With the recent election results, there is a renewed focus on trade policies that will significantly impact the logistics landscape. A major component of this shift is the anticipated expansion on tariffs, including a proposed 10% - 20% tariff on all imports and up to 60% on goods from China. For logistics leaders, these changes signal disruptions that demand strategic adaptation and foresight.
We are already seeing consumer brands take actions such as diversifying their production bases, planning to raise prices, and moving certain production tasks stateside.
At Motivational, we believe that being innovative and proactive is the key to maintaining efficient and cost-effective operations. With this, we’ve put together this guide to help consumer brands like yours re-evaluate your end-to-end logistics.
Evaluate the Agility of Your Supply Chain
Start by assessing your own supply chain flexibility. Are you prepared to handle changes in sourcing, production, transportation, customs?
Geographic Diversification for Supply Chain Resilience
Diversification isn’t just a switch up, but rather a calculated pivot that involves planning for potential financial and operational disruptions.
One example of this is a multi-country supply chain. Whether some operations move to the US, Cambodia, Malaysia, Philippines, Vietnam, Mexico, or Brazil for example, resilience through geographic diversification is one of many ways to lower the impact of the forthcoming proposed tariffs.
This is a growing practice referred to as ‘Friendshoring’, where supply chain networks are focused on countries regarded as political and economic allies.
Pre-Build Inventory to Hedge Against Tariff Spikes
Another proactive approach to offset the impact of upcoming tariffs is to pre-build inventory before the new policies take effect. This strategy allows companies to stock up on products at current, lower tariff rates, creating a cushion against future cost increases. It is worth noting that with this, while you may avoid certain tariffs, you will incur additional storage costs for the prebuilds.
If a prebuild strategy is more cost effective for you, it will mean you need a fulfillment and logistics partner in the US with the capacity for increased inventory.
Shift Production Elements to US-Based 3PLs
Another way to mitigate tariff impacts is to reshore parts of your production or assembly process to the U.S. Top-tier third-party logistics partners offer a range of services beyond traditional warehousing, such as light manufacturing, assembly, and kitting. By assembling or finishing products domestically, brands can avoid tariffs on fully imported goods.
An added benefit of this strategy is improved control and responsiveness. Operating closer to your customer base allows for faster lead times and enhanced supply chain oversight.
Some 3PLs can tailor their services to meet your specific needs. Don’t be afraid to ask your logistics partner for help with anything from simple assembly tasks to more complex production processes.
Employ Flexible Logistics Technology for Cost Optimization
Amid rising tariffs, flexible logistics technology can help offset increased costs. Tech that enhances supply chain visibility and operational efficiency are crucial for adapting quickly and maintaining profitability.
Some examples include:
- A Nimble Warehouse Management System (WMS)
- Dynamic Parcel Shipping
- Integrated EDI Systems
- Predictive Analytics
Engage Stakeholders with Transparent Communication
Clear and proactive communication is essential to successfully navigating any disruption, including tariff increases.
Internally, prepare your teams for potential impacts on production timelines, logistics adjustments, and customer service. Externally, inform suppliers, partners, and clients of your updated strategy to maintain trust and continuity.
This needs to happen both ways, meaning, your logistics partner should also be communicating regularly with you to ensure alignment and readiness.
Turning Challenges into Opportunities for your Logistics Operations
While new tariff policies present clear challenges, they also offer an opportunity for all of us to innovate and strengthen our logistics processes together.
At Motivational, we are dedicated to helping brands sustain growth even amid disruptions like this. We work to be more than just a service provider. We serve as a true partner, standing behind you as reliable allies in your journey. Want to learn more? Let’s talk.