President Trump has announced a series of sweeping tariffs, notably on steel and aluminum, automobiles, and key manufacturing and industrial inputs, marking a significant shift in U.S. trade policy. These measures have introduced substantial volatility into global trade, along with acute pressure on cost structures, supplier relationships, and inventory decisions across industries.

For businesses that rely on cross-border supply chains, these tariffs aren’t just a short-term cost increase; they’re a structural shift. To preserve margins, meet demand expectations, and remain competitive without sacrificing quality, companies must proactively rethink how they manage their inventory and design their supply networks. Read how.

The cost and complexity of inventory management amid tariff volatility

Tariffs introduce a double-bind: rising costs on one hand, and increased planning complexity on the other. Many businesses are now weighing whether to front-load purchases of affected goods, lock in current rates through temporary stockpiling, or shift sourcing altogether. Each option carries trade-offs.

• Stockpiling can trap working capital and increase warehousing costs, not to mention the risk of goods becoming obsolete if demand shifts.
• On the other hand, holding lean inventory can leave companies vulnerable to price fluctuations or even stockouts, especially when suppliers themselves are adjusting to the new policy landscape.
• The probability of a supply shock increases as suppliers, and suppliers of suppliers, grapple with inventory rationalization and forced shortages.
• Quality can also become an unintended casualty. As businesses scramble to find lower-cost alternatives to tariffed imports, they may pivot to unfamiliar suppliers only to find quality, compliance, or capacity issues down the line.

Companies need more than a reaction; they need a framework, capable of scenario planning, to evaluate cost impacts, simulate risks, and balance short-term mitigation with long-term resilience. That starts with precision: right-sizing inventory levels to preserve cash without compromising service and building demand planning models that adjust dynamically as trade policies shift.

Building resilient, engineered supply chains

Engineering a resilient supply chain means going beyond reactionary adjustments in the short term. It involves assessing geopolitical risk, logistical flexibility, and time-to-customer, while keeping profitability in focus. 

Strategies such as dual sourcing, nearshoring, and supplier diversification must be backed by data. Cost-to-serve models, margin sensitivity analysis, and vendor performance dashboards will help businesses make accurate and long-term decisions. 

Proper third-party risk management dictates that it’s not enough to just find a cheaper supplier. The strategic question is whether the full cost of pivoting – including onboarding, compliance, service levels, etc. – makes the business more competitive over time.

In conclusion: Build strategy for greater control

In an environment where tariff shocks can distort costs overnight, businesses need more than stopgap solutions. With the right processes, decisions that once felt high-risk, like reshoring productions or pivoting suppliers, can become grounded, strategic moves.

Tariffs may be outside your control. But your strategy isn’t.

How CohnReznick can help

At CohnReznick, we help companies navigate shocks and move beyond just reactive tactics. Our teams work cross-functionally to connect supply chain volatility to real financial levers, optimizing stock levels, identifying tariff-heavy goods, and mapping out high-exposure suppliers. We support our clients in evaluating alternative sources and conducting rigorous vendor due diligence to assess not just cost, but also continuity and compliance.

Contact our team to start building your plan for managing tariff pressure with smarter inventory management and stronger supplier networks.