Supply chains under pressure: Strategies for a shifting tariff landscape
Companies across industries take varied approaches to mitigate tariffs impact
In response to proposed changes to US tariff policy, many companies across industries are actively reworking their supply chain strategies, including by renegotiating supplier contracts, adjusting distribution networks and reconsidering the end-to-end flow of products in order to manage potential disruptions. New sweeping tariffs—announced by the Trump administration in April 2025 1 and now going into effect following rounds of negotiations—apply to a wide array of imported finished goods and materials. Among the latest developments is a 15 percent US tariff on goods from the European Union.2 To better understand how companies are responding, KPMG LLP surveyed 300 C-suite executives in May 2025, focusing on how they are adapting their supply chains to this evolving landscape.3
Strategic supplier negotiations
The consumer goods sector is leading the way in renegotiating supplier contracts as a proactive measure to address changing tariffs, with 77 percent of respondents making this adjustment. This figure exceeds the overall survey average of 51 percent. The emphasis on renegotiation reflects the sector’s need to maintain cost-effectiveness and adaptability in the face of tariffs that could affect product pricing and competitiveness.
"The consumer goods sector is leading the way in renegotiating supplier contracts as a proactive measure to changing tariffs, with 77 percent of respondents making this adjustment."
Emphasis on domestic sourcing and facility adjustments
The automotive industry is markedly focused on shifting to domestic sourcing and production, with 78 percent of the respondents taking this route—significantly higher than the overall survey average of 46 percent. This strategy aims to reduce dependency on international trade channels that are likely to be disrupted by tariffs. Additionally, 48 percent of automotive respondents are relocating or combining production facilities, far above the overall survey average of 18 percent, demonstrating the sector’s strong proactive stance in safeguarding its operational continuity.
Reluctance and minimal impact perception
In contrast, the technology sector exhibits a reluctance to alter supplier or sourcing strategies, with 15 percent of respondents maintaining the status quo, a figure more than double the overall survey average of 7 percent. Furthermore, 35 percent of technology respondents reported not making any modifications at all, which is notably higher than the overall survey average of 14 percent. The reluctance may hinge on the sector’s intricate global supply networks, where rapid adjustments are challenging. Additionally, 43 percent of respondents express minimal concern regarding the discontinuation of duty-free treatment of shipments under $800 from China, notably higher than the overall survey average of 22 percent.
Adjustments within consumer goods, retail, and life sciences
In addressing tariff burdens, consumer goods (70 percent), retail (60 percent), and life sciences (58 percent) sectors respondents exhibited a higher tendency to alter their strategies by adjusting distribution channels. The overall survey average stands at 51 percent, underscoring a common approach across these industries to safeguard product accessibility and manage costs efficiently.
Agility in strategic response
The retail industry shows significant agility in its ability to pivot (i.e., make significant supply chain changes), with 30 percent of respondents saying changes could be made within one to two months. This quick adaptability surpasses the overall survey average of 11 percent of respondents selecting that timeframe and highlights the sector’s readiness to implement rapid changes to minimize tariff impacts.
The automotive sector also demonstrates a considerable ability to adapt, with 63 percent of respondents indicating the ability to pivot within 7 to 12 months, which is above the overall survey average of 46 percent respondents choosing that timeframe. Meanwhile, sectors such as energy, natural resources, and chemicals (ENRC), life sciences, and industrial manufacturing appear slower in pivoting, with 30 percent, 26 percent, and 25 percent of respondents, respectively, needing one to two years— highlighting the need for longer strategic planning and restructuring timelines.
Impact on sales and procurement
Industrial manufacturing is particularly sensitive to tariff changes, with 25 percent of respondents anticipating a large decrease in sales. This concern is significantly above the overall average of 13 percent, stressing the tangible impact tariffs could have on industrial production and global competitiveness.
Implementing analytics tools that incorporate tariff costs into sourcing decisions is a common strategy across all industries, especially in the automotive (67 percent of respondents) and ENRC (70 percent) sectors, indicating strong emphasis on data-driven decision-making.
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Although some industries are acting swiftly to mitigate tariff challenges, others are taking a cautious approach. However, as the tariff proposals continue to unfold, all sectors may need to reassess and adapt their strategies further to preserve economic stability and operational efficacy in the evolving global trade environment.
Footnotes
3 The survey of 300 C-suite executives (life sciences, retail, consumer goods, automotive, industrial manufacturing, and technology) was conducted online from May 22, 2025, to June 11, 2025.
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