Harnessing AI-Driven Insights to Steer Supply Chains Through Tariff Shifts

Disruptions in supply chains are common, but the recent surge in tariff threats adds extra strain on global businesses. To gain insights, we spoke with Steve Johanson, Senior Vice President and Industry principal for Network Optimization at Logility, an AI-driven supply chain provider. Our conversation covered the ramifications of tariffs, common misconceptions to avoid, and how AI-enhanced modeling can empower companies to stay proactive.

Supply Chain 24/7: What level of disruption could new tariffs on China,Canada,and mexico cause for global supply chains?

Steve johanson: The potential impact is considerable. Supply chains inherently deal with uncertainty. Unlike unexpected events like the Suez Canal blockage, tariffs typically come with some forewarning but can change rapidly and have indirect effects.

The implications of tariffs extend to operational expenses, supplier diversification strategies, and distribution methods. The challenge lies in their policy-driven nature rather than being market-based; thus they can shift overnight as part of broader geopolitical negotiations. Companies must be ready for both implementation and possible reversal.

The silver lining is that organizations possess tools and skilled personnel for planning ahead. conversely,failing to adapt swiftly may allow competitors to seize an advantage.

SC247: Which industries will face the moast significant challenges due to these changes?

SJ: Sectors impacted by tariffs generally fall into three categories:

• Brittle industries: Automotive and semiconductor sectors have established supplier networks where onboarding new suppliers requires time and careful decision-making.
• Sensitive industries: Consumer goods sectors that frequently adjust operations due to tight profit margins.
• affected support industries: Logistics firms and component manufacturers caught up in broader supply chain shifts.

A case study from six years ago illustrates this well; a U.S. automaker estimated that steel tariffs cost them over $1 billion in profits while domestic steel producers saw a similar increase in sales—some businesses thrive while others struggle under pressure. The focus should be on understanding the comprehensive impact across the entire supply chain rather than reacting impulsively.

SC247: Are there prevalent misconceptions about tariffs that companies should recognize?

SJ: the primary misconception is viewing tariffs as merely a one-time cost hike.

A lot of firms think they just need cheaper suppliers without considering other factors at play within a larger system—freight costs fluctuate alongside supplier prices while demand evolves too. It’s crucial not just to fixate on tariff impacts but instead maintain an overarching view of how every element interacts within procurement through production down to distribution.
Supply chains are dynamic entities rather than static links!


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