The
impact of tariffs has been one of the major confounding factors for businesses around the world, with new levies on trade driving significant levels of uncertainty across long-standing supply chains. However, businesses have begun to work on out-innovating
their newfound trade challenges.
One of the heaviest impacted supply chain regions by tariffs is China and much of Southeast Asia.
Last year, the total goods trade between the US and China was an
estimated $582 billion, but the relations between the two global powerhouses remain up in the air, with tariff negotiations ongoing between representatives from the Trump administration and the Chinese government.
With initial tariffs on some Southeast Asian nations ranging from 46%, recent negotiations have resulted in far lower tariffs ranging
between 19% and 20%. However, this still represents a greater challenge than prior to President Trump’s Liberation Day announcement back in April.
Challenges in negotiations with China have caused significant unease among businesses in the US and beyond with supply chains in Asia.
For instance, data shows that US imports of electronics and industrial machinery from China fell by
more than 60% in June 2025, compared to just five months prior.
So how are businesses solving this year’s supply chain uncertainty? It appears an increasing number of firms are opting for innovative solutions in response to tariff challenges:
AI to Transform Supply Chains
In response to tariff uncertainty, many businesses with supply chains that reach into affected trading partners are using technology to become more adaptable to changes.
Intelligent tools from companies like Salesforce and Kaxis utilize AI to help businesses navigate the rapidly changing tariff landscape. Here, artificial intelligence algorithms can constantly
monitor tariff schedules, consider affected products, and run simulations of changes to the supply chain to mitigate new costs.
Machine learning (ML), a subset of AI, can also help businesses to manage their inventory levels more effectively, avoiding over or under-ordering and identifying alternative suppliers that may be more cost-effective in real-time.
The Reshoring Boom
President Trump has been vocal in his encouragement of leading US tech firms to reshore their production domestically, with varying degrees of success.
Reshoring means that businesses look to US manufacturers to fulfill their supply chain needs or to nearby nations with more favorable trade agreements in place.
One of the biggest cases of a leading company reshoring the production of its products can be found in Nvidia, which
pledged $500 billion to manufacture AI chips in the United States.
Recently, Apple hiked its commitment towards its American Manufacturing Program to
$600 billion. However, critics have suggested that manufacturing an iPhone, for instance, in the US could
double or triple the cost of each unit due to differences in labor costs, infrastructure, and access to crucial components.
We’re also seeing leading Asian tech firms embrace reshoring as a form of vertical integration to future-proof their sales performance in the near future. In March, Taiwan Semiconductor Manufacturing Company pledged to invest
$100 billion towards US chip production, illustrating how the pull of tariffs can also reshore businesses from overseas.
Creating a WFOE in China
Establishing a Wholly Foreign-Owned Enterprise (WFOE) in nations affected by tariffs, like China, has become another popular strategy for
businesses seeking to rethink their supply chains in 2025.
The strategy provides businesses with the ability to build a presence overseas while remitting the profits to their country of operation. This helps to provide a greater level of operational flexibility when it comes to invoicing clients in RMB and drives
down the cost of procuring materials locally as a result.
The ability to operate directly within Chinese markets means that businesses can hire locally and cut down on their supply chain costs by lowering their reliance on suppliers in Asia.
Creating a WFOE in China can also help business owners to maintain complete control over their enterprise while also making decisions without the need for a consensus from a local partner.
Although challenges like a lack of local business knowledge and establishing Chinese partners have hindered businesses in the past, innovative firms are turning to
AI and ML as a means of studying new
markets and breaking down communication barriers with prospective businesses domestically, helping to streamline operations in a new country.
Navigating the Age of Tariffs
It appears that the age of tariffs will be here for the foreseeable future, but for innovative businesses with overseas supply chains, this doesn’t have to be an impossible challenge to overcome.
By embracing technology to navigate changing trade landscapes, it’s possible to mitigate the impact of tariffs and even establish more efficient supply chains in the process.
For those seeking to drive down costs, reshoring or building a presence in key trading nations like China could be an effective way to display more agility than competitors and keep costs lower for consumers. With the right blend of technology and acumen,
more businesses can thrive as tariffs continue to impact trade.
