Disruptions Beyond Tariffs

Matt Bartlett

05-08-2025

The past three months have garnered more attention on tariffs than perhaps the prevailing three decades. Facing substantial financial impacts, companies are discussing actions to weather the storm, and where to find safe harbor. The immediate impact for business’ profitability and liquidity is real and is profound: in conversations I’ve had, businesses are seeing tariff exposure from low-single digit impact to EBITDA (earnings before interest, taxes, depreciation, and amortization), to multiple times annual earnings.

For companies facing existential crises from tariffs, there must be an immediate focus to rescale and reimagine the business to survive. Most business leaders must consider impacts of tariffs as part of the broader context of disruptors and challenges at play, or else risk the missed opportunity to build their supply networks for robustness. These disruptors and challenges include:

• Technological advancements, especially the development and deployment of artificial intelligence, additive manufacturing (3D printing) and automation.
• Skilled labor shortages, especially harder-to-automate skilled trades, technical manufacturing and maintenance roles.
• Geopolitical disruptions, including recent conflicts in the Middle East and Ukraine and the unpredictability of global events going forward.
• Global logistics network disruptions, spawning from a variety of factors: climate impacts on Panama Canal operations; blocked shipping lanes in the Suez Canal from the Ever Given; vessel rerouting to avoid Houthi militias; and coordinated port strikes in the U.S.
• Industry-specific shocks, especially impacting Tier-1 and Tier-2 suppliers with significant reliance on stable OEM demand and performance.

Building Beyond Tariffs: Actions to Consider for Broader Disruptions

The competitive landscape is shifting with the convergence of these disruptive forces. Winning the long game requires a focused effort to be both more agile and more robust. When future-proofing supply chains, leaders should evaluate actions across these five areas as part of comprehensive strengthening against disruptions:

• Reposition supply networks for localized production. Look to create regional or local “hubs” with suppliers and manufacturers, and consider use of third-party manufacturers to accelerate ramp-up while reducing capital expenses and overall risk.
• Establish multi-tier supply visibility and origination transparency. Understand upstream impacts with greater clarity for all potential disruptions, and enable more strategic conversations with suppliers on innovation, quality, supply assurance and cost containment.
• Build talent capabilities for future crises, including adoption and investment in AI, automation and critical labor skillsets. First movers will often be the winners when disruptions arise. Having the right structure, skills and capabilities could well be the difference to moving first, with confidence.
• Accelerate innovation cycles. Align innovation timing more closely with market trends, while reducing investments through expanded use of enabling technologies for research and design.
• Evaluate current holdings and assets. As the global landscape shifts, business leaders should regularly assess their portfolio for market opportunities and market realignment.

Near-term uncertainties around tariffs and global trade will likely continue. Don’t allow them be the singular, dominating factor in future decisions on supply chains and business operations. Positioning for long-term success – and unlocking greater value – requires a broader focus and action across the disruptive forces in play.