March Roundtables Discussion Highlights: Navigating Tariff Impacts on Procurement

March 2025 Executive Roundtables for purchasing leaders

The roundtable theme was on actions manufacturing purchasing organizations are taking to address the recent U.S. tariffs as well as retaliatory tariffs from other countries.  Highlights of the roundtable discussion are summarized below. 

• Head of Cost Downs and Should-Be Costing for a manufacturer of power electronics shared that they have putting an initiative to identify Mexican suppliers to serve U.S. customers on hold.  They also shared several tactics they have put in place to reduce the impact of U.S. tariffs: 
  • Asking suppliers to identify US-based manufacturing locations 
  • Requesting Country of Origin details for direct materials purchased by suppliers  
  • Identifying new sources with manufacturing locations in the U.S. 

• Head of Commodity Purchasing for a supplier of electronic devices for automotive manufacturers shared that they established a tariffs task force in November in anticipation of new U.S. tariffs and have been able to mitigate half of the impact of the now 70% tariff on chips from China using two main tactics: 
  • Working with existing suppliers to move manufacturing to locations outside of China (they had already been working with suppliers to establish two manufacturing locations to reduce supply chain risks) 
  • Identified chips where the assembly occurred in China, but wafers were produced outside of China to change the country of substantial transformation outside of China. 

• Director of Supply Chain Performance for a manufacturer of windows and doors for commercial buildings share that they are moving their aluminum sourcing to Argentina based on support for mitigating tariff costs. 
  They also commented that always-shifting trade and tariff policies from the U.S. administration have been an incredible distraction from a big strategic transformation project currently in the third year.  

• Sr. Director of Supply Chain for an aerospace fastener manufacturer shared that they are focused on figuring out the implication of various tariffs and planning for customer relief.  They shared that they were able to get relief from tariff costs in 2018, adding a surcharge and providing details for customers. 

• Director of Global Sourcing for a commercial laundry system manufacturer shared that they have been working on resourcing parts currently made in China to other Asian countries or the U.S. since the U.S. election.
  They commented that expect Mexico to no longer be a tariff haven for the U.S., and they are finding the U.S. trade and tariff policies to be a distraction from working on strategic initiatives. 

• Director of Global Strategic Sourcing for a manufacturer of food processing equipment shared they are finding some suppliers are already increasing margins along with tariff pass-throughs. 
  They use Altana to understand supply chain impacts of tariffs (country of origin for multiple tiers) and are able to use the knowledge to push back on suppliers requesting price increases under the guise of tariffs. 

• Chief Supply Chain Officer for a utility truck manufacturer shared that they manufacture in both the U.S. and Europe but have traditionally shipped product between the two.  They may have to move to a regional buy-make-sell strategy.  They have limited their sourcing to Asia to instances where total landed costs advantages were 70% or more, so they anticipate the Asia sources will still be viable after tariffs are added. 
  They added that their customers will likely postpone capital purchases if prices increase, making it difficult for their company to make planned investments.   Also, they mentioned they believe some top company executives are hoping that tariffs are being used as a bluff / negotiation tactic, and they will be resolved with minimum impact. 

• Director of Category Management for a manufacturer of windows and doors for commercial buildings shared that they are moving sourcing to Mexico and finding a significant cost savings from the China/Asia sources they had been using.  They’ve been working with the Mexican suppliers to change raw material sourcing from China to when possible. 
  They believe the U.S. tariffs on China will persist, but other tariffs will be resolved through negotiations.  They also shared that they expect suppliers to try to increase pricing even when there is not tariff impacts on their costs and will ask for cost transparency to resolve these situations. 

• Director of Strategic Sourcing and Procurement Transformation for a global float glass manufacturer shared that they expect their Canadian customer to switch to sourcing to suppliers that can manufacture product outside the U.S. They are analyzing the impact of tariffs on products they produce in Mexico for the U.S. market. 
  They shared that for many of their products, they can adjust supply chains because of their global footprint – many of their customers are JIT, so supply chain optimization is already routine.  They added that their company is pushing off capex investments to avoid tariff cost increases. 

• Director of Purchasing and Materials Management for a contract manufacturer shared that they are canvassing their supply base to assess the risks and impacts of tariffs.  They added that they have a mix of short-term contracts – where tariffs do not impact their costs – and longer-term contracts where they do not have an opportunity to pass on tariff costs.  They are including tariff pass-through language in new quotes going forward. 

• Director of Purchasing – America for a manufacturer of automation equipment shared that while they import a lot of equipment from Japan that may be subject to tariffs, their U.S. manufacturing operations only have 2 or 3 suppliers from outside the U.S. that ship much volume.  They are looking at alternative supply sources and building a risk tracker to identify sources of raw materials for their suppliers to determine which tariffs apply.   

• Purchasing Director – North America for an automotive pumps manufacturer shared that they have a plant in Mexico and product engineering is done in Europe.  Consequently, they have a lot of European-spec materials.  
  They brought up the risk that many of their suppliers use maquiladoras, and there will be challenges if they maquiladora exceptions are removed by the Mexican government.  They shared they are taking a two-prong approach to addressing tariff impacts: 
  • Tracking the origins of raw materials for U.S. suppliers to identify compatible materials that can be sourced from the U.S. 
  • Reviewing BOMs to identify parts that are not compliant with USMCA and might be able to be sourced in the U.S. 

• Associate Director of Mechanical Commodities for an audio products manufacturer shared that they have a manufacturing facility in Jaurez, Mexico that imports materials via a free trade zone, and there is a risk that Mexico will eliminate the duty-free status of materials imported from China via free trade zones. 
  Their biggest challenge at this time is the tariffs on good exported from their Mexican manufacturing facility to U.S. distribution centers.  They are working with their Mexican suppliers to re-route logistics to avoid border crossings and the associated duties. They also mentioned that they didn’t renew their USMCA paperwork and may be impacted if USMCA goods from Mexico are exempted from tariffs. 

• Director of NPI Sourcing for a semiconductor equipment manufacturer shared that they had already reduced imports from China in recent years and don’t import much from Mexico. Their biggest concern is the aluminum and steel content of imported components – they are analyzing with suppliers (country of origin), but it is unclear how the content will be calculated for assigning duties (i.e. weight, cost). 
  They mentioned that over half the aluminum used by Mexican suppliers is imported, and while they are starting to see some price impacts from tariffs, they haven’t seen the full price increases yet. They also shared they are considering onshoring some parts – their industry has specialized suppliers who are well known, and they’ve used in the past. 

• Head of North American Purchasing for a supplier of automotive pumps and drive components shared that they were in the first week at their current company.  At their previous company (a manufacturer of automotive electronics), they were reliant on Chinese technology for components.  They found that there was little they could do to avoid tariffs on current products, but were assessing geopolitical risks and options for new programs. 

• Head of Procurement – Americas for an automotive underbody coatings manufacturer shared that their spend is impacted in three areas: raw materials (where there is not a lot of options to onshore), steel containers that they ship their product in, and capital equipment.  They are analyzing the tariff impact and exposer for capital equipment and foresee that some investments may be delayed if they can’t find alternatives in a timely manner. 

• Steel Global Commodity Manager for a clamps manufacturer shared they are using the 2018 tariffs as a baseline for developing their mitigation strategy. They developed a PowerBI report to analyze BOMs for tariff exposures and quickly identify which finished goods are impacted as tariff rules change. 
  They are evaluating the cost of sourcing domestically but are finding that many materials are still cheaper from offshore sources even with the tariffs.  They also shared that while the carbon steel prices have seen some price increases, stainless steel prices haven’t changed. 

• Jeoff Burris of APD shared a few insights with the group based on his monitoring of tariff news: 
  • Non-USMCA materials will likely be tariffed more heavily out of Mexico 
  • The U.S. government has signaled they will eliminate the “loophole” of Mexican manufacturers avoiding tariffs on materials imported from China 
    • The Mexican government has already offered to apply same tariff rates as the U.S. on materials imported from China 
  • The USMCA was set to be reviewed in 2026, and the U.S. administration has expressed concerns about the Free Trade Zone loophole