Tariff Tactics: Short- and Long-Term, Supply Chain and Political  

The Data

1. 1

   In the US, the tech, auto, specialty retail, and subcomponent manufacturing industries are most exposed to President Donald Trump’s tariffs.

2. 2

   The share of US tech suppliers based in China is 34%, while 16% of US apparel and footwear suppliers are based in Vietnam and Taiwan.

3. 3

   A recent Zero100 survey found 62% of C-level supply chain executives have a plan in motion to reduce reliance on China-based sourcing in the next 12 months.

4. 4

   Due to diversification efforts by the apparel and footwear industry, 15% of suppliers for the US are already spread across Southeast Asia, excluding Vietnam.

With ongoing developments in US-China tariffs (a few days ago, President Donald Trump said he would reduce tariffs on China substantially after several weeks of back-and-forth), supply chain and operations leaders face continued volatility. A recent Zero100 survey points to action, though, as 62% of chief supply chain and operations officers say they’ve already actioned plans to reduce reliance on China.  

And though, in this uncertain climate, moving some manufacturing to the US is prudent, it throws up a myriad of challenges like higher costs and the need to build physical and talent infrastructure. And in some cases, it still may not be fully possible.  

So, who is most vulnerable and where? And what are some short-term and long-term strategies for action?  

Tech, Auto, and Specialty Retail Are Most Exposed in China 

Zero100 data and analysis found the technology, auto, and specialty retail industries were most exposed to Trump’s China tariffs. Over a third of US tech suppliers are currently based there, followed by 28% of auto and 28% of specialty retail suppliers.  

Alongside this, notably, is the fact that 8% of US subcomponent manufacturers are in Taiwan. This is somewhat unsurprising, given that Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest and most advanced semiconductor foundry. But with AI chips heavily reliant on advanced semiconductor manufacturing, the stakes are high when it comes to ensuring a stable and cost-effective semiconductor supply chain – with IBM, for example, recently announcing a $150 billion commitment in the US over the next five years. 

Short- vs Long-Term Strategy   

Many companies, including Apple, Nike, and Samsung, have long been diversifying away from China, moving production to places like Mexico, Vietnam, and India. The apparel and footwear industry, meanwhile, has placed its bets on Southeast Asia (SEA). Discounting Vietnam, our data and analysis show that 15% of US apparel and footwear suppliers are spread across other countries in SEA, fuelled by lower labor costs, among other factors. The industry with the next highest share of suppliers spread across SEA is food and drug retail at 5.5%. 

While tariffs in SEA countries are lower for the time being, the back-and-forth with China offers a lesson in how this could change. Exemptions, lobbying, and other political strategies could offer relief for now – research has shown that politically connected corporations do receive more exemptions. But ultimately, increasing production in higher-cost manufacturing locations, like the US, is a long-term strategy that allows for a level of insurance against volatility and the possibility of capitalizing on market opportunities. 

That said, reengineering supply chains that have been built over the course of decades, bridging the digital divide, and investing in innovation in AI, robotics, and automation is no easy feat – and will ultimately take years.  

The Takeaway 

In an environment of ongoing uncertainty, take a two-pronged, supply chain and political approach. Mitigating the effect of tariffs might be found in deal-making and leaning on suppliers in countries less affected by tariffs – for now.  

In the long term, however, invest in building physical and talent capabilities in locations where the risk of any tariff volatility will have no or limited impact. This will involve executing an automation action plan, including building partnerships with selected vendors; developing career paths in sourcing, manufacturing, and logistics; and working closely with potential suppliers to build the foundation for future investment. 

To see a different data cut or to dig deeper into this topic, reach out to our VP Research Analytics, Cody Stack, at Cody.Stack@zero100.com.    
 
Methodology  

Zero100’s proprietary data and analytics are a combined effort between our data scientists and research analysts. We provide data-first insights matched with our own research-backed points of view and bring this analysis to life via real-world case examples being led by supply chain practitioners today.       

For this study, we analyzed FactSet database relationships between 2021 and 2024 and surveyed supply chain and operations leaders in our community.   

Further Reading 

• The Signal: Supply Chain Exposure to China Just Got More Serious 
• The Zero100 Podcast: The State of Supply Chain: 100 Days of Trump 2.0 
• Research Report: How to Make Change Go Viral: Executive Cheat Codes for Transformation