Evolving tariff policies and trade barriers are intensifying pressures on global supply networks, urging companies to adapt through localisation and diversification amid mounting uncertainty and rising costs.
Global supply chains are experiencing unprecedented pressure due to evolving tariff policies and trade barriers, which inject significant uncertainty, disrupt operations, and elevate costs across various industries. Creditsafe’s recent research on tariff risks within the supply network highlights how companies are contending with exposure to fluctuating trade regulations, threatening to destabilize their supply systems. A crucial factor identified is the overreliance on a single market, making businesses particularly vulnerable. The study emphasizes which sectors face the greatest risks from rising tariffs and offers practical strategies for companies aiming to reduce their exposure and bolster resilience amid volatile trade conditions.
For example, the pharmaceutical industry faces substantial risks from new tariff initiatives, such as proposed tariffs reaching up to 200% on imported medicines. This move, part of an effort to revive domestic manufacturing and reduce foreign dependency, could initially make drugs more expensive and less accessible. While some pharmaceutical firms are investing heavily in U.S. facilities, the reliance on imported active ingredients complicates full localization efforts, which remain costly and slow. Experts warn that even modest tariffs could increase drug prices by approximately 10-14% once existing stockpiles diminish, impacting vulnerable populations like the elderly and low-income groups.
Broader trade policies have also been impactful. Since the early 2020s, the Trump administration has imposed broad tariffs on imports from China, the EU, Mexico, Brazil, and India, affecting steel, autos, electronics, and pharmaceuticals. These actions have prompted legal challenges, with courts ruling many tariffs temporarily illegal, pending further review. Critics from economic and political spheres warn these tariffs could fuel inflation, raise consumer prices, reduce investments, and provoke retaliations from trading partners. The automotive and electronics sectors have particularly felt the pinch, facing increased costs and logistical challenges. Such tensions have caused stock market volatility and altered global trade flows, complicating planning and forecasting for businesses.
The impact on U.S. import volumes has been notable. In June 2025, the U.S. port throughput dropped by 8.4% year-over-year to 1.96 million twenty-foot containers, according to Reuters, reflecting declining trade amid tariff concerns. The National Retail Federation predicts a 5.6% decline in cargo volume by the end of 2025 compared to the previous year. Rising tariffs, especially on countries like India, Brazil, and Switzerland, have led retailers to modify supply chains in an effort to mitigate costs. Industry leaders warn that ongoing tariff uncertainty hampers business planning and ultimately results in higher consumer prices, reduced product availability, and slower economic growth. They advocate for trade agreements that focus on reducing tariffs rather than increasing them further.
The clean energy sector faces similar challenges. Tariffs on critical components like batteries, solar panels, and electric vehicle (EV) parts threaten to hinder U.S. progress toward climate and energy goals. For instance, tariffs on grid batteries could reach over 80% next year, jeopardizing storage projects. Additionally, a 100% tariff on Chinese-made EVs and rising import costs for EV parts are constraining domestic production. Solar energy development, heavily reliant on imported equipment from Southeast Asia, is also at risk. Although some importers are stockpiling supplies, the domestic manufacturing capacity remains insufficient to meet sector demands, jeopardizing the pace of clean energy expansion. Rising costs due to tariffs on energy inputs like steel and aluminum further complicate efforts to build a sustainable energy infrastructure.
China is responding to these trade tensions by accelerating efforts to reduce dependence on foreign components, a move reinforced by tariffs and retaliatory levies that have reached up to 125%. Companies across sectors such as semiconductors, chemicals, and medical devices are increasingly localizing their supply chains to mitigate risks and reduce costs. Firms like Estun Automation and China Harzone Industry Corp are replacing foreign inputs with domestic alternatives, a shift supported by China’s strategic initiatives like “Made in China 2025” and the “dual circulation” policy. While these moves strengthen China’s industrial self-sufficiency and reshape global supply networks, they also pose challenges related to inefficiencies and heightened tensions. Overall, the trade war appears to have catalyzed China’s push for self-reliance, potentially leading to permanent structural shifts in global supply chains.
In the United States, recent supply chain disruptions mirror some of the difficulties experienced during the COVID-19 pandemic. Elevated tariffs and ongoing trade uncertainties are contributing to material shortages, increased costs, and delays. Industry reports indicate that disruptions are now among the most severe in two years, with auto manufacturers particularly affected—halting production due to shortages of essential components. These issues are largely driven by tariffs, with delays and rising costs reaching peaks similar to those seen during the pandemic’s supply chain crisis. Also, there are concerns that China may be slow-walking shipments of rare earth minerals, vital for electronics and batteries, potentially violating recent trade agreements. These challenges underscore long-standing vulnerabilities in U.S. supply infrastructure, which are now exacerbated by current policies that complicate efforts to modernize and stabilize supply chains.
In summary, the current landscape shaped by tariffs and trade tensions presents significant risks for global supply chains. Companies are reevaluating sourcing strategies, diversifying markets, and investing in more flexible and resilient supply networks. While some policymakers and industry advocates view tariffs as tools to bring manufacturing home and protect local industries, evidence suggests that such measures often lead to higher inflation, reduced availability of goods, and increased supply fragility. Moving forward, a balanced approach—emphasizing predictable, targeted tariff policies and strategic trade agreements—may be essential to preserving the stability and efficiency of international supply networks amid ongoing geopolitical shifts.
Source: Noah Wire Services
