How do Fortune 500 companies rebuild their supply chain overnight? Most of them stitch together playbooks on the spot
“Almost every client I talk about has a room of war,” says Mary Rohlman, KPMG’s US supply chain leader. “They spin up their teams and their members completely dropped their day’s work. Their job is to watch the news now, see what’s coming up next, and be able to present it to leadership soon.”
It’s life in the chaotic, big trade war of 2025, but businesses aren’t continuing the war. As governments fundamentally reshape their global business environment, they are trying to survive and thrive. At the heart of that challenge is the supply chain, and how to accurately translate it is Topic A of all these war chambers. “This is a unique time in the history of supply chains,” says Abe Eshkenazi, CEO of the Supply Chain Management Association. “That’s something we’ve never done at this level.”
Everyone knew something big was coming – President Trump often told the world that he would impose more tariffs, but little was prepared for everyone due to the size of the tariffs he imposed on 57 countries on April 2nd. I suspended most of these dutiesreduce them to 10% in all countries except China. The customs duties for this writing are 145%. Living people have no experience managing US businesses in that environment.
So far, it appears that most US companies are taking a small step. Some are accelerating existing plans to bring manufacturing to the United States, Rollman said. As tariffs change, some people hold imports at the border. But “it’s a minority,” she says. “Most of the companies I work with are working to model options and scenarios, but we haven’t made any major changes now.”
Adaptation is not easy. In today’s globalized economy, cars assembled in the US included, for example, parts of dozens of countries. Some parts crossed the boundary many times when constructed. Ford says it uses parts made from over 1,000 materials provided by around 1,400 suppliers. Redesigning this type of supply chain will be daunting.
Some industries had to scrap the supply chain after Trump’s tariffs in his first term, but that experience may not give much advantage this time. “We are pleased to announce that Andrew Siciliano, head of the US at KPMG and global trade and customs practices,” said: “Many businesses moved from China in 2018,” he said, “we moved to Vietnam, Thailand, India and Malaysia after Trump imposed tariffs in his first term.” As of April 2, all four of these countries face high tariffs. They are currently down to 10% and we don’t know what kind of tariffs they will face when the suspension expires.
It also adds yet another layer of complexity. Will the tariffs be the same as tomorrow? The pause is a surprise, and history says there certainly more surprises ahead. In his first term as president, Trump announced, for example, new tariffs on Brazilian metals, and then cancelled a few days later after speaking with then-Brazilian President Jea Bolsonaro. A similar procedure has been formed again, but this time it will be much larger. Trump recently told Air Force 1 reporters that tariffs gave the US “a great power to negotiate” and that “I’ve spoken with a lot of Europeans and Asians around the world. They want to do business.” Other officials, including US trade representative Jamieson Greer, have shown that the administration is open to making trades. The tariffs announced on April 2nd clearly have begun bidding in negotiations. This means that business leaders need to build new supply chains based on tariffs that can change at any time with little warning.
It’s exactly an environment in which the supply chain functions badly. “Supply chains rely on predictability, not just on data,” says Eshkenazi. “If you know what demand is, you know how to sequence supply and orders, inventory and logistics. We don’t deal with uncertainty as well as financial markets.”
If difficulties are exacerbated, major changes in the supply chain require long-term responses. For example, automakers need at least two and a half years to build US manufacturing facilities, while some plants require 3-5 years. By the time they run, which countries are the car manufacturers trying to avoid and which countries do they engage? Did that billion dollar investment turn out to be wise? Or consider the ingredients of common drugs. Most of them are made in China and India. “It was like that for 20 years,” says Rohrman. Producing them in the US will increase by 35%, she says, but building plants in the US could take up to two years. Until then, materials will need to be imported at even higher prices, relying on tariffs negotiated with China and India.
Leaders are struggling to make high stakes decisions and are frustrated with the difficulty of identifying Trump’s long-term purpose. Louisiana Republican Sen. John Kennedy recently confessed Wall Street Journal, “I don’t know what his goal is now.” Eshkenazi said, “What are you trying to achieve through all these tariffs?” They might want to remember what Trump wrote in his 2015 book. The unstable America: “I don’t want people to know exactly what I’m doing or what I’m thinking. I like being unpredictable.
He certainly has been successful, including supply chain executives.
This story was originally introduced Fortune.com