Supply Chain Leaders to Pass Costs to Customers to Mitigate Tariff Increase: Gartner

Nearly 45% of supply chain leaders anticipate passing costs to their customers as their primary strategy for mitigating new tariff costs, according to a survey by Gartner, Inc. And, 43% of respondents stated they would mitigate the costs through various supply chain initiatives as their primary strategy.

“Supply chain leaders have many potential levers to pull from in mitigating new costs related to tariffs,” says Vicky Forman, senior director analyst in Gartner's Supply Chain practice. “While supply chain leaders have multiple initiatives underway to potentially lessen the impacts, many of these actions have yet to be completed.”

Key takeaways: 

·        While “increased costs” was the top risk associated with new tariffs, cited by 92% of respondents, 75% also flagged concerns about slowing customer demand among the Top 3 risks to their business. These risks included an overall decrease in consumer demand (cited by 49%), as well as concerns about retaliatory measures impacting international customer demand (cited by 45%).

·        The supply chain initiatives to mitigate tariff impacts planned (or already underway) most cited by respondents included:

Renegotiating supplier contracts (47%)

Exploring collaboration opportunities with suppliers (43%)

Addressing country of origin, valuation and other trade management tactics (40%)

Adjusting supply locations outside the United States (39%)

Adjusting production locations outside of the United States (26%)

Pulling inventory forward (23%)