Navigating the New Trade Turbulence: Procurement Strategies for Tariff Readiness
- With tariffs becoming a growing risk, procurement leaders must act now to mitigate disruptions.
- Strategies like supply chain diversification, financial risk transfer and contract renegotiation can shield businesses from unexpected costs.
- Effective scenario planning and cross-functional collaboration will separate the companies that thrive from those that struggle.
March 05, 2025 | Procurement Strategy
Tariffs are no longer just talk — they’re here.
With the U.S. preparing to enact tariffs against key trade partners like Mexico, Canada, the European Union and China, procurement leaders must move beyond reactionary measures and take decisive action to secure supply chains.
The past six months of relative supply chain stability—what some call the "Goldilocks zone"—may soon be over. European manufacturers are already contracting, U.S. businesses face growing financial exposure, and China’s retaliation looms large.
The question isn’t whether tariffs will disrupt your business, but when.
The companies that prepare now will be in the best position to weather the storm.
What should procurement be doing to stay ahead of disruptions?
1. Strengthen Supply Chain Flexibility Before It’s Too Late
Procurement teams can’t afford to rely on single-country sourcing anymore. Companies that have already started diversifying their supply chains beyond China — through strategies like “China-plus-one” and nearshoring — are ahead of the curve when it comes to building resilience and minimizing tariff exposure.
Companies that act now will have a wider range of supplier choices, while those that wait may find themselves scrambling for limited capacity.
2. Offload Risk Through Supply Chain Financing and Outsourcing
Smart companies are leveraging third-party providers to de-risk supply chains.
To bolster supply chain resilience, companies are outsourcing inventory management to specialized suppliers and leveraging 3PL partners for flexible, tariff-optimized routes. Securing supply chain financing further safeguards working capital against financial disruptions.
For example, companies moving parts back and forth between Mexico and the U.S. can optimize cross-border trade flows to minimize tariff exposure. Those who fail to rebalance their logistics risk getting hit with unexpected costs.
3. Protect Margins by Updating Supplier Contracts and Cost Models
When tariffs hit, the last thing you want is a contract that locks you into unsustainable costs. Procurement teams should be renegotiating now. Failing to embed tariff protections into supplier contracts today could mean skyrocketing costs tomorrow.
Mitigating trade risks requires proactive contract adjustments with tariff contingency clauses.
Companies should also consider expanding the total cost of ownership models to include potential trade barriers, so as to provide a clearer cost picture.
In addition, with greater flexibility in supplier agreements you can pivot more rapidly to alternative sources when needed.
4. Run Scenario Planning Drills Like Your Business Depends on It
Many companies underestimate how quickly tariff changes can upend supply chains. But while you can’t predict the future, you can prepare for it. Companies that engage in rigorous scenario planning will react faster and more effectively in navigating trade uncertainties.
By meticulously mapping best, mid, and worst-case tariff impact scenarios, businesses can proactively identify alternative suppliers and sourcing locations.
Crucially, aligning procurement, finance and operations teams ensures a unified response plan, enabling swift and decisive action when disruptions arise. This holistic approach empowers organizations to anticipate challenges and maintain operational continuity.
The Bottom Line: Adapt Now or Struggle Later
Tariffs aren’t disappearing from the global trade landscape anytime soon, and a wait-and-see approach is a losing strategy.
Procurement leaders who take proactive steps — diversifying supply chains, shifting financial risk, updating contracts, and scenario planning — will not only survive but emerge stronger.
The choice is clear: act now or pay later.
Take the Next Step
- Get more insights into how to handle tariff disruptions in the GEP bulletin “Brace for Impact: Unpredictable Tariff Disruptions Are Here – This Is Your Playbook”.
- Want to assess your supply chain’s tariff exposure and build a risk mitigation strategy? GEP’s experts can help.
- Stay current on the latest developments in supply chain and procurement software and strategy on GEP’s blogs.
