Merchants Supply Chain Resilience Tariffs
- Rising costs and logistical challenges from tariffs are impacting businesses of all sizes, but many are adapting by diversifying sourcing and strengthening supply chains.
- tariffs have increased costs and complicated logistics for businesses, yet they've also highlighted the adaptability of merchants when faced with changing incentives.
- A recent survey by PYMNTS Intelligence of 60 firms reveals that 92.6% of goods firms report increased raw material costs, and 74.1% are experiencing shortages or delays in...
Tariffs and Delayed Payments Strain Businesses, But Resilience Emerges
Table of Contents
Rising costs and logistical challenges from tariffs are impacting businesses of all sizes, but many are adapting by diversifying sourcing and strengthening supply chains.
The Broad Impact of Tariffs and Delayed Receivables
tariffs have increased costs and complicated logistics for businesses, yet they’ve also highlighted the adaptability of merchants when faced with changing incentives. Goods producers, including retailers and tech firms, are reporting higher input costs and delivery delays, but are also identifying opportunities to localize sourcing and build more robust supply chains.
A recent survey by PYMNTS Intelligence of 60 firms reveals that 92.6% of goods firms report increased raw material costs, and 74.1% are experiencing shortages or delays in product acquisition. Despite these challenges, a significant portion-70.4%-view tariffs as a chance to bolster the local economy, and 40.7% believe tariffs have improved supply chain resilience. This combination of pressure and adaptation is driving a shift away from reliance on single-source imports towards multisourcing and near-shoring,even when it means higher short-term expenses.
Beyond tariffs, delayed receivables are adding to the financial strain. Abhishek,an expert in working capital management,notes that delayed payments represent a “universal drag on businesses of every size and sector,” with some firms experiencing a 3% to 5% erosion of their working capital due to these delays.
How Businesses Are Adapting
The most common responses to mitigate these impacts include:
- Multisourcing: Diversifying suppliers to reduce reliance on any single source.
- Near-shoring: Relocating production closer to the point of sale, reducing transportation costs and lead times.
- Localizing Sourcing: Prioritizing domestic suppliers to support the local economy and enhance supply chain control.
- Supply Chain Hardening: Investing in redundancies and risk mitigation strategies to protect against future disruptions.
These strategies, while perhaps increasing near-term costs, are seen as crucial for long-term resilience. The move towards greater control over supply chains reflects a broader trend of businesses prioritizing stability over solely focusing on cost minimization.