With the potential implementation of 25% tariffs on imports from Mexico and Canada looming, many businesses are seeking guidance on how to navigate the resulting supply chain disruptions. A recent webinar hosted by global supply chain provider Kuehne + Nagel highlighted this growing concern.

The webinar, titled “Navigating Unprecedented Global Trade Disruptions,” took place on January 15 and attracted approximately 1,500 attendees—three times the usual audience for Kuehne + Nagel’s webcast discussions.

“I was blown away and very encouraged by the turnout,” said Greg Tompsett, Vice President of Customs Brokerage USA at Kuehne + Nagel, in an interview with FreightWaves. “It just shows people are desperate for information.”

The proposed tariffs are part of an effort by President Donald Trump to pressure Mexico and Canada into taking stronger action against migrant and drug smuggling issues. While Tompsett believes these threats may serve as a negotiation tactic, he emphasized that businesses must be prepared should they take effect.

If the tariffs are enforced, shippers will need to assess their supply chain status immediately. “What goods are already in transit? What purchase orders are confirmed? What options do we have to mitigate the impact?” Tompsett explained. Strategies to manage the disruption may include placing goods in bonded warehouses, delaying imports, or leveraging foreign trade zones to temporarily hold shipments.

The possibility of tariffs has also raised concerns about increased transportation costs. “Historically, some companies have used similar situations to impose surge pricing or other cost increases,” Tompsett noted. “While this may yield short-term gains, it can damage long-term relationships with customers.”

As of Monday, the SONAR National Truckload Index Linehaul Only (NTIL) reported that the nationwide dry van spot rate stood at $1.85 per mile, reflecting a 2% decline from the previous week and a 4.6% decrease year over year. The index, which tracks dry van loads moving over 250 miles while excluding fuel costs, has been trending downward since January 11.

Beyond immediate concerns, the tariffs could also accelerate shifts in global supply chains, potentially encouraging more manufacturing operations to return to the U.S. However, Tompsett remains skeptical about the scale of such a shift. “I don’t know if it will reach the level some hope for, particularly in high-end manufacturing,” he said.

Nari Viswanathan, Senior Director of Supply Chain Strategy at Coupa Software, emphasized the importance of proactive planning. “Preparing for tariff disruptions before they happen is essential,” he told FreightWaves. “Businesses that fail to plan could face severe revenue downturns in 2025. Supply chain visibility and agility are critical in navigating these challenges.”

Historically, tariffs have influenced global supply chain decisions. The 2018 tariffs on Chinese imports led some companies to relocate production to Vietnam, Thailand, and Mexico. To mitigate risks, businesses should develop contingency plans, including shifting sourcing strategies, increasing domestic production, or adjusting product pricing. Additionally, assessing supplier risk in Canada and Mexico can help companies diversify their supply chains and manage costs effectively.

Tompsett, a keen observer of trade policy, believes the tariff threats may serve as leverage in future trade negotiations. “Setting a deadline 10 days in advance suggests a strategic move rather than an immediate action,” he speculated. “I anticipate the tariffs will be deferred until the renegotiation of the United States-Mexico-Canada Agreement (USMCA) in 2026. In the meantime, there may be increased border security measures as a compromise, allowing all parties involved to claim a political victory.”

As businesses prepare for potential trade disruptions, proactive planning and strategic decision-making will be crucial in minimizing risks and maintaining supply chain resilience.

 

Source: freightwaves.com