Advertisement
Advertisement

The supply chain strategies retail is using to respond to tariffs

Date:

Share post:

By Eric Linxwiler. The Trump administration has revived tariffs as a core instrument of U.S. trade policy, imposing sweeping new duties on imports from Canada, Mexico, and the European Union, a 10% baseline
tariff on nearly all U.S. imports, and sharply elevated rates—up to 145%—on Chinese goods.

These actions and the threat of even greater tariffs to come have triggered a rapid escalation in trade tensions, with U.S. trading partners announcing retaliatory tariffs of their own.


Eric Linxwiler
Eric Linxwiler

For retailers, the result has been a surge in sourcing costs, mounting supply chain complexity, and growing uncertainty in pricing and planning. Some companies have responded by front-loading inventory or passing on costs to consumers, but those reactive approaches alone are insufficient for what is increasingly looking like a structural shift in global trade. The new normal will require long-term strategic adaptation.

A new report from TradeBeyond, Managing Tariff Turbulence in Supply Chains, highlights eight strategies that brands and retailers are using to build resilience and mitigate the risks posed by tariffs this year and beyond, including diversifying supplier bases, employing real-time scenario planning, and exploring tariff engineering.


Diversifying Suppliers and Sourcing

While diversification has long been a foundational sourcing principle, 2025 has exposed just how fragile even moderately diversified supply chains can be. The recent tariff escalation caught many companies off guard—particularly in high-risk categories like apparel and consumer electronics—despite efforts to broaden their supplier base.

What’s different now is the speed and scale of tariff changes, which are forcing brands to reassess not only their country exposure but also their supplier readiness. Many are moving beyond basic diversification, building out multiple pre-vetted alternatives in each major category and negotiating capacity-sharing agreements that enable production to shift on short notice.

To reduce exposure, sourcing teams are now identifying new suppliers in lower-tariff regions and adjusting their logistics networks accordingly. Some maintain a preferred vendor list within a centralized sourcing platform, ensuring two or three vetted alternatives in each major product category. Others are negotiating capacity-sharing agreements that allow production to shift quickly without the need for renegotiated factory approvals.

Mapping out a complete alternate supply chain on short notice is difficult and time-consuming, which is why leading companies are turning to digital platforms that centralize supplier profiles, certifications, and performance data. Real-time visibility into supplier capabilities and compliance metrics is critical for managing the volatility of today’s new global trade order.

Operationalizing What-If Planning and Scenario Modeling

Uncertainty around tariffs has made scenario planning essential. Retailers need to be equipped to model different sourcing, pricing, and inventory outcomes quickly—at any point in the planning cycle. Scenario planning enables teams to ask “what if” questions: What if tariffs rise another 10%? What if a preferred supplier is suddenly targeted by new duties? What if rerouting or reshoring could reduce total landed cost?

The most resilient organizations are enabling cross-functional teams—not just finance—to run these simulations in real time. That requires a multi-enterprise platform that centralizes landed cost inputs and supports granular, SKU-level modeling based on shifting trade policies. The goal is to move from reactive cost-cutting to proactive decision-making.

To enable this, businesses are adopting open costing systems that incorporate full cost breakdowns beyond just FOB pricing—factoring in freight, duty, insurance, and compliance costs. When combined with real-time HTS classification data, these tools ensure accurate duty calculations and allow for rapid response to new tariff conditions. This is no longer a theoretical exercise; it’s a core competency for companies navigating today’s sourcing challenges.


Exploring Tariff Engineering

Some companies are taking a more technical approach by exploring tariff engineering— modifying product design or classification to qualify for lower tariff rates. For example, an apparel manufacturer might adjust the fiber composition of a shirt to reduce its applicable tariff.

Others are auditing high-risk SKUs to identify reclassification opportunities or substitute inputs
that maintain quality while reducing costs.


Accurate tariff classification is the foundation of this strategy. Companies must ensure that every
product has an HTS code assigned at the item level based on material composition, construction,
and intended use. Misclassification can lead to overpayment or regulatory penalties, which makes regular auditing and staff training essential.


Businesses are also revisiting duty drawback programs, which allow companies to reclaim tariffs paid on goods that are eventually exported. Additionally, some are leveraging foreign trade zones (FTZs) to defer or eliminate tariffs on goods processed or stored within those areas. While these strategies may seem niche, they can offer meaningful savings—especially when margins are tight and tariffs are high.

These and other strategies are covered in greater depth in TradeBeyond’s new Managing Tariff Turbulence in Supply Chains report. As the trade landscape continues to shift, companies that invest in flexibility, transparency, and cross-functional coordination will be best positioned to thrive. Tariffs may be unpredictable, but with the right strategies in place, retailers can protect profitability and maintain supply continuity.

(Eric Linxwiler is Senior Vice President of TradeBeyond. He has over 30 years of experience in
enterprise software and cloud-based platform companies with a specialty in supply chain
optimization and workflow management. Contact him at eric.linxwiler@tradebeyond.com.
?

Related Retail Insider stories:

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From Retail Insider

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Loblaw Expands Maxi Discount Strategy in Quebec

Loblaw opens a new Maxi and Pharmaprix in Mont-Laurier as part of a broader national push into hard-discount grocery formats.

Pizza Pizza tops Elite Franchise annual franchise list

The annual ranking recognizes brands that are not only performing at a high level today but are actively shaping the future of the sector through innovation, resilience, franchisee support, and long-term growth.

Giant Tiger and Kids Help Phone unveil new youth-designed pink shirt for Anti-Bullying Day

Through its Anti-Bullying campaign, Giant Tiger has raised more than $350,000 to date to help fund KHP e-mental health services, creating real impact in communities across Canada.

Recipe Unlimited announces 3rd new Olive Garden location in Canada

The restaurant will open in Ajax, Ontario, bringing the brand's Italian-inspired dining experience to a new community in Eastern Canada.

Tim Hortons raises $1.3 million through Special Olympics Donuts, with 100% of proceeds donated to Special Olympics Canada

The funds raised from Special Olympics Donuts support year-round, inclusive sport programs for more than 40,000 athletes with intellectual and developmental disabilities.

Steve’s Music Restructures, Closing Most Stores

Steve’s Music is restructuring its Canadian operations, closing most stores and focusing on a single Montreal flagship and online sales.

IKEA Canada partners with Africville Museum to host immersive exhibit in Halifax 

Nova Scotia is recognized as the birthplace of African presence in Canada.

Canadian Tire Fined $1.29M for False Pricing in Quebec

Canadian Tire will pay $1.29 million after pleading guilty to 74 counts of false advertising tied to inflated reference prices in Quebec.

From The Desk: Experiential Retail and Luxury Growth Shape the Week

Experiential activations, luxury expansion, and retail restructurings highlight a week of strategic recalibration across Canada’s retail sector.

Just Socks Foundation Sock Drive Returns for 11th Year

Just Socks Foundation launches its 11th annual sock drive, culminating in a February 13 Big Sock Drop serving more than 40 charities.

Bang & Olufsen Returns to Yorkville With New Toronto Store

Bang & Olufsen is opening a new Toronto flagship at 135 Yorkville Avenue, marking its return to the city’s luxury retail corridor after several years away.

Statistics Canada reports retail sales growth

In November, the largest monthly increase in dollar terms came from sales of food and beverages, which rose 5.6% compared with the same month in 2024.

Time Out Market Vancouver reveals further additions to its all-star culinary lineup of local chefs and restaurateurs

Time Out Market Vancouver – located at Oakridge Park – is 51,000 square feet of space and will feature 18 kitchens, one dessert and one coffee counter, alongside three bars, multiple event spaces, around 1,000 seats and a large outdoor terrace facing onto a public park. 

Cadillac Fairview malls celebrate Olympics and Chinese New Year

“Our shopping centres serve as true gathering places for our communities."

Affirm partners with Wayfair in UK and Canada

The recently expanded partnership brought Affirm to Wayfair’s online and in-store checkouts across the US last October.

To lower grocery bills, food supply chains need to be improved: McGill professor

The expanded Canada Groceries and Essentials Benefit does not reduce the grocery bills. 

Consumers approaching Valentine’s Day comfortably and intentionally: Lightspeed Commerce

Nearly two thirds of North American consumers (62%) feel little to no pressure to spend money on Valentine’s Day. Instead, most shoppers are approaching the holiday comfortably and intentionally.

DX3 2026 Reimagines Canada’s Leading Retail Conference

DX3 2026 returns to Toronto with a reimagined, executive-focused format moving beyond the traditional trade show model.

VIDEO: Canadian consumers holding steady but under strain as debt and uncertainty persist: Economist Todd Hirsch

Household debt is a growing concern, particularly among consumers relying on high-interest credit cards to cover essentials such as food and fuel.

Lightspeed Commerce sees revenue increase but a net loss in Q3

Revenue grew by 11% compared to last year but a net loss of $33.6 million.