Tariffs & Trade: Why Strong Supplier Relationships Matter More Than Ever
The tariffs, implemented under the Trump administration, are creating uncertainty and turmoil in global markets, impacting supply chains and increasing costs. This volatility and unpredictability of trade policies is forcing businesses to rethink their sourcing strategies. Diversification and flexibility are now critical, yet difficult to achieve. Many teams will be grappling with what to do next.
In this new, tariff-driven environment, strong supplier relationship management is not just advantageous—it is essential.
Collaborative partnerships enable businesses to weather storms, reduce overall costs, foster innovation, secure scarce resources, and maintain agility. Over 16 years of annual SRM research, we have observed that companies with strong supplier relationship management practices can achieve savings of between 2 -6% over and above what is already contracted. They are twice as likely to receive scarce resource, three times more likely to receive innovation first and 5 times more agile in bringing changes to market.
Yet the research also showed that only 7% of organisations are good at Supplier Relationship Management.
We recommend four strategic actions:
Know your supplier base and diversify when possible: Segment your suppliers and include tariff risks amongst other criteria like spend, criticality, access to innovation. Look to reduce dependence on specific regions or suppliers to help distribute risk and strengthen supply chain resilience.
Strengthen SRM: short term, use the segmentation to have the discussions with suppliers and come up with a collaborative plan. Train your team on supplier management and put joint account plans in place. Medium term, formally understand if you are a customer of choice for key suppliers and improve this. Develop and /or standardise your processes, policies and procedures.
Fast track digital SRM: Fast track SRM digital implementation or leverage a third-party supplier management service provider to bring a digital solution as part of the service. This will provide visibility on supplier performance, enhance transparency, collaboration, and communication across the organisation with your suppliers.
Monitor geopolitical developments: Adopt a proactive approach to stay ahead of shifting trade policies and adjust procurement strategies accordingly.
For further insights we recommend following two thought leaders we’ve had the privilege of engaging with at our Chief Procurement Officer (CPO) roundtables, Gillian Tett and Ann Pettifor offer valuable perspectives on the evolving trade landscape:
Gillian Tett, editor-at-large at the Financial Times, highlights that U.S. trade strategies under the Trump administration—and potentially under similar populist agendas—may continue to be erratic. She notes that tariffs are just the beginning of broader economic interventions that could reshape global trade.
Ann Pettifor, economist and author, compares the economic shocks triggered by Trump-era tariffs to the financial turmoil that followed the collapse of Lehman Brothers. She argues that these disruptions highlight the need for structural reforms to prevent systemic crises, further emphasising the urgency of resilient supply chain management.
Our own annual SRM research shows that more than 50% of an organisation’s workforce is employed by suppliers, and suppliers have a direct influence on over 50% of the customer experience. Suppliers are no longer just operational support; they are integral to business success.
Tariffs are reshaping supply chains, and your next move matters. With over 21 years of SRM expertise and 16 years of SRM research we know how to navigate these changes. Reach out to enquiries@stateofflux.co.uk if you would like an initial conversation about your current challenges and explore what you could do to make your supply chain more resilient.
