles). Although more strategic than the “fits-all” approach, “fits-many” still leaves entire sectors and individual organizations with few alternatives to navigate market and trade policy shifts. 
• One-size-fits-one: Today’s reality is that companies need to be increasingly responsive to specific marketplace desires and personalization demands. Fluctuating tariffs and trade policies only add to the reasons why it’s essential to reconsider what a global footprint should look like. Tariff exposure and sourcing decisions now differ greatly based on each specific product and its inputs. Therefore, the most resilient companies are adopting a “one-size-fits-one” approach, where they contemplate their strategic business objectives and—at the product level—factor materials, transformation processes, and origin rules into their supply chain decisions.

The “fits-one” strategy requires companies to evaluate the unique risks and opportunities within their own portfolios. In practice, this often results  in a regionalized approach to the supply chain, which makes it easier for organizations to customize and provides multiple levers to pull when needed. A tariff on supplies imported to the US from China, for example, would only impact a portion of the company’s overall goods, and might be mitigated by leveraging supply relationships and capacity in other regions. 

Admittedly, implementing the “fits-one” approach may be more expensive and can introduce inefficiencies in the short term, since it adds duplicative productive capacity across multiple locations.. In exchange, though, organizations gain diversification that reduces downside risk.

“Fits-one” lowers risk exposure by providing easier options to pivot when one (or more) geographies experience supply chain turbulence. It vastly reduces the hidden cost of the risk inherent to the “fits-all” and even “fits-many” strategies.

Think of it much like a retirement account portfolio. A diversified portfolio may not consistently result in the highest returns, but it’s much less susceptible to massive swings and will likely achieve better results over the long term.

Take actionable steps

Make no mistake: relocating a supply chain is challenging and involves upfront expenses. Consequently, any decision to migrate to a “fits-one” approach must be grounded in a thorough assessment of each organization’s unique goals, products, and risk exposure. But with the proper analysis, new strategic opportunities may arise.

To begin the analysis, organizations that aren’t doing so already must start to:

• Track each tariff exposure separately. Create (and constantly monitor) a breakdown of actual additional tariff costs. Organizations should be able to identify immediately how much tariffs are costing them, and from where that cost is originating.
• Know the organization’s tariff absorption rate. How much actually stays with the business as a cost, and how much is passed on to the market?
• Understand, by percentage, where all of the organization’s product inputs originate. What percentage of the supply chain inputs come from Canada, Mexico, Europe, or Asia, for example?
• Distinguish, by product, where all suppliers are located. Use bills of materials (BOMs) to pinpoint countries of origin. Whenever possible, try to be familiar with the origins of second- and third-tier inputs, in addition to immediate subcomponents (i.e., understand your suppliers’ suppliers and beyond).

Identify the organization’s profitability by product. Keep in mind that standard costing can quickly become outdated in fluctuating tariff and inflationary environments. However, knowing specific product margins can help businesses take a data-driven approach to determining where to prioritize—or deprioritize—their strategic efforts.

With this data in hand, organizations should then conduct a three-step process to move toward a “fits-one” strategy:

1. Conduct a sensitivity analysis. Look at what various percentage changes in tariff rates do to profitability by product and by location. This will reveal the areas of exposure on which to focus.
2. Evaluate the suppliers within each of the organization’s regions of concentration. How many suppliers and alternative suppliers do you have in those regions? How much leverage do you have with each of them?
3. Examine potential alternative suppliers. What competitive options, if any, are available in different regions? Some specialized or rare inputs may only be available from a few global suppliers, while others may allow for a competitive supplier reassessment.

Finally, armed with all of these insights and information, organizations must take a critical look at where they want to go strategically. Are they trying to maximize short-term returns or optimize for the longer term? If the answer is the latter, then it may be the right time to adjust the company’s supply chain and production philosophy to a “fits-one” regionalization strategy.

Turn tariff challenges into a strategic advantage

Adopting a new philosophy about something as complex as the supply chain is never easy, but that doesn’t mean it’s not worth doing.

Remember when the International Organization for Standardization (ISO) 9000 series of quality management standards first emerged in the late 1980s? Many organizations believed it would do nothing more than add unnecessary hassle and cost. Over time, however, they came to recognize that implementing ISO 9000 could actually help them improve quality, lower costs, and seize a strategic product advantage.

Today, global supply chains are no longer shaped by uniform decisions. Adopting a regional, “fits-one” supply chain strategy may not be simple. But just as with ISO 9000, organizations must keep the endgame in mind. Embracing the shifting tariff environment as an opportunity to rethink the supply chain can create a more effective path to long-term growth and stability.

About the Author:
Lou Longo is a Partner and the leader of the International Consulting Practice at Plante Moran. For over three decades, he has helped clients increase their operational efficiency and grow their businesses across borders. He is a frequent speaker on globalization and enjoys assisting organizations in achieving the highest profitability and quality in their international operations.

Read more from the author:

Navigating tariff changes: A guide to protecting margins. | CFO.com. Published April 2, 2025.

6 Questions With…Plante Moran’s Lou Longo. | Supply Chain Management Review. Published June 24, 2025.

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