Gartner: How Supply Chain Leaders are Tackling Tariffs
When tariffs rise, supply chain leaders face tough decisions. And, if new research from Gartner is anything to go up, decision-makers are almost equally split when it comes to coping with these spiralling costs.
The consulting giant's latest survey finds that passing added costs directly to customers is the go-to strategy for 45% of leaders, while 43% favour taking action within their supply operations to lessen the financial blow.
Gartner spoke to executives between 17 March and 7 April, with the vast majority of those surveyed representing businesses generating more than US$1bn in annual revenue.
Tariffs prompt rethink on supplier contracts and sourcing
Unsurprisingly, increasing costs is the main issue associated with tariffs for 92% of Gartner's respondents.
However, slowing customer demand isn't far behind, with three-quarters highlighting it as a top-three concern. This includes a general dip in customer interest, flagged by 49%, and fears of retaliatory trade actions, which could hurt international sales, noted by 45%.
For some leaders, simply passing those costs on is not a long-term solution and, instead, many are revisiting core elements of their supply chain.
Renegotiating supplier contracts tops the list of proactive measures, cited by 47% of supply chain leaders. A further 43% are exploring deeper collaboration with suppliers and two in five (40%) are addressing compliance through a closer look at country of origin rules, valuation and trade practices.
Changing where goods are sourced is also on the agenda. Around 39% are reviewing supply locations beyond US borders, while 26% are also considering moving production elsewhere. Another 23% are pulling forward inventory to manage costs more proactively.
“Supply chain leaders have many potential levers to pull from in mitigating new costs related to tariffs,” states Vicky Forman, Senior Director Analyst within Gartner’s Supply Chain practice.
“While supply chain leaders have multiple initiatives under way to potentially lessen the impacts, many of these actions have yet to be completed.”
Shifting from cost transfer to transformation
Gartner's research suggests longer-term resilience hinges not just on tactical changes, but structural ones.
Vicky's point underscores the shift in attitude: avoiding short-term fixes in favour of investments in the supply base, trade compliance and sourcing diversification.
The high share of respondents actively rethinking supplier relationships demonstrates the sheer scale of transformation. These changes mark a pivot from reactive to more strategic, risk-aware procurement and sourcing.
With customer demand already showing signs of volatility, business leaders recognise that simply transferring costs may not be sustainable.
Moving production and supply operations overseas presents its own set of challenges, from regulatory hurdles to logistics and cost implications. But, as these findings show, companies are prepared to explore those paths to better shield themselves from policy-driven cost shocks.
Tariffs on the agenda at Gartner Supply Chain Symposium/Xpo
These latest findings will form part of a wider discussion at the upcoming Gartner Supply Chain Symposium/Xpo.
The event is set to bring together supply chain professionals to explore how organisations can prepare for continued volatility, with dates in Orlando (5-7 May) and Barcelona (19-21 May).
Attendees can expect insights into how their peers are adapting, what’s working and how to anticipate the next wave of disruption.
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