When Tariff Wars End, Fishing Nets Will Beat Fishing Poles

Why Supply Chain Resilience Also Requires a Bigger and Better Fishing Boat

Supply chain resilience in an era of tariff wars comes down to the difference between a fishing pole and a fishing net – preferably cast from a boat.

Confused? Don’t be. Think of the following two scenarios.

In scenario one, a fisherman (or woman) is standing on the riverbank below a dam. That’s where most executives are regarding what to do about tariffs. They’re not doing much, and they’re not catching many fish.

In scenario two, executives are steering high-powered fishing boats, trolling the river with nets. They’re not catching much either. After all, there’s not a lot of water.

But the tariff wars are filling that dam up with water. Some day – I think in late June or July, maybe August at the latest – that dam is going to break. At that time, we’re going to see a flood of change hit global trade.

The Trump administration will make trade deals with trading partners. They will establish tariff levels for other countries.

And the smart executives in scenario two, like many Tompkins Ventures clients, are ready to go. Their boats can handle the torrents of fast-moving water. They have their nets out. They’re ready for trade deals, foreign policy shift, supply chain optionality and whatever comes their organization’s way.

And they are going to catch a lot of fish.

Planning for the Flood or Waiting to Be Washed Down the River?

Because those manufacturers and retailers in scenario two have done the necessary work. They have answered the most important things: What does this mean to me, my bottom line and my customer prices?

How bad will tariffs affect our business if we’re sourcing from and trading with India? How bad are the tariffs if we’re sourcing from and trading with Vietnam?

What happens to your bottom line if tariffs on Chinese imports come to rest at 20%? What if Malaysia faces moderate tariff increases? How do different sourcing countries affect your cost structure?

That goes for anywhere there’s a tariff barrier in every country involved in your end-to-end supply chain. You, the executive in charge, along with your supply chain teams, need to know what could happen under many scenarios.

They’re the kinds of models your team should be running right now. Before the tariff wars quiet down.

Now, no one knows what the answers are, but you can kind of read the tea leaves and get some perception as to what is going to happen. The U.S. and China will settle things on automotive, steel, aluminum and other areas. But expect tariffs to wind up totaling between 10% and 20%.

Uncle Sam May Help – but Not Right Away

Now, I certainly expect President Donald Trump to combat increased costs with regulatory and tax relief.

Let’s say your industry tariff costs are going to be between X and Y. Well, then you can expect some tax relief to compensate. Or the White House will work with you on regulatory relief to reduce costs. Administration officials are against inflation, so they don’t want to increase consumer prices.

But such relief won’t happen immediately. Because tax cuts come from Congress, not via executive orders.

So, executive teams really have to do their jobs over the next several months.

You need to figure out the impact so you can figure out what to change. If we’re bringing goods in from Indonesia and the final rules reduce profitability by .5%, well, that’s OK. All successful organizations can deal with a .5% drop in profits without getting washed down the river.

Strategies to Steer Through the Tariff Torrent

But in other scenarios, the impact might be greater than .5%. But executives can deploy other strategies to achieve optionality. In other words, casting wider nets from a bigger and stronger boat.

What about buying ahead of the tariff? We know when the tariffs are going to take effect, so let’s build inventory stocks. Because the end of tariff wars will not mean the end of tariffs.

Now, just-in-case inventory is an expensive way to operate forever. Product sits in warehouses and does not turn over as much as you like. Therefore, factor in those inventory carrying costs.

Other options, like bonded warehouses and free trade zones, might not save money. But they can delay the tariffs. And if countries reach trade deals before you need that inventory, you have avoided the costs.

Also, look more carefully at the first sale rules. If you buy something from China, and then I buy it from you, the tariff is your responsibility. That could change depending upon contracts and negotiations, so review your contracts. Can your suppliers pass tariffs on to you or add transportation costs?

How about going to your suppliers and asking, in the spirit of partnership, to share the tariff costs? Maybe your supplier will pay half the tariffs, and you’ll pay half.

Because guess what? Suppliers in China or India want to sell as bad as you want to buy. And so the business in India or Indonesia or wherever might tighten their belts a little bit as well. Talking to your partners and cutting a deal with them is certainly viable.

And in a tariff-constrained environment, going back to the fundamentals is more important than ever:

• Sharpen freight rate negotiations.
• Consolidate shipments.
• Reduce waste.
• Improve cash flow visibility.

ReGlobalization Is the Way Forward

Of course, the biggest boat and the biggest net is ReGlobalization, the optionality of diversifying your supply chain to other countries. By July, the smart companies will either have optionality in place or at least have plans for optionality.

Nearshoring, reshoring and friendshoring are all on the table. Because you do not want to get stuck producing everything in one country and have that country smacked by tariffs.

We’re not going back to the pre-2020 world. Global trade is no longer about minimizing cost at all costs. It’s about strategic advantage, resilience and agility. ReGlobalization gives you the optionality to reduce production in countries hit hard by tariffs and shift to countries with lower tariffs.

Because as I’ve written time and again, ReGlobalization is not a retreat from globalization. The strategy is a smarter, more intentional approach to global trade. ReGlobalization is about understanding the new rules – economic, political and environmental – and designing supply chains that align with them.

That might mean reshoring critical manufacturing. Or nearshoring production to Mexico. Or friendshoring to trusted partners in Latin America, Eastern Europe or Southeast Asia.

Tompkins Ventures’ partners have helped clients do all of the above – and more.

Industries Likely to Be Reshored

Now, notice how I’m not talking about bringing everything back to the United States. Despite what you hear politicians claim on the cable and the nightly news, that’s not going to happen.

We’re not going to reshore toys. We’re not going to reshore footwear and apparel. Low-cost, low-wage assembly work will not come back to the United States.

A significant amount of trade will stay where it is, operate under a tariff deal amenable to the current administration, or be nearshored. Garments, Christmas stuff and toys could migrate to production areas in Latin America. Mexico under the USMCA could certainly benefit. So could Canada, to some extent.

However, national security concerns, automation advantages or high-tech requirements make some industries better reshoring candidates.

National Security-Oriented

• Semiconductors: Advanced chip fabrication, driven by CHIPS Act and Department of Defense support
• Critical minerals and rare earths: Lithium, cobalt and rare earth refinement
• Next generation energy and grid technology: Nuclear, hydrogen, storage technology
• Aerospace and defense: Drones, hypersonics, space tech

Tech-Heavy, Low-Headcount

• Pharmaceuticals: Biologics, APIs, mRNA therapies
• Medical devices: Imaging tools, implantables
• Enterprise SaaS and AI hardware: Edge computing, inference chips

Automated & Capital-Intensive

• Advanced 3D Printing: Aerospace components, implants.
• Electric vehicles and gigafactories: Electric vehicle batteries and EV drivetrains
• Industrial automation: Factory robots, warehouse automation

The Waiting Game Is a Losing Game

Many executives are stuck in a state of suspended animation, paralyzed by uncertainty. They’re watching global developments – U.S. tariffs on Chinese goods, geopolitical realignments, supply chain disruptions – hoping things will just settle down.

But when they settle down, the dam will break and the river will run. In the next 100 days, winning organizations will secure sourcing optionality. That means identifying and establishing backup sources across different tariff risk profiles – before the raging current hits.

You don’t need to rebuild your entire supply chain. You don’t need to nearshore or reshore everything overnight. But you do need options. You need to know where you could go, what it would cost and how fast you could pivot.

Redundancy builds resilience. Flexibility enables speed. Optionality ensures you don’t drown when the river surges.

So quit waiting for perfect information. You can plan smartly without it. Quit sitting idly waiting for clarity with your cane pole. Get on that big, bad boat and cast those nets wide.

If you wait until July to start moving, you’re going to be fighting for scraps. Your competition will have booked the best suppliers. The best lanes will be blocked up. And the best talent will be taken.

At Tompkins Ventures, we’ve been preparing for this moment. We’ve got the technology. The relationships. The procurement strategies. And the logistics solutions to help you weather the storm and come out ahead.

So, if you need help finding the right boat and the right net, let’s talk. What’s coming next is the deluge, and we would love to have your organization ready.

Don’t just want to wait until the dam breaks and hope.

Related Reading

• Workforce Development for Reshoring American Manufacturing
• Cargo Theft Is Rising; Trust Is the Solution
• Massive Tariffs Will Create Massive Supply Chain Disruptions