Commentary by Edward Segal, a crisis management expert and author of Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies.

The nation's fragile supply chains and the businesses that depend on them will face another crisis if President-elect Donald Trump carries through with his plans to impose tariffs on Canada, China, and Mexico.

"These tariffs will inevitably increase costs which we already know, as they act as a tax on imported goods, and very likely will disrupt the flow of trade by adding complexity to customs processes and extending lead times that are already quite long," Amanda Russo, founder and CEO at Cornerstone Paradigm Consulting, predicted in an email message.

There is a sense of urgency for corporate executives to prepare for the looming crisis. That's because "once companies experience a supply chain disruption, it takes them an average of two weeks to plan and execute a response," according to an October report about supply chain vulnerabilities by McKinsey & Company.

Proactive Measures

There are steps business leaders can take now to to prepare for and help lessen the impact of a tariff-fueled crisis as much as possible.

Seek Supply Chain Alternatives

"Tariffs can disrupt established supply chains by making imported components more expensive or less accessible. Companies may need to seek alternative suppliers, which can be time-consuming and costly, potentially leading to production delays, Tanya Wade, a senior manager at KPMG, noted via email.

Trump''s tariffs could also create additional crisis situations.

"Targeted countries may respond with their own tariffs on U.S. exports, affecting American businesses that rely on international markets. This tit-for-tat escalation can lead to broader trade conflicts, further destabilizing supply chains," she pointed out.

Stockpile Inventory

"The first thing businesses may want to do is to bring in inventory early prior to any new tariffs being imposed. This approach has to be weighed against the financial risk of sitting on aging inventory but, depending on the product and position of the company, it is something to consider," Paul F. Magel, president of the application solutions division of Computer Generated Solutions, advised via email.

Diversify

"Another way that businesses can proactively mitigate the impact of potentially higher tariffs is by re-evaluating their supply chains and considering strategic diversification of sourcing and production to areas where tariffs are not being imposed," he counseled.

There could be a silver lining to tariffs for some companies.

"Higher tariffs can also create opportunities for businesses to increase their competitiveness by exploring domestic or near-shore production and forming new partnerships that reduce exposure to tariff-related costs," Magel concluded.

There is more than one way companies could guard help against the impact of tariffs.

Manage Financial Impact

"Managing the financial impact of tariffs has also become a priority. Businesses are looking for ways to offset increased costs by improving operational efficiencies, renegotiating contracts, or adjusting pricing strategies. Technology plays a growing role in this process, as companies adopt advanced supply chain management tools to monitor risks, predict disruptions, and optimize logistics in real-time," Ryan Jacobs of Jacobs Investment Management, observed in an email interview.

Plan Ahead

"Another critical step is engaging in proactive planning. Companies are developing contingency strategies to account for a range of tariff scenarios, modeling how different levels of import duties might affect their pricing, demand, and operations. Many are also working with industry groups and policymakers to advocate for exemptions or adjustments that could mitigate the impact on their sectors," he commented.

Challenges

The survey by McKinsey & Company that was released in October underscores the major challenges companies face in preparing for supply chain disruptions.

Talent Shortages

"A shortage of talent, particularly digital talent, continues to hamper supply chain transformation efforts. Of those surveyed, 90% say that their companies lack sufficient talent to meet their digitization goals. That number hasn't changed in any meaningful way since the first survey in 2020," the report observed.

A Lack Of Understanding Of Risk

"The biggest gap could be the one at the top of the organization. Few surveyed supply chain executives believe that their boards have an in-depth understanding of supply chain risk. Only a quarter have formal processes in place to discuss supply chain issues at board level. All this could leave companies dangerously exposed to future disruptions," according to the survey results.

Fewer Discussions

"Perhaps more concerning is a steep drop in the frequency that supply chain risks are discussed at a senior-management level. In the 2023 survey, almost one-half of respondents said that their organizations had a regular reporting cadence for supply chain risk. This year, that share dropped to one-quarter, with most companies reverting to ad hoc reporting in response to disruptions or the emergence of major new risks," the report pointed out.

Going Forward

Don't Fly Blind

"If you're not mapping your supply chain down to tier three, four, or five, you're flying blind. You need to know where your suppliers may feel a tariff crunch," Brandon Daniels, CEO of Exiger, an AI-powered supply chain management company," advised in an email interview.

Rethink Supply Chains

"At the end of the day, this isn't just about tariffs. It's about rethinking how we build and manage supply chains. It's about moving from reactive to proactive. Companies that take this moment seriously—invest in resilience, embrace technology, and build partnerships—will not just weather the storm; they'll come out stronger. This is the time to turn disruption into opportunity," he commented.

Evolve

"Ultimately, the tariffs underscore the critical need for supply chains to be both resilient and adaptable. Organizations that fail to evolve risk severe disruptions and escalating costs. By addressing vulnerabilities such as supplier dependency and reliance on manual processes, companies can better position themselves to thrive in an unpredictable trade landscape," Amanda Russo of Cornerstone Paradigm Consulting counseled.

Companies and organizations have faced a number of supply chain crises over the years, including the Covid-19 pandemic, the 2021 blockage of the Suez Canal by a cargo container ship, and the impact of Russia's invasion of Ukraine

Businesses who don't take steps now to protect themselves as much as possible from a tariff-related supply chain crisis will only have themselves to blame if and when it—or another crisis—strikes.

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