Tariff News Will Bring Partial Clarity Aug. 1

Executives Have Short-Term, Long-Term and Strategic Options

Aug. 1 is three days away. Aug. 12 is two weeks from today. Tariff news coming from those two deadlines will bring greater clarity for supply chain teams and the economy as a whole.

At least that’s what I expect. In the last few months, tariffs have dominated the news cycle. China tariffs, secondary tariffs, reciprocal tariffs, retaliatory tariffs – all kinds of tariffs.

President Donald Trump recently sent letters to leaders of various countries setting various deadlines for trade deals. Unlike previous presidents, in his mind, those aren’t negotiating positions. For the 47th president, those deals are done.

Most countries face a deadline of Aug. 1 to accept or, perhaps, offer negotiations. China has a special deadline of Aug. 12.

While the news seems to change every day, sometimes every hour, I think many of those deadlines will hold. Countries and trading blocks are taking the deadlines seriously.

Yes, United States trade policy seems to turn on a dime. But that’s because Trump’s negotiating style constantly maneuvers the playing field, looking for leverage and advantage where possible. And the Trump administration believes the U.S., the world’s largest consumer economy, is in a strong position.

So, with time running short, executive and supply chain teams must face two facts. First, if you haven’t already started, prepare to add optionality to your supply chains. You need new partners for alternative sourcing, production, supply and distribution as the world ReGlobalizes.

Second, economists have predicted Trump’s tariffs would plunge the economy into depression since his first term. (This 2018 story from Politico details how 1,100-plus economists warned against protectionist trade policies.)

Obviously, that hasn’t happened. Maybe the economy is more flexible than academic modeling. Maybe the pain is coming. Or, as The Wall Street Journal reported, perhaps the U.S. economy will retain its swagger.

Either way, businesses have short-term, long-term and strategic options to deal with the coming era of tariff enforcement.

Tariff News Brings ‘Just in Case’ Back from the Grave

Many Tompkins Ventures partners have used our networks to help build inventory ahead of tariff deadlines.

My three Purdue industrial engineering degrees tell every fiber in my soul that “just-in-case” tactics are not optimal. Inventory is waste, so for companies seeking efficiency, just in case died decades ago.

But changing times call for change. And beating a 30%, 40% or 50% tariff seems like a good bet, although others are waiting until the tariff smoke clears. Companies who build excess inventory won’t sell it immediately; therefore, your teams should explore bonded warehouses and free trade zones.

You also can renegotiate supplier terms, splitting tariff costs. And, over time, you can wring at least 10-15% of the waste out of supply chains.

Longer-term, for manufacturers, while reshoring is real, it’s not universal. In sectors where labor isn’t a major cost, we have already seen movement. High-tech, automotive and automated production are leading the charge. And companies have already committed $1.6 trillion to new U.S. manufacturing. Apple, Nvidia, Micron, IBM and TSMC are investing heavily.

However, one goal of higher tariffs will always remain elusive: Driving all manufacturing back to the U.S. About 40% of products by dollar and 60% by volume will not reshore. We’re not rebuilding the labor-intensive infrastructure for toys, apparel, low-cost furniture or seasonal home décor.

The U.S. does not have the workforce nor the infrastructure. Textile mills are now lofts, apartments and food halls. Factories have transformed into condos, office space, artists’ studios, boutique hotels and more.

That’s why ReGlobalization combines reshoring with nearshoring, friendshoring and the right technology. International trade will remain a large part of the U.S. economy, probably forever.

According to John McCown’s “The McCown Report,” inbound US. container volume to the top 10 U.S. ports decreased 7.9% in June. But overall volume still totaled 1,879,461 TEUs.

That’s a lot of containers, a lot of trade. So ports, logistics hubs and transportation to and from will remain critical.

ReGlobalization and the Rise of Optionality

But in the future, these goods won’t be arriving from the same source or travel the same path.

It took time and talent to globalize supply chains for the cheapest, single source. Usually, that was China. Now, your time and talent must examine the world.

That’s why your company’s strategic response means ReGlobalization. Build new supplier relationships, rework customs and compliance documentation and rethink inventory flows.

Many executives hear me discuss optionality and think they can find one small, alternative supplier. But sourcing 90% of your products from one place and 10% from another is not true optionality. Ideally, procurement should split 40%, 40% and 20%. That kind of mix should allow your company to pivot supply sources in response to any disruption.

That’s the resilience of ReGlobalization at its best.

Getting a head start on finding new sources of production and supply is critical. When the dust settles and rules are final, companies, including your competitors, will try to up their game. They will race to find the best manufacturers, logistics partners and local capacity.

But they’re probably going to be too late. The best suppliers in any given region are finite. Waiting could leave your company locked out or paying a premium. Early movers will secure the most resilient, cost-effective options for the era of ReGlobalization.

That’s why we like Dynamic Supply Chain Optionality, or DSCO. This toolkit helps you build adaptable networks using AI, digital twins and scenario modeling. The results provide real, executable alternatives that work with not just your supply chain, but your entire value network.

And that allows your company to adapt dynamically. Because while tariffs are the latest storm, the last decade has taught business leaders that the next disruption is right around the corner.

Why Economists Get Tariffs Wrong

So why haven’t we had catastrophe yet?

Economists are smart, and they have fantastic models. However, models assume linear reactions. Higher import costs mean higher consumer prices mean less spending mean less GDP.

But models cannot predict volatility, policy nuance, human adaptability or President Trump’s seemingly chaotic trade negotiations. If you go from a 50 percent tariff one day to 125% three days later to 15% the next, how can models keep up?

Some consumers respond by stocking up, while others decide to delay purchases. Trade representatives announce a pending deal; then it falls apart. Executive orders for exemptions, delays and carve-outs soften the blow of higher tariff rates.

The best analogy is weather. Models predict a hurricane. People prepare. But sometimes the storm veers. Sometimes it drizzles.

Either way, reality doesn’t unfold in a vacuum. Forecasts are predictions, not outcomes.

Meanwhile, as mentioned above, smart companies have already started finding workarounds with ReGlobalization, switching suppliers, negotiating better deals, adding inventory before the tariffs hit.

So, the hard numbers today don’t fully reflect the soft predictions.

However, the forecasts might not be wrong. It may just mean the economy is more flexible, or the pain is still on the way.

Either way, your strategic response should start now – if you haven’t already.

When Tariff News Dies, It’s Too Late to Move

Could these predictions fall flat? Yes. Predicting what President Trump announces next is, at best, difficult. And usually impossible.

So Aug. 1 and Aug. 12 could pass by, and tariffs could get another reprieve.

But even if that happens, sometime in the not-too-distant future, you and your competitors will know what the tariff schedule is. And if you waited until tariff news dies down to take action, you’ll be scrambling.

Because companies that embrace supply chain optionality and resilience will gain market share. Strategic flexibility, powered by DSCO in an era of ReGlobalization, becomes the edge.

If you haven’t started that work, it might not be too late. If you’ve started, accelerate. And if you’re well underway, validate your assumptions and test your scenarios: sourcing, logistics, cost structure, geopolitical risk. Because you need plans A, B, and C—and the means to switch between them at speed.

I’d love to hear how you’re approaching this. What have you reshored, nearshored or friendshored? Where are you building optionality, and how are you preparing for Aug. 1, Aug. 12 and beyond?

Drop me a line. Let’s discuss ReGlobalization.

Related Reading

• Free Trade Is Dead; Global Supply Chain Redesign Is Alive
• If an Economist and a Consumer Scrap, Who Wins the Fight?
• Adam Smith Wants You to Redesign Your Supply Chains