- Tariffs might be here to stay, as the trade war era that began in 2018 marks its seventh consecutive year.
- Sourcing costs are rising rapidly, prompting executives to urgently shift to lower-cost, low-risk suppliers.
- We recommend a three-part strategy: track supplier spend, assess country risk, and monitor supplier financial health.
Senior executives and supply chain leaders are facing an urgent need to reassess sourcing strategies with tariffs. With an ongoing trade war, including effective tariffs of 30% on China imports (previously 145%), companies that do not adapt risk significant input cost increases, margin compression, and financial stress.
Organizations must identify alternative suppliers in lower-tariff regions — and ensure those suppliers are financially resilient and regionally stable to handle increased demand, operational complexity, and the volatility of international trade.
Navigating the New Supply Chain Reality
Supply chains have evolved over decades, shaped by globalization, cost optimization, and shifting geopolitical alliances. These networks are deeply embedded in manufacturing and service delivery systems. Onboarding a new supplier is not plug-and-play — it requires time, investment, compliance, and strategic alignment. Companies have hundreds to tens of thousands of suppliers across their supplier tiers and value chain. The new tariff regime is forcing supply professionals to make changes or otherwise face significant cost increases.
Three Sourcing Factors
In today’s tariff-heavy environment, cost remains a critical factor. Some foreign inputs remain significantly cheaper than domestic alternatives even with tariffs in place. However, tariffs previously as high as 145% on imports from China have disrupted long-standing sourcing models, pushing supply professionals to explore other viable trade partners. When sourcing alternatives, supplier financial health and regional stability are critical considerations too. SupplyChainMonitor™ recommends a three-part strategy:
- Supplier Spend and Mapping: Track your suppliers by total spend and country location. For example, goods imported from China are subject to a 30% (previously 145%) import tariff, significantly raising procurement costs. Procurement professionals are looking to other major manufacturing hubs with low labor costs (e.g., Vietnam, India, Mexico, Philippines, Thailand, Malaysia).
- Assess Supplier Financial Stability: Financial distress of a key supplier can shut down a factory and jeopardize your supply. Continuously monitor supplier financial health with risk scores to mitigate future disruptions. Financially durable suppliers ensure a robust supply chain given their resources to invest in key initiatives that support supply continuity and excellence, including R&D, QA, capital expenditures, compliance, and so on.
- Evaluate Country Risk: Prioritizing sourcing from low-risk jurisdictions — often referred to as friendshoring — is increasingly critical amid rising geopolitical tensions and ongoing trade disputes. Again, the current era of trade wars began in 2018, making this the seventh consecutive year of heightened global trade risk.
This framework allows executive teams to create dynamic “what-if” scenarios, balancing tariff mitigation, long-term financial resilience, and business continuity.
Visibility Beyond Tier 1
Focusing on direct (tier 1) suppliers is a prudent first step. Additionally, many tier 1 suppliers depend on N-tier suppliers — which may be located in high-tariff regions. A U.S.-based supplier may seem stable on the surface, but if their products rely on N-tier components sourced from China, for example, you are still exposed.
Executives can request visibility across multi-tier supply chains and invest in tools and partnerships to map these dependencies. Replacing even a portion of your exposed supply chain can alleviate disruption risk over the long-term.
SupplyChainMonitor’s AI-Driven Analytics
With higher prices from tariffs, there's an opportunity to identify new financially stable suppliers. SupplyChainMonitor™ provides actionable insights that help you navigate today’s tariff landscape with confidence. Clients use our solution to:
- Integrate AI-driven financial intelligence with internal supplier data
- Monitor suppliers for early signs of financial deterioration
- Inform supply teams of supplier country risk exposure
- Identify low-risk supplier alternatives
Our tools help you build a resilient supply chain by continuously monitoring your supplier base and enabling informed risk decisions daily.
| Supply Challenge |
SupplyChainMonitor™ Solution |
| Alleviate High-Tariff Exposure |
Supplier Spend & Mapping |
| Track Supplier Financial Health |
AI-Driven Bankruptcy Risk Analytics |
| Control Regional Risk Exposure |
Country Risk Ratings |
| Identify Supplier Alternatives |
Industry Peer Analysis |
Bottom Line
The 2025 tariffs are reshaping the cost and risk structure of global sourcing. Smart executive teams know this isn't just a procurement issue — it's a board-level risk that demands coordinated action across supply chain, finance, and operations. The companies that thrive will be those that act decisively, with data-driven strategies and financially sound partners. SupplyChainMonitor™ empowers you to build a stronger, smarter, and more resilient supplier base for the future.