As the United States navigates evolving economic policies in President Trump’s second term, procurement and supply chain leaders must prepare for a rapidly changing landscape. Recent shifts in trade, energy, and immigration policies present both challenges and opportunities. Strategic foresight, supply chain resilience, and innovation will be critical in adapting to these changes.
Shifting Trade Dynamics
On February 1, 2025, the U.S. administration declared a national economic emergency and implemented new tariffs, including:
- An additional 25% tariff on all imported goods from Canada and Mexico
- An additional 10% tariff on all imports from China
- A 10% tariff exception for energy commodities from Canada
However, only two days after signing the executive order, President Trump agreed to defer these tariffs for 30 days after both countries pledged to strengthen border enforcement.
While Trump has affirmed a 30-day pause on the implementation of tariffs on Canada and Mexico, China has threatened additional tariffs on U.S. exports, further complicating international trade dynamics. Negotiations and discussions between the two countries are ongoing, with the potential for further adjustments to tariff strategies.
It remains unclear whether Trump will follow through on his threats to Canada and Mexico once the 30-day deadline expires. This uncertainty might see businesses reduce their reliance on American markets, hold off on investments in new factories, or delay hiring workers until the trade standoff becomes clearer.
Meanwhile, China has threatened to impose a 15% tariff on imports of coal and LNG from the U.S., stating that these tariffs will come into effect on February 10, 2025. China also plans to impose 10% tariffs on U.S. imports of crude oil, agricultural machinery, large-displacement vehicles and pickup trucks.
Impact on Procurement and Supply Chains
Canada and Mexico are more vulnerable to these tariffs than China, given their deep trade ties with the U.S. North American supply chains, particularly in manufacturing and consumer goods, face significant disruption.
U.S. consumers may experience higher prices on staple products and alcoholic beverages due to retaliatory tariffs from Canada and likely measures from Mexico. The automotive industry, including major manufacturers such as GM and Ford, will be significantly impacted by increased raw materials and components costs.
Additionally, base metal, electronic component, and chemical prices are expected to rise, further raising manufacturing costs in U.S. industrial hubs. Logistics, packaging, and construction costs will also increase, affecting overall market competitiveness.
With further retaliatory actions possible from Canada, Mexico, and China, as well as potential tariff escalations involving the EU and BRICS nations, businesses must prepare for additional volatility.
Mitigation Strategies for Procurement Leaders
To mitigate these challenges, procurement leaders should emphasize supply chain diversification. Exploring sourcing alternatives in Southeast Asia, India, Latin America, or Central and Eastern Europe (CEE) can reduce financial strain from tariffs and decrease dependence on a single geopolitical region.
For some, reshoring production to the U.S. may be an attractive option, particularly with potential tax incentives for domestic manufacturers. However, these approaches come with trade-offs—higher labor and operational costs—which businesses must evaluate to ensure profitability.
Labor Challenges Amid Immigration Policy Changes
Tighter immigration policies under the new administration have included the declaration of a national emergency at the U.S.-Mexico border, deploying military personnel, and reinstating strict immigration controls.
This intensifies pressure in an already strained labor market for procurement and supply chain leaders. Addressing these challenges will require a mix of strategies, including increased automation, workforce upskilling, and cultivating strong partnerships to stabilize labor supply.
Beyond immediate concerns, stricter immigration policies may ripple through supplier networks, delaying production timelines and driving up costs. Companies must anticipate these effects and take a holistic view of their supply chains to maintain operational continuity. For instance, the administration’s plan to deport 1.4 million undocumented immigrants could exacerbate labor shortages, potentially increasing wages and inflationary pressures.
Energy Policy and Sustainability Goals
Another key area of potential disruption is energy policy. The administration has prioritized fossil fuel expansion, signaling an order to promote oil and gas production while withdrawing the U.S. from the Paris Climate Accord. While this may benefit traditional energy sectors, such as oil and gas, companies invested in sustainability may face potential headwinds.
Organizations focused on sustainable practices must balance compliance with new policies and their long-term environmental goals. Many companies, however, may remain committed to their sustainability initiatives, recognizing their alignment with consumer values, corporate responsibility, and long-term competitiveness.
Even in a less favorable policy landscape, sustainability will remain a differentiator for organizations prioritizing innovation and responsibility.
Strategies for Success in Changing Times
Procurement and supply chain leaders must adopt proactive, adaptable strategies to adapt to these changes. Scenario planning can help businesses anticipate policy shifts in tariffs, regulations, and trade agreements, enabling agile responses.
Simultaneously, investments in digital tools—such as AI and predictive analytics—can provide real-time insights into geopolitical and economic trends, enhancing decision-making.
Fostering transparent communication across the supply chain is equally critical. Clear alignment with suppliers, stakeholders, and customers will build trust and ensure organizations can weather uncertainty together.
As companies prepare for challenges and opportunities throughout 2025, procurement and supply chain functions must evolve into more strategic roles. Leaders who embrace disruption as a catalyst for innovation will position their operations for success.
Organizations can build resilient, forward-looking supply chains that thrive in an increasingly complex global economy by aligning with new policy realities.