Supply chain organisations and procurement leaders are bracing for a major crisis, as the incoming Trump administration promises sweeping tariffs in Q1 of 2025. A new report by spend management solutions firm Ivalua has revealed that half of organisations in the US and UK are preparing for changes in US trade policy, including rising tariffs.
These changes, they believe, will create sweeping supply chain disruptions, resulting in higher costs for customers. Multiple organisations also warned that sweeping trade regulation changes could put them “at risk of collapse.”
Free trade agreements under threat
Ivalua’s study of 200 US and UK supply chain and procurement decision-makers identified restrictions on exports of certain products and materials as their top concern (89%). The majority (84%) pressed worry about the overhaul or elimination of existing free trade agreements. A similarly overwhelming number (89%) also expressed concerns over broad tariffs on imports, while 84% fear high tariffs on goods imported from China.
Sparked by President-elect Trump’s recent threats to hike tariffs on goods imported to the US from China, Canada and Mexico upon taking office, organisations’ fears could be realised as early as January when the new administration comes into power.
“President Trump has been forthright in his position on tariffs, but the final details may vary based on negotiations with certain countries and some categories of imports,” commented Alex Saric, a procurement expert at Ivalua. Uncertainty around how trade policies and tariffs will be implemented means companies won’t know how best to optimise supply chains to mitigate the impact until the last minute. At a minimum, organisations should start working with suppliers now to reconsider supply chain operations and identify ways to mitigate the impact of likely trade policy changes in the new year.”
The impact
The impact, according to Ivalua, could be significant for US and UK businesses. Of the firms who anticipate more disruption from January:
- 52% say they will need to completely reevaluate which suppliers they work with.
- 51% say they will pass the cost onto customers – US organisations (65%) are more likely to do so than those in the UK (36%).
- Almost half (48%) foresee rising supply chain costs that reduce profitability.
- 45% warn rising supply chain costs will put their business at risk of collapse – with US organisations (52%) having a greater fear of collapse than those in the UK (36%).
“Organisations should prepare for the possibility of nearshoring or onshoring operations, factoring in evolving ‘made in USA’ thresholds and the impact increased tariffs will have on suppliers in China, Mexico, and Canada,” Saric added. “But the reality is that certain industries, especially those dependent on rare earth minerals or established manufacturing clusters, can’t easily shift away from China.”
