Have a Tariff-ic Day!: How to minimize the impact of Trump’s Tariffs?

(How many items on this breakfast table will impacted by the new tariffs?  Yeah, you guessed it – basically ALL of them!)

Love him or hate him, President Trump is not playing around in his first 100 Days in the Oval Office.  Arguably, the biggest item of note are the new tariffs being mandated on Canadian and Mexican commerce – and it is here.

In a nutshell, here is what is happening,

As of March 4, 2025, all imports from Mexico and Canada are now subject to 25% tariffs (with the exception of Canadian energy imports subject to 10% import duties), and the 10% tariff initially imposed on Chinese imports in February doubling to 20%.  (source, Dentons)

These executive orders issued by The Donald will certainly impact all of us. 

The cost of everything from orange juice, appliances apparel, paper and even BEER! GASP! Beer!  And the list goes on and on and on.  Buckle your seatbelts, America.

Obviously, this is/will cause a major shift in supply chain and logistics practices.  We need to control what we can and see how this whole thing plays out.

Here are five (5) key strategies for your distribution center and broader supply chain operations:

1. Optimize Your Supplier & Sourcing Strategy

✅ Diversify Suppliers

• Identify alternative suppliers in non-tariffed regions (e.g., Latin America, Europe, or domestic options).

• Establish backup agreements with secondary suppliers to reduce risk.

  
  

✅ Leverage Nearshoring Smartly

• If sourcing from Mexico, consider partnering with manufacturers in free-trade zones or countries with preferential trade agreements with the U.S. (like Chile, Colombia, or Costa Rica).

• If feasible, explore reshoring some production back to the U.S. to avoid tariffs entirely.

  
  

✅ Renegotiate Supplier Contracts

• Work with suppliers to share tariff costs or explore bulk purchasing discounts to minimize price spikes.

  
  

2. Adjust Logistics & Transportation Strategies

✅ Reroute Shipments & Optimize Border Crossings

• Avoid congested entry points (like Laredo, TX) by exploring alternative crossings with lower delays.

• Use bonded warehouses near the border for transloading and consolidation to reduce customs risks.

  
  

✅ Leverage Multi-Modal Transportation

• Consider rail and intermodal options to reduce trucking reliance.

• Air freight may be costly but could be a short-term solution for high-value or time-sensitive goods.

  
  

✅ Optimize Distribution Center Placement

• If tariffs increase costs, re-evaluate DC locations to be closer to U.S.-based suppliers.

• If importing from Canada or Mexico, warehousing near ports (Houston, Los Angeles, or New Orleans) may help shift imports to ocean routes instead of land.

  
  

3. Strengthen Inventory & Warehousing Strategy

✅ Stockpile Before Tariffs Take Effect

• Increase inventory levels for highly impacted goods before tariffs hit.

• Secure additional warehouse capacity if needed to store extra inventory.

  
  

✅ Balance Just-in-Time (JIT) & Just-in-Case (JIC) Inventory

• If operating on a JIT model, consider a shift toward JIC for critical goods to buffer against supply chain shocks.

• Use predictive analytics to forecast demand and prevent stock shortages.

  
  

✅ Explore Foreign Trade Zones (FTZs)

• FTZs allow you to defer, reduce, or eliminate tariffs by storing goods in a tax-free zone before they enter the U.S.

• Consider setting up or working with FTZ-enabled warehouses near ports or borders.

  
  

4. Manage Tariff Costs with Strategic Pricing & Cost Recovery

✅ Pass Tariff Costs to Customers Strategically

• Implement tiered pricing models where customers pay slightly more for affected goods.

• Offer longer-term contracts with locked-in pricing before tariffs take effect.

  
  

✅ Leverage Duty Drawback Programs

• If you re-export goods from the U.S., apply for a duty drawback program to reclaim some tariffs.

  
  

✅ Automate Tariff Classification & Compliance

• Use AI-driven customs compliance tools to ensure proper tariff classifications and minimize unnecessary duties.

• Work closely with customs brokers to avoid misclassification penalties.

  
  

5. Strengthen Trade & Compliance Readiness

✅ Monitor Trade Policies Proactively

• Stay updated on tariff changes by subscribing to trade alerts and customs notifications.

• Engage in industry groups (e.g., National Association of Manufacturers, American Trucking Associations) to advocate for policy shifts.

✅ Train Supply Chain Teams on New Tariff Rules

• Ensure your logistics and procurement teams understand new regulations and compliance requirements.

• Use automated trade compliance software to flag potential tariff risks before they impact operations.