Navigating a new era of tariffs

Global trade will likely be reshaped by a surge in tariffs as the world’s largest economy signals a shift towards more restrictive trade policies.

5 June 2025

6 mins

Corporate & investment bankingTransaction bankingTreasury

Global trade will likely be reshaped by a surge in tariffs as the United States, the world’s largest economy, signals a shift towards more restrictive trade policies.

The latest US stance on tariffs includes imposing a minimum 10% tariff on all countries with some nations hit significantly harder than others. This means that Asian economies that have previously been sheltered from the US-China trade war will potentially be drawn into their own conflict with Washington, causing significant pressures on global supply chains, operations, liquidity, and revenues than ever before.

Some of the world’s largest exporters have been hit by steep levies with corresponding retaliatory actions.

Navigating this increasingly complex global environment requires companies to adopt a multifaceted and proactive strategy to reduce exposure to tariff-related risks and ensure resilience in their supply chains.

Adapt, diversify, and optimise: Strategies to mitigate risks and strengthen resilience

Organisations, and the financial institutions supporting them, that take early, proactive action to adapt to tariff changes, diversify their supply chain and optimise their operations and financials, will likely be in a stronger position to weather volatility and potentially even gain a competitive advantage, if they can navigate such complexity effectively.

Adapting to a dynamic trade regime

In many ways, organisations today are better equipped to navigate the challenges posed by tariffs, thanks to the valuable lessons learned from trade disruptions in the not-too-distant past, such as the COVID-19 pandemic and the US-China trade tensions of 2018. These events have changed the playbook in terms of supply chain management and have pushed organisations to factor trade volatility into their long-term strategic planning and risk management frameworks.

With the imposition of fresh rounds of tariffs decision-makers must thoroughly assess the sensitivity and exposure of their businesses to them. Exporters, for example, should gain visibility across the entire supply chain, including second- third- and fourth-level suppliers, to identify potential vulnerabilities and take necessary action.

For financial institutions, this means we must have a deep understanding of our clients’ business model and the markets they operate in and with to support them in mitigating the overall impact through suitable solutions.

Michael Spiegel

Global Head, Transaction Banking, Standard Chartered

Mapping exposures effectively requires high-quality data, and digitalisation with the aid of tools like artificial intelligence (AI) is an ideal strategy to aid faster and more accurate data gathering, analysis, and interpretation. AI-powered solutions can monitor supply chains in real time to provide insights into potential risks and opportunities impacting not only a business but its supplier network across the supply chain. AI can also enable predictive modeling to forecast how different tariff scenarios might impact supply chains and financial performance, allowing for proactive planning.

New tariffs may also portend changes to the regulatory landscape, such as tax and financial regulations, as governments adjust import duties, tax incentives, or subsidies for domestic industries, to offset the impact of tariffs. The period following the introduction of new tariffs can be confusing and for organisations to remain on top of these changes, access to timely and relevant intelligence from their finance and logistics partners, for example, will be key to ensure compliance across the supply chain.

Diversifying supply chains to cushion impact

The pandemic and previous trade tensions between China and the US have exposed the risks of concentrated supply chains, prompting many companies to expand their manufacturing capabilities to markets like ASEAN as part of their China + 1 strategy. This has helped companies mitigate against US tariffs on Chinese exports to an extent by shifting some production to economies that face lesser restrictions

There's already evidence of the acceleration of supply chain diversification across emerging trade corridors, such as from Asia to the Middle East and Asia to Latin America. What will be key is the ability to tap into these emerging trade corridors.

Madhur Jha

Global Economist and Head, Thematic Research, Standard Chartered

The appeal of this tariff arbitrage strategy may increase with the US adding a broad range of tariffs – including over 100% on Chinese goods imports (as at 9 April 2025). Because while nearshoring and shifting production to other lower cost countries, or sourcing a network of alternative suppliers takes time to implement, they eventually allow for greater flexibility amid continued trade.

Yet, while tariff arbitrage could potentially minimise the impact of new tariffs, it requires careful navigation of legal frameworks. As they begin to trade with entities in new markets, businesses and their bank partners must ensure they are compliant with local, regional, and international regulations to avoid costly mistakes.

Optimising cash flow and operations

Tariffs increase costs, hurting margins and revenues. Companies can mitigate these effects with the use of advanced analytics, including AI, to identify areas of inefficiency and cost-saving opportunities within their operations. These could include optimising working capital, liquidity and cash flow, inventory management, and other functions across the supply chain.

Bank partners like Standard Chartered have a crucial role to play in bolstering financial resilience by offering a range of trade financing solutions such as Letters of Credit, Factoring, and Supply Chain Finance. With the potential for payment disruptions, trade financing can help companies extend competitive financing solutions to its suppliers to ensure supply chain continuity, whilst protecting themselves from potential cash flow issues that may arise from late payments. Exporters can also work with bank partners to leverage solutions like currency hedging and forward contracts to mitigate rising costs and exchange rate fluctuations.

In addition, savings from automating customs processes and compliance can help boost profit margins. E-documentation, for example, reduces paperwork, lowers costs, and speeds up the process of exporting goods across borders while blockchain-based solutions can offer a transparent and secure system for tracking goods as well as enable fast and hassle-free access to working capital across supply chains.

Navigating with agility and foresight

Although the full extent and impact of US tariffs and their countermeasures remain uncertain, and perhaps subject to rapid change, organisations must be flexible and adopt a multi-disciplinary toolkit to navigate challenges and opportunities effectively.

Companies as well as the financial institutions supporting them can best protect their business interests by focusing on strategies within their control. By embracing digital tools, diversifying their supplier base, and leveraging financing and hedging tools, companies can navigate these complexities with agility and foresight.

Partnering with a trusted global bank like Standard Chartered with a wide range of capabilities — from payments to digital trade solutions and financing — enables companies to gain access to valuable insights and solutions that can help anticipate and manage risks effectively and develop strategic responses to current and emerging trade challenges.

Macro Freestyle podcast

Trade wars and stagflation risks

Listen to the Macro Freestyle podcast, “Trade wars and stagflation risks”, for Standard Chartered’s perspective on the dynamic and ever-changing situation

Listen on Apple

Listen on Spotify