Before You Panic Over Tariffs, Go Beyond the Headlines

Company Leaders Need Calm, Rational Analysis in the Midst of Chaos

Every few weeks – or days – new tariff announcements splash across headlines. And every time, panicked executives ask me: “Oh my goodness, Jim, what do we do?” Well, first off, don’t panic over tariffs.

Here’s my advice: Take a deep breath. Don’t make wholesale supply chain changes based on headlines alone. Just because a tariff has been announced doesn’t mean it will happen. And even if it does, it may not affect all your goods – or any of them.

That doesn’t mean do nothing. Instead, dig into the details. Run a careful tariff assessment. Start with the basics: Are your products even in the affected category? If not, great – keep moving forward. If they are, start developing optionality – alternative sourcing, production, suppliers and transportation.

Still, be careful about making major supply chain changes before the end of the year. After all, tariff news has whipsawed company executives for quite a while now, and the issue remains volatile.

If hard-hit U.S. textile manufacturers have been able to apply optionality, you should too. So, whether you’re importing products from Brazil, Mexico or other countries, you can examine alternatives.

Textiles Show How Optionality and Innovation Drive Resilience

ReGlobalization, driven in large part by tariffs, mandates optionality. And right here in North Carolina, Glen Raven has shown us what such a model of supply chain agility looks like in practice.

From the 1970s to the early 2000s, globalization devastated the North American textile industry. In the Carolinas and Georgia, companies closed 95 percent of their looms. One would think that Glen Raven, founded in 1880 as a cotton mill, would be history.

Instead, Glen Raven Mills still operates. And, I think, much of its current success can be traced to optionality. Because Glen Raven adapted to produce yarn around the globe while maintaining a significant presence in the United States. They now operate plants in South Carolina, North Carolina, France and China.

That footprint gives them optionality and a global capability to change operations when necessary. In fact, Glen Raven just recently added a third shift to its Sunbrella specialty yarn plant in Burlington, N.C.

Other firms, like Unifi, have revitalized some domestic textile production through innovation. In Yadkinville, North Carolina, the company recycles plastic bottles into a high-end polyester branded as Repreve. Brands like Ugg, Nike, Levi’s, Patagonia and North Face clamor for the material.

62% of Brazilian Goods Are Exempt – Are Yours?

Faced with 50% tariffs on materials and goods coming out of Brazil, your company operations might have to mimic what Glen Raven and Unifi have done.

Or maybe not.

As it turns out, the Brazilian tariffs exempt a lot of products – 62%, by my count.

The exclusion list includes oranges, oil and fertilizers, but not coffee or beef.

So, when Brazilian clients call me, and they do, I first want to know if their products are in the 62% exclusion list or the 38% that are going to get whacked.

Once we figure out which pile you’re in, then we can go from there. While a tariff assessment can be relatively straightforward, you have to use quite a bit of sensitivity analysis, because this stuff is changing at a rapid pace.

And honestly, I don’t think 50% is going to hold. The Brazilian tariff will probably wind up someplace between 15-25%.

So we’re going to look at this and say, worst case you have a 25% increase on these products. Where else can we get that product?

Because guess what, the world is bigger than Brazil. Tariff mitigation might involve nearshoring or friendshoring. Then we need to examine alternatives for transportation, the impacts on inventory and how we can mitigate those issues.

Then you have optionality for the future. And when the tariff landscape settles, your company can pivot to the right plan.

USMCA Can Turn Tariff Pain into Supply Chain Gain

Of course, my favorite question when facing disruption is simple: What new opportunities open up? Tariff pressure can be the catalyst you need to rethink your playbook.

Take the United States-Mexico-Canada Agreement (USMCA). For years, most companies ignored it. Why bother with extra paperwork when tariffs were only 1%? Now, with the threat of 30% tariffs on imports from Mexico and Canada, USMCA becomes a bigger deal.

Those who do the work will save. Those who don’t will pay.

Here’s an example. A U.S. company imports blenders from Mexico. But the blenders don’t qualify for USMCA benefits. Why? Because too many parts come from China.

Under USMCA’s “rules of origin,” all or a certain percentage of products must be made from U.S., Canadian or Mexican parts to enter duty free.

So, the company restructured its supply chain. It now buys motors from a U.S. supplier. Plastic housings come from Mexico. Circuit boards are redesigned and sourced in Canada. The Chinese parts are phased out.

The Mexican plant also adds more steps in the process – like molding the plastic and doing quality checks. These changes show “substantial transformation” within North America. The blenders now qualify as USMCA goods.

The results? Import duties disappear. Margins improve. The company gains stronger relationships with North American suppliers.

Yes, it took upfront investment. Yes, it required adjustments. But now the supply chain is more resilient, and the company is positioned for long-term growth.

That’s the power of USMCA. And that’s the opportunity you miss if you panic over tariffs. Done right, compliance goes beyond building costs. And your company builds a stronger, smarter, more regional supply chain that will serve your business for years to come.

Prepare Now. Pivot Later. Panic Over Tariffs Never

So don’t panic over tariffs. The world isn’t ending. Despite the volatile environment, your company has the capability and capacity to put plans in place now so you’re ready to pivot. Optionality – multiple viable paths forward – is your best insurance policy in a ReGlobalized world.

That means preparing the right partnerships, the right locations, and the right transportation and distribution options. Whether nearshoring, reshoring or friendshoring, you’ve got more tools than ever to mitigate tariff risks.

Combine that with technological advances in visibility and planning, and you’re far better positioned to weather the storm than you think.

Tariffs may grab the headlines, but insight and preparation win the day. I’d love to discuss how exploring optionality can strengthen your supply chain. Connect, and let’s chat.

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