Note: Tariff news is moving fast, and this story is still developing. Stay tuned for updates.
When we surveyed Freightos users in early 2025 about potential trade disruptions, and specifically about the threat of looming tariffs, something interesting emerged.
While smaller companies expressed some worry about President Trump’s 2025 tariffs, the concern wasn’t too pressing. Larger companies, on the other hand, were already preparing for the worst.
Turns out those larger firms were onto something, as President Trump has been imposing more, and higher, tariffs on global shipping in the (only!) six weeks he’s been in office. While some had anticipated that Trump’s early signals were more of a threat to get Canada and Mexico to the negotiation table, that view emerged as an optimistic read.
The ongoing tensions culminated in a bombshell announcement on March 3, 2025 that the 25% tariff on imports to the US from Canada and Mexico and an additional 10% increase on goods from China would indeed go into effect (view the official White House Fact Sheet here). Trump has since suspended these tariffs for all goods covered by the USMCA – which leaves more than $1 billion of imports per day that are not in the USMCA subject to tariffs.
Looking back at our survey results conducted across some 40 importers/retailers, they now tell an important story about preparedness, perception, and the very real consequences of underestimating major policy shifts.
And, as we’ll see, about how even the best-planned preparations might not be enough.
The Preparedness Gap: A Tale of Two Approaches
Back in January, our survey revealed a divide in how different-sized businesses approached trade risk. While 78% of respondents overall expressed concern about tariffs, the real story lay in the details:
- Larger companies were far more aware of – and concerned about – the threat tariffs presented, with a full 80% somewhat or seriously concerned
- In contrast, only 55% of smaller importers shared this level of concern
How serious were the concerns? Not always serious enough to act on.
Of the companies, 30% of those with concerns changed or planned to change shipping modes, 30% shipped or planned to ship early, but only 15% had taken steps to change their sourcing or manufacturing location – and of those, 75% were larger companies.
Smaller companies, less concerned in advance by the tariffs, may have been less prepared for them, or less able to move as quickly, lacking the global presence and relationships.
Learning from the Red Sea Crisis
The non-stop tariff changes of the past few weeks have all but eclipsed discussion of the Red Sea crisis in the news. But Red Sea diversions represented the major global shipping challenge of 2024, and, more importantly for today, they may have contributed to larger companies’ readiness and sense of urgency when tariffs began making headlines.
Our survey data shows that:
- 75% of larger companies experienced disruptions from the Red Sea Crisis, with 60% of them making supply chain adjustments
- Among smaller companies, 35% experienced disruption, and only 10% of those adjusted their supply chain to compensate
Larger companies were hit harder by the Red Sea Crisis – and they learned faster that they’d need to increase flexibility to keep their supply chains moving.
Yet even those who successfully navigated the Red Sea crisis find themselves facing a fundamentally different challenge with tariffs – you can’t route around them.
The Limited Effectiveness of Flexibility
The 59% of surveyed companies who got more flexible with their supply chains, shipping on alternate modes or lanes, and shipping early, may have blunted the initial impact of steep new tariffs.
But aside from frontloading as much inventory as possible before they go into effect, the only way to fully avoid tariffs is to source elsewhere. That process can easily take months, and many businesses are asking themselves if it’s worth it: with looming tariff threats on Europe and elsewhere, the next big announcement could put them right back in the same situation, unless they choose – if they’re able – to follow President Trump’s goal and shift to domestic sourcing, like Volvo.
Managing Shipping Volatility in an Environment of Limited Options
The global shipping landscape has shifted dramatically and may shift even further, with signals of potential 60% tariffs on Chinese imports and a 10-20% global duty or reciprocal tariffs on the horizon. While there’s no perfect solution, here are the best available strategies, understanding their limitations:
Short-Term Tactics (Limited but Immediate Impact)
- Start with the basics: Calculate exactly how new tariffs affect your products
- Consider selective inventory building for your most critical items, though this only buys time
Longer-Term Tactics
- Build redundancy gradually by identifying backup suppliers for your most important products
- Strengthen relationships with your current suppliers as they may have solutions you can tap into
- Look for flexibility in minimum order quantities and payment terms
- Look for components or materials that can be sourced domestically without requiring major investment
- Keep contracts flexible with current suppliers – negotiate shorter terms or variable commitments
The data tells us two sobering truths:
- Larger companies saw this coming and started preparing early, but even their extensive resources haven’t found a complete solution.
- For smaller businesses, this offers a ray of hope – you’re not necessarily behind just because you can’t completely reorganize your supply chain. The most resilient approach might be a combination of smaller, practical steps: maintaining cash reserves, building inventory selectively, strengthening supplier relationships, and remaining flexible enough to adapt quickly.
While no one can predict the next tariff announcement, companies can prepare to absorb shocks rather than avoid them entirely. In today’s global trade environment, that may be the only realistic strategy.
Freight news travels faster than cargo
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