Insights

The holiday rush is on, and the shelves are packed with the fruit of global supply chains. Many of the simplest consumer products owe their existence to components from many suppliers in many nations. The same can be said for the food on the holiday table, the cars on the lot, and the digital information that powers on-demand package delivery.

These components, commodities, and information networks are largely hidden from the consumer – until something goes wrong. Every supply chain has its weakest link, subject to shifts in policy, weather, and world events. Those potential shifts loom even larger in the coming year, so business leaders and policymakers must prioritize resilient, ready, and agile supply chains to protect consumers from disruptions, shortages, and inflationary shocks.

Trade policy has built and broken supply chains throughout American history, and the policy shifts announced by President-Elect Donald Trump will indeed transform these chains once more. A threatened trade war with China will deny American manufacturers and distributors a significant source of inexpensive components and parts while also disrupting the export of American commodities such as grain and iron ore that help fuel China’s own domestic supply chains.

Many corporations, manufacturers, and suppliers have operations that span the northern and southern borders, blurring the lines on what exactly makes an “American” company. These companies also have extensive networks of partnerships with outside vendors and suppliers that are inextricably linked with their business models. Some of these relationships go back centuries, while others grew in the wake of the 1992 North American Free Trade Agreement (NAFTA) and its successor, the US-Mexico-Canada Agreement (USMCA), negotiated under the previous Trump Administration in 2020.

Untangling these supply chains will cause severe disruptions to operations in all three nations, increasing material costs, disrupting delivery schedules, and generating labor gluts and shortages. The brunt of these disruptions will be felt by the American consumer, as businesses pass along the additional cost at every point in the chain.

However, business leaders and policymakers can ease consumer impact through preparation and planning. In the case of the proposed tariffs, businesses have the advantage of knowing what’s coming several months in advance. Many domestic manufacturers and retailers are already stockpiling imported components and parts in anticipation of future price increases and shortages.

But stockpiling strains the heavy load of holiday and year-end manufacturing and transportation infrastructure for domestic and international producers. Factory, shipping, and warehousing capacity place physical constraints on how much stockpiling is possible or advisable in the coming weeks. Depending on the industry, spoilage and degradation today may end up costing more than tariffs tomorrow. Excessive stockpiling of materials and products sacrifices one of the most successful business innovations in the past century – “just in time” manufacturing and delivery.

Stockpiling also increases a business’s exposure to another significant threat to the supply chain: natural disasters. The more products and components are warehoused in advance, the more damage a flood, fire, or other disaster can inflict on a company’s bottom line and future viability. Natural disasters can also destroy entire supply lines by taking an irreplaceable link offline. When the only factory that produces a key component is damaged by a hurricane, tornado, or fire, partners thousands of miles away will feel the impact. Extreme weather events have increased over the past few years and will continue as climate change’s effects accelerate.

Manufacturers and retailers can prepare for natural disasters with flood and fire protection mitigation strategies. But these steps can only go so far in the face of a major incident like the hurricanes that struck the southeast earlier this year. Businesses with complex supply chains must plan for alternate sources of critical materials and components. Diversified sourcing can help smooth disruptions and stoppages from extreme weather events.

Businesses must also diversify their supply chains to prepare for national security events, both overseas and domestically. Following the terrorist attacks on September 11^th, 2001, businesses built greater redundancy and geographic distribution for their data centers and material supply chains. The Iraq war led businesses to diversify their sources of fuel. And Russia’s invasion of Ukraine necessitated a revolution in how European businesses access everything from grain to natural gas.

In this uncertain national security environment, business leaders need to build further agility and flexibility into their supply chains before such incidents occur, not after. For example, US manufacturers remain highly dependent on Taiwanese semiconductor production. A national security event involving the People’s Republic of China could sever that link for American manufacturers. Increasing influence from China, Russia, and Iran on resource-producing nations in Asia, Africa, and South America could also lead to similar disruptions on a global scale. The American consumer will experience all of this as cell phones, cars, and computers that require everything from rare earth metals to advanced technical components become more challenging to find.

As businesses shift suppliers and partnerships to prepare for supply chain interruptions, they should also be mindful of the security risks at every link in the chain.

From national security concerns to intellectual property, data breaches often occur not at the primary company or agency but at a point further down where cyber, operational, or physical security protocols could be more robust. Business leaders, policymakers, and government procurement specialists must all have a firm understanding of the security measures in place at every stage of the chain – and they must retain the ability to shift, stockpile, divert, and sever within their supply chains to remain viable in the face of crisis.

The changes for 2025 should serve as a wake-up call for every enterprise dependent on supply chains for their operations and success. The metaphor to strive for may not even be a chain at all, but a web with multiple pathways for goods, components, and information to reach the primary client efficiently and effectively to meet the needs of the American consumer, no matter what the new year may bring.