Navigating Trade Wars

Understanding recent tariff changes

Tariffs are a tool used by governments to protect domestic industries or respond to trade disputes. For instance, the U.S. steel tariffs have increased import prices by up to 25%, affecting industries reliant on steel, such as automotive and electronics. Similar measures are being adopted worldwide, altering the cost structures of numerous sectors.

Tariff changes influence supply and demand, forcing businesses to reconsider their sourcing and production strategies. Companies that rely on imported materials face rising costs, leading them to either absorb the expenses, pass them onto consumers, or relocate manufacturing to mitigate financial impact. This dynamic has created an environment where local production can, in some cases, become more viable than importing.

Supply chain disruptions and strategic adjustments

With shifting tariffs, supply chains are being reconfigured. A company importing semiconductors from Asia, for example, might seek alternative suppliers in tariff-friendly regions. Likewise, automotive manufacturers may prioritize local steel to counter rising import costs, affecting global production footprints.

However, these decisions carry risks. Given the temporary nature of some tariffs, companies must make strategic adjustments with incomplete information. Businesses that adapt swiftly while maintaining operational flexibility will be better positioned to handle uncertainties.

Reevaluating supplier agreements and production networks

Trade policy shifts compel businesses to renegotiate supplier contracts and rethink production volumes. A manufacturer sourcing materials from China might explore options in Latin America or Southeast Asia to avoid high tariffs. Such transitions demand new logistics partnerships and introduce fresh operational challenges.

To manage these changes effectively, companies need structured strategies focused on sustainability, efficiency, and risk mitigation. Leveraging industry expertise can help businesses navigate supply chain disruptions while ensuring safety and operational continuity.

The Competitive Edge: Adapting to a New Trade Landscape

Operational adjustments for flexibility

Companies facing higher import costs may increase domestic production, while others may consider reshoring or outsourcing. For example, Australian or Canadian aluminum producers may now need to seek other markets for their products, drive cost reduction or face inventory issues. These shifts, though often necessary, introduce challenges such as inefficiencies, workforce adaptation, and cost management.

Navigating complexity in supply chains

Organizations must reassess their supplier networks to counter rising import costs. Pharmaceutical companies sourcing raw materials from multiple suppliers, for example, may shift to lower-tariff regions. This transition could lead to short-term inefficiencies but offers long-term strategic advantages.

Mitigating business and operational risks

The evolving trade landscape presents several risks:

• Business uncertainty: Companies must make decisions— such as relocating production—without clear insights into long-term tariff policies. Agility is crucial.
• Operational challenges: Adjusting production strategies introduces potential downtime and quality control issues, requiring careful planning to minimize disruptions.
• Workplace safety risks: Expanding or relocating operations can impact worker safety, particularly when employees are unfamiliar with new environments. Investing in robust training programs is essential.

How dss⁺ can help businesses navigate trade challenges

As companies strive to adapt to the evolving trade landscape, dss⁺ offers expert solutions to enhance operational resilience, mitigate risks, and maintain competitiveness. Through a structured approach, dss⁺ helps businesses:

• Optimize supply chains: dss⁺ provides strategic insights to help businesses reconfigure supply networks, ensuring minimal disruptions while maintaining cost efficiency and sustainability.
• Enhance operational efficiency: By implementing best practices in lean operations and process improvement, dss⁺ assists companies in adapting to tariff-induced changes without compromising productivity. For example, if local production growth is required, dss⁺ can help debottleneck existing production operations and increase existing capacity usage, enabling growth with lower marginal capital expenditure.
• Strengthen workplace safety: With expertise in safety leadership and risk mitigation, dss⁺ helps businesses integrating new suppliers or relocating production maintain a strong safety culture, reducing workplace incidents and downtime. For example, dss⁺ has specific approaches to address safety related challenges which typically occur in these moments such as the increased in number of contractors and new hires, a situation which generally increases operational and safety risks.
• Develop risk management strategies: dss⁺ helps organizations build robust risk management frameworks to anticipate and respond proactively to policy shifts, minimizing business disruption. Implementing a robust Readiness to Operate (RTO) process for relocating operations is critical.
• Embrace new rules and regulations: New markets, products and geographies bring with them a new set of rules and regulations. Beyond helping clients to comply with these, dss⁺ supports the identification of issues, the design and implementation of processes, procedures and management operating systems which enable companies to grow sustainably, at a cost-efficient level.

Embracing Change to Sustain Growth

Trade policy changes are inevitable, but companies that anticipate disruptions and implement adaptive strategies will gain a competitive advantage. Businesses must embrace operational agility, reassess supply chain models, and invest in workforce training to mitigate risks and maintain stability.

A proactive approach—one that balances cost efficiency with long-term resilience— will be the key differentiator in navigating trade wars. Those who fail to adapt may find themselves at a disadvantage in an increasingly volatile global market.

By staying ahead of shifting trade policies, businesses can not only weather economic storms but emerge stronger and more competitive in the process.