95% of Supply Chains Are Shifting Due to Tariffs and Geopolitics—Are You?

95% of companies now rate tariffs and geopolitical shifts as major factors in supply chain decisions. The latest round of tariffs introduced under the current U.S. administration on April 3—blanket 10% duties on nearly all imports, escalating to 49%+ for select countries—marks the largest tariff increase in 95 years.

This surge in trade disruption has upended assumptions around sourcing safety and predictability. De minimis exemptions are disappearing, starting with China, and country-specific tariffs go live April 9, affecting allies and low-cost sourcing hubs alike.

This volatility impacts production costs, sourcing decisions, and even market access. Over 36% of companies have already shifted or plan to shift sourcing away from China but simply moving production doesn’t guarantee protection. In fact, countries like Vietnam, Bangladesh, Israel, and Cambodia are now facing tariffs under the new reciprocal structure.

Tariff risk now demands full agility: alternative suppliers, dynamic cost modeling, and rapid adaptation. However, rapid relocation exposes deeper issues—many new hubs lack the infrastructure or compliance maturity brands need.

Supplier Diversification: Transparency is Non-Negotiable

Shifting sourcing to countries like India, Vietnam, and Bangladesh has become a strategic move—yet it introduces new challenges, especially as these countries now face tariffs under the new trade policies. According to the State of Supply Chain 2025 Report, 41% of supply chain leaders cite issues such as higher logistics costs, onboarding delays, and lack of compliance infrastructure. Many of these suppliers aren’t fully equipped to meet documentation or ESG reporting expectations.

Moving production does not erase compliance obligations. Without full visibility into subcontractors and materials, companies may still be exposed to forced labor violations or transshipment risks. In fact, many factories in new hubs are managed by the same networks as those in China, bringing hidden risks along with them.

This is why leading brands are pairing diversification with deeper supplier vetting, ongoing monitoring, and traceability investments. Real-time digital audits and mapping ownership structures across tiers are now core sourcing practices.

Enforcement Meets ESG: Compliance Pressure Intensifies

Governments are linking trade enforcement with ESG compliance. The Uyghur Forced Labor Prevention Act (UFLPA), EU due diligence laws, and now proposed de minimis restrictions are forcing importers to prove origin and ethical production. According to the report, 75% of organizations have increased compliance budgets to meet these mandates.

New U.S. policy removes de minimis exemptions on low-value imports from China and signals future global expansion. That means even a $50 parcel might require full customs documentation, including 10-digit HS codes. Companies must now handle compliance at scale—across thousands of SKUs and small shipments.

The convergence of ESG enforcement and trade rules means compliance is no longer optional. Companies lacking real-time origin data or audit trails risk shipment seizures, fines, or reputational damage.

AI and Automation: Defending Against Complexity

AI is rapidly becoming essential for managing tariff classification, origin validation, and trade compliance. AI systems now screen every shipment across 300+ risk factors to detect undervaluation, fraud, or misclassification in seconds.

On the corporate side, AI is being deployed to:

• Predict tariff exposure and optimize sourcing before duties hit
• Recommend HS codes based on product language and customs history
• Automate audit flagging across supplier and routing data

Leading brands also use AI for continuous compliance checks—spotting trends in quality defects, ESG violations, or suspicious subcontractor activity. This prevents issues from escalating into legal or operational crises.

Traceability: From Risk Mitigation to Market Advantage

Traceability has shifted from sustainability buzzword to regulatory and strategic must-have. It enables:

• Verification of origin for tariff classification
• Evidence of ethical sourcing for forced labor laws
• Real-time risk detection across supplier tiers

Digital traceability systems, such as product passports or blockchain-enabled ledgers, allow companies to provide origin data instantly. In many regions, they’re also becoming prerequisites to market entry.

Beyond compliance, traceability builds brand trust and competitive advantage. Suppliers with traceability capabilities are increasingly preferred in sourcing decisions, especially as ESG-aligned sourcing becomes standard.

Digital Maturity: A Competitive Differentiator

Fewer than 10% of companies have near-full supply chain automation. Yet, digital maturity is now a necessity, not a luxury. Manual systems cannot respond to rapid policy changes or audit demands. Digitally mature companies:

• Access compliance data instantly
• Reroute or revise sourcing in hours, not weeks
• Detect and resolve risks early with AI and traceability platforms

Siloed systems hinder visibility. Leading companies are integrating compliance, sourcing, and ESG tools into unified platforms, giving teams a single source of truth.

How Inspectorio Enables Resilient Trade Compliance

Inspectorio supports global brands and retailers with:

• Traceability dashboards that verify origin and ESG metrics
• AI-powered audit and compliance tools to flag risks early
• Supplier collaboration platforms that streamline documentation and drive shared standards

From managing forced labor documentation to reducing audit duplication, Inspectorio makes compliance faster, more transparent, and scalable.

Final Thought

The new trade reality is clear: tariffs, enforcement, and ESG scrutiny are converging. To remain competitive, companies must treat compliance and traceability as strategic pillars. By investing in AI-driven tools and digital maturity, supply chains not only survive—they lead.

Inspectorio empowers supply chain leaders to stay ahead—through transparency, automation, and insight-driven compliance.