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If business leaders only consider the obvious threats from tariffs, they could be blindsided by less obvious and arguably more serious problems. Let’s dive into the deeper and easily overlooked fallout that might emerge from tariffs, and the opportunities that come with addressing them.

How tariffs shake up supply chains and trade

The global economy is a fragile, deeply complex and interconnected ecosystem with countless interdependencies, many of which only surface when something breaks.

Margins are often razor-thin and depend on infrastructure, trade relationships, and processes that have been built and honed over years and decades.

The pricing system enables businesses to make informed decisions and coordinate their demand, supply, and logistics to remain profitable and competitive.

Tariffs, reciprocal tariffs, and retaliatory restrictions and regulations create shockwaves that hit businesses and then ripple through the system. They affect nearly every party in the supply chain, including manufacturers, distributors, suppliers, carriers, retailers, and customers. These parties react in turn, expanding the circle of chaos. Trading partners that were economical before tariffs came into effect may no longer be so. Factories staffed by experts and surrounded by synergetic suppliers may no longer be feasible.

The neglect of high-value intangibles

With all the chaos induced by tariffs, leaders’ focus has been wrenched from their most important tasks — business strategy, innovation, driving key initiatives, and making important operational decisions. Now it is redirected to dealing with the bureaucracy, fallout, and subsequent uncertainty of tariffs. This will certainly reduce the quantity and quality of future innovation and progress.

The higher costs on supplies and products due to tariffs will be siphoned from the rest of the economy, leaving less available capital. Add to this the considerable uncertainty that trade wars generate, and there is likely to be a significant slowdown, if not a freeze, in investments, further reducing the amount available for research and development and impacting innovation.

Product selection may shrink as brands withdraw less profitable products from markets—or even withdraw entirely from markets. And closely connected to that is the potential for rising customer dissatisfaction and switching loyalty.

Whenever prices are artificially inflated due to taxes, tariffs, or outright embargoes, there is a rising risk of theft, black markets, smuggling, and counterfeit products emerging. This is difficult to combat, and counterfeit products can seriously harm a brand.

What can business leaders and organizations do?

Besides preparing to deal with tariffs, businesses can take a few more strategic and powerful actions.

As prices rise and business transactions slow, cost optimization at all levels is crucial. However, businesses should also prepare to seize opportunities as they arise.

Perhaps the single biggest thing companies can do is to accelerate the digitization of their supply chains to deal with volatility, latency, and inefficiency more effectively. In Blue Yonder’s 2025 Supply Chain Compass Research Survey, 82% of leaders agreed that outdated technology will hinder their supply chain’s potential. Undoubtedly true. The biggest opportunity here is for companies to modernize their entire supply chain using a multi-enterprise network-based approach, as they compete with their network of supply chain partners.

A single, network-based platform for the entire supply chain ecosystem means each trading partner can optimize internally and orchestrate globally with partners, using interoperable cloud-based solutions specifically designed to work together for maximum efficiency. It facilitates end-to-end visibility across the supply chain network, speeds up collaborative decision-making, while lowering waste and costs at every node and link in the supply chain, leading to dramatic savings that can offset tariff costs.

By leveraging a digital supply chain network, organizations can gain an unprecedented ability to execute the SADA loop — see, analyze, decide, and act — much faster and more effectively. This is because they will have all the relevant and timely data from across the supply chain, enabling better analysis and decision-making in synchronization with trading partners.

Create competitive advantage through unprecedented network-wide visibility to orders, inventory, shipments, and product origin. This will enable companies to see, not just where product is now, or its final assembly point, but the origin of materials and components that went into the product. This chain-of-custody is vital information when mitigating the effects of tariffs. With the threat of black markets emerging as product prices rise, this visibility will enable companies to bolster the security of their supply chain.

Companies should consider using product authentication to mark and track products at the source and across the supply chain. A supply chain command center that monitors shipments across the network can help detect suspicious activity that could indicate product diversion, switching, or theft. It can alert companies to unusual shipment delays, missed milestones, and unplanned stops, which can indicate that the product is being tampered with. (Traceability can also help with sustainability, ensuring the product is sourced from the appropriate certified, compliant suppliers.)

Ensure supply chain systems are interoperable. With planning and execution cycles needing to shrink to address rapid market shifts, companies must analyze changes, understand the impact of decisions, and make decisions quickly. Plans need to adapt quickly to changing conditions and operational feedback to remain optimal and feasible. Interoperable planning and execution systems across demand and supply, as well as transportation and warehouse management, can compress long cycles and unlock greater agility, efficiency, and value.

Run what-if scenarios and use AI to help balance the costs, benefits, and tradeoffs. What-if scenarios are powerful analysis, decision, and action tools. Companies that digitize their supply chain network on a common platform will find such scenario planning to be far more powerful, as they can include trading partners in planning, get alignment, and quickly deploy differentiated plans across tariff-sensitive and tariff-immune product segments in their portfolio.

Adapt quickly with speed and precision by leveraging technology

Business leaders need to look at the big picture, long-term, while considering the important details and all the hidden costs (including the time and the cost of fully implementing changes). Bear in mind that tariffs might come and go rapidly, potentially making an expensive reshore move unnecessary in a year or two. So don’t rush or commit to big changes that are expensive and difficult to reverse.

On the other hand, it’s difficult to over-invest in modernizing supply chain technology. Such an investment in improved efficiency, resilience, and security will pay back regardless of whether tariffs are in force or not. It will lower costs across the supply chain and help organizations better manage volatility and respond more effectively to disruptions, regardless of their source.

Technology that can help evaluate the full end-to-end supply chain, factoring in the many cost tradeoffs and what-if scenario plans, that can track the chain of custody of products, and minimize tampering and theft, is invaluable. And it’s a huge advantage whether tariffs go up, down, or away completely. Your customers will thank you regardless.