Trump’s win is already scrambling supply chains

Trump has vowed to enact sweeping trade restrictions ranging from across-the-board import duties to increasing the cost of goods from China through tariffs as high as 60% to 100%.

Last week’s electoral victory of Donald Trump is having an immediate effect on global supply chains, with several companies publicly discussing production changes they’ve made ahead of his return to the White House.

During the campaign, Trump vowed to enact sweeping trade restrictions ranging from across-the-board import duties to increasing the cost of goods from China through tariffs as high as 60% to 100%.

The wide range of possible outcomes has many firms waiting to see what the actual trade policies will be before enacting a final plan. Others are already moving ahead with elements of their supply chain strategy.

“I don’t think anybody’s surprised,” TD Cowen analyst Oliver Chen told B-17. “The probability factor was high for either side.”

Further softening the element of surprise is the fact that the world has already experienced Trump’s approach to trade — and China in particular — in his previous administration, which led many companies to develop more flexible sourcing.

Bark Box CEO Matt Meeker called the reelection of Donald Trump “a bit of Groundhog Day for us.”

Before Trump became the Republican nominee, many companies were already exploring alternatives to their former reliance on China by finding partners in other Asian countries, or by “near-shoring” production to the Americas.

Much of the executive commentary on earnings calls during election week signaled a wait-and-see approach regarding what the Trump administration will enact. Executives have also touted the agility of their current strategies.

Several companies, however, aren’t waiting to make changes to their supply chains.

Premier Inc., a healthcare company that provides an array of products and services, said it has brought production of essential items, like face masks and isolation gowns, closer to the US as part of a multi-year effort to lessen dependence on Southeast Asia.

Last week, CEO Michael Alkire said Premier’s partners are asking the company to continue looking for sourcing that will be less affected by tariffs.

Fortune Brands, which owns a portfolio of home products brands like Moen plumbing fixtures and Yale locks, has been rethinking its supply chain since Trump’s tariffs in 2017.

“We’ve moved away almost everywhere from single source,” CEO Nick Fink said. “Your secondary source may cost you a bit more than your primary source, but if your primary source were to become more expensive because of tariffs, you can dial that down and dial up your secondary source and rebalance it to be the most efficient.”

“We are very well positioned to handle increased tariffs,” he added. “We don’t invite it because it’s a lot of hard work.”

In consumer goods, cooler brand Yeti started production earlier this year at its second non-China drinkware factory and said it is in the process of opening a third. By the end of next year, half of its drinkware production capacity will be out of China, the company said.

Outdoor equipment and lifestyle products maker Clarus said it still has some production in China — Black Diamond headlamps and footwear — and is moving production to Vietnam and other countries.

If a significant tariff increase is directed at China, Black Diamond brand president Neil Fiske said the company is prepared to pull orders forward.

“We may end up hedging inventory a little bit to buy us consistency in our pricing as we diversify,” he said.

Meanwhile, Rivian founder and CEO Robert Scaringe said the EV maker has chosen suppliers that it doesn’t expect to ever be exposed to large tariffs, as well as writing contracts “in such a way that we’re not carrying much of the risk.”

“What’s going to be interesting is how far this reaches into the upstream supply chain,” he added, referring to raw materials like steel and lithium. “That’s something that every manufacturer, certainly ourselves included, are thinking about.”

Not everyone is talking trade, however.

US trucking and logistics company Schneider National’s executive vice president, Jim Filter, said clients are not yet asking him about how to get ahead of tariffs.

If they do, he said, “that would happen at a little bit faster pace than what we would normally see, as currently our customers are really operating just under normal replenishment cycle, preparing for this holiday push.”