The newly imposed U.S. tariffs on China and temporarily suspended tariffs on Canada and Mexico (following recent negotiations) are forcing companies to reassess their procurement strategies. Rising import costs and geopolitical tensions are driving organizations to reconsider whether globalization or regionalization is the more viable approach to supply chain management. Businesses are now facing critical decisions.

1. Make or Buy?

Should companies move production closer to target markets to mitigate the impact of rising tariffs and logistical disruptions, or should they continue sourcing globally, benefiting from lower unit costs. The increasing cost of transportation, political uncertainty, and shifting trade regulations could make in-house production a more cost-effective option in the long run.

Make – In-house production carries significant operational and financial risks, including access to raw materials, workforce availability, capital investment in infrastructure, and resource management (e.g., ensuring the right skill sets and material supplies).

Buy – Companies must carefully evaluate supplier reliability, potential disruptions in deliveries, and exposure to market price fluctuations. Selecting the wrong supplier could lead to costly inefficiencies.

2. Regionalization or Globalization?

Some companies are turning to regionalization, sourcing from suppliers in countries with lower trade risks. Regional suppliers often provide greater supply chain stability and better compliance with local regulations. However, this approach may come at a higher cost or limit access to cutting-edge innovations. Others are diversifying their supplier base to distribute risks across multiple markets.

3. Cost Optimization vs. Supply Chain Stability?

For years, lower production costs in Asia have been a key driver of globalized procurement. Today, with rising tariffs and transportation costs, companies must carefully balance cost savings with supply chain resilience. Building flexible supply chains that can withstand geopolitical and economic shifts is becoming a top priority.

The current geopolitical landscape is reshaping sourcing and investment strategies. Companies that adapt their procurement approaches with agility will gain a competitive edge in this evolving market environment.