Businesses Caught in a Web of Uncertainty and Rising Costs

Businesses Caught in the Crossfire

The Trump administration's tariffs on Chinese imports have thrown businesses into a state of uncertainty, forcing them to grapple with the question of whether to relocate their supply chains. While some companies are exploring alternative options, others are finding the cost of moving production prohibitive.

Lalo, a baby product brand with a predominantly Chinese supply chain, faces the challenge of finding new suppliers that meet stringent safety regulations. "It can be way more expensive to move your supply chain than to eat the tariff," says Michael Wieder, Lalo's cofounder and CMO. "We don't want to react on things that are going to end up being a waste of money and a waste of time."

Joe&Bella, a brand specializing in adaptive wear, faces a similar dilemma. Many of their highly specialized products, like magnetized zippers, are simply not available outside China. "Changing a manufacturer isn't just like packing up a suitcase and moving on over," says founder Jimmy Zollo. "It'll probably take several months of back and forth if they can even find the right fabric, zipper, and dye."

The uncertainty surrounding the tariffs is further compounded by the inconsistent pace at which policies are implemented and retracted. "The main problem is nobody knows what to do because one day we have 25 percent on Mexico and Canada, and then the next day it's paused for a month," says Yossi Sheffi, director of the MIT Center for Transportation and Logistics. "Things are being put on and off seemingly haphazardly, so it's hard to plan. What business hates more than anything is uncertainty."

With the cost of moving a supply chain potentially "prohibitive," many businesses are adopting a wait-and-see approach. Meanwhile, consumers are likely to bear the brunt of the tariffs, as the cost is absorbed by various stakeholders along the supply chain.