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Navigating supply chain changes in today’s tariff reality

On McKinsey Perspectives

DELIVERING ACTIONABLE INSIGHTS ON THE DAY’S NEWS

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Only McKinsey Perspectives. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

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Shifts in supply chains

In the news

•

Flashbacks to COVID-19. US manufacturers are reminded of the COVID-19 era as changes in trade policies have made it challenging to obtain essential supplies, Axios reports. Factories are experiencing lengthier delivery timelines for their key inputs as the cost of materials is quickly increasing. What’s more, car manufacturers are sounding the alarm that supply chain issues could bring their assembly lines to a standstill; at least one auto brand has stopped production altogether. [Axios]

•

Tariff ‘stacking.’ Many US companies are seeing steeper tariff costs than what recent trade deals announced. As Reuters notes, the higher bill results from the combination of new tariffs with earlier ones, which remain in place. Until recently, one US manufacturing executive who uses Asia-based suppliers was paying 70% in taxes on metal components—a notably higher rate than was broadcast in May. Because of this tariff “stacking” phenomenon, businesses are having a tough time predicting their costs. [Reuters]

“Even if you’re not changing your supply chain today, it is important to start to prequalify suppliers and identify potential alternative sourcing opportunities.”

—Roman Belotserkovskiy, partner, McKinsey

On McKinsey.com

•

A supply chain reset. Tariffs on imported goods mean that some companies may face up to billions of dollars’ worth of exposure. That’s according to McKinsey Senior Partner Valerio Dilda , in conversation with McKinsey Partners Roman Belotserkovskiy , Liz Hempel , and Riccardo Drentin about tariffs’ effects on the global value chain. For international businesses, Dilda says it’s not a question of whether to transform, but rather where and how to do so. Companies that can get ahead of the curve in revisiting their supply chains may fare better in the new reality of tariff-related disruptions.

•

Intelligent use of inventory. In North America, many companies are struggling to understand how tariffs and trade restrictions affect them, Belotserkovskiy says. Since some of the tariffs may be temporary and could evolve pending negotiations, companies can help mitigate the business effects—at least in the short term—through the strategic use of inventory. Today’s companies can take a cue from past practices: for instance, using front-loaded shipments, low-tariff regions, and inventory buffers, as well as increasing safety stocks. Learn what else companies can do now to build optionality into supply chains.

Stay competitive with your supply chain

—Edited by Belinda Yu, editor, Atlanta

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by "Only McKinsey Perspectives" <publishing@email.mckinsey.com> - 01:11 - 3 Jul 2025

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Streamline Bag, Carton & Barrel Handling with HEROLIFT

Rapid, Small-Batch Customization for Smart Metering Projects

Navigating supply chain changes in today’s tariff reality

Shifts in supply chains

In the news

“Even if you’re not changing your supply chain today, it is important to start to prequalify suppliers and identify potential alternative sourcing opportunities.”

—Roman Belotserkovskiy, partner, McKinsey

On McKinsey.com

Archives

in

info@learn.odoo.com

Streamline Bag, Carton & Barrel Handling with HEROLIFT

Rapid, Small-Batch Customization for Smart Metering Projects

Navigating supply chain changes in today’s tariff reality

Shifts in supply chains

In the news

“Even if you’re not changing your supply chain today, it is important to start to prequalify suppliers and identify potential alternative sourcing opportunities.”—Roman Belotserkovskiy, partner, McKinsey

On McKinsey.com

“Even if you’re not changing your supply chain today, it is important to start to prequalify suppliers and identify potential alternative sourcing opportunities.”

—Roman Belotserkovskiy, partner, McKinsey