For several years, business leaders have treated tariffs as a disruption — a temporary shock to be absorbed, hedged, or waited out. KPMG’s Biannual Supply Chain Report, released this month, states plainly that trade policy has become “a standing cost embedded in global supply chains, rather than a temporary disruption to wait out.” The DHL Global Connectedness Report 2026 reinforces the point: despite a volatile 2025 shaped by tariff hikes and geopolitical friction, global trade proved more resilient than expected — but the structure of that trade has been permanently altered. Organizations that have not yet recalibrated their supply chain strategy for this new permanent state are operating on an assumption the evidence no longer supports.
What the Data Is Actually Telling Us
The picture emerging from this month’s research is more complex than the headlines suggest — and more consequential for strategic planning.
Global trade is resilient, but structurally transformed.
The DHL Report shows that the world’s level of globalization held steady at 25 percent in 2025 — matching the record high first reached in 2022. Global goods trade grew faster in 2025 than in any year since 2017, excluding the pandemic rebound. US importers accelerated shipments ahead of new tariff increases; China redirected exports toward non-US markets, sustaining overall global volumes. The headline conclusion — trade is holding — masks the more important story: where and how that trade flows has fundamentally changed.
The great reallocation is real and accelerating.
Harvard Business School research published this spring documents what it calls “the great reallocation in US supply chain trade.” US imports from China have returned to near-2001 levels — before China’s entry into the World Trade Organization. Mexico, Vietnam, and India are the primary beneficiaries, with Mexico and Vietnam gaining share through new product categories rather than simply absorbing existing Chinese volumes. The recalibration has been “so profound,” per HBS researchers, that the shifts triggered by April 2025’s Liberation Day tariff announcement occurred within months — not years. For organizations still running supply chain strategies built on pre-2022 assumptions about China’s role, the gap between strategy and reality is growing.
AI is driving trade growth, not just trade disruption.
One of the most underreported findings from the DHL report is the role of AI-related products in sustaining trade volumes: semiconductors, data transmission equipment, and AI infrastructure components accounted for an estimated 42 percent of goods trade growth in the first three quarters of 2025. This creates a strategic double-exposure for organizations heavily reliant on AI infrastructure: they are simultaneously subject to tariff risk on the technology inputs that power their operations, and to export control risk as AI-adjacent products become increasingly sensitive in the context of US-China competition.
Tariff uncertainty is now structurally embedded.
KPMG’s analysis of the legal landscape is particularly instructive for risk leaders. The Supreme Court’s decision overturning the presidential emergency powers used for broad tariffs has not removed tariff risk — it has redistributed it. Section 122 tariffs have been immediately re-imposed for 150 days. Sections 301 and 232 investigations — covering unfair trade and national security respectively — have been initiated and carry significantly greater legal durability than emergency powers tariffs. The KPMG conclusion is clear: uncertainty about trade policy is here to stay, and organizations must manage it as a permanent feature of the operating environment, not a phase to be endured.
Five Operational Priorities for the New Trade Reality
KPMG’s report is explicit: firms are no longer optimizing supply chain locations for lowest-cost production. They are examining their exposure to disruption along each node of their supply chains. The distinction matters. A cost-optimization lens asks: where is production cheapest? A risk exposure lens asks: where are we most vulnerable if a tariff, export control, weather event, or geopolitical decision disrupts this node? Most organizations have mapped their tier-one suppliers. Far fewer have visibility into tier-two and tier-three dependencies — where the most dangerous single points of failure typically reside.
- Commission a node-by-node supply chain exposure audit that maps every significant supplier relationship, logistics dependency, and production location against four risk dimensions: tariff exposure, geopolitical risk, climate and weather vulnerability, and operational concentration.
- Extend the audit to tier-two and tier-three suppliers for your ten most critical product lines or operational inputs — these deeper dependencies are where the most consequential hidden risks typically sit.
- Score each node for disruption impact: if this node failed tomorrow, what would the operational, financial, and reputational consequences be, and how long would recovery take?
The pace at which trade policy is changing — new tariff investigations, Supreme Court decisions, Section 301 and 232 proceedings, export control updates — requires real-time intelligence capability that most organizations do not currently have. Business units making sourcing and inventory decisions are routinely operating on outdated trade policy assumptions. The organizations best positioned in this environment are those that have built systematic trade policy monitoring into their strategic intelligence function, with clear lines to the executive and board level.
- Establish a dedicated trade policy monitoring capability — whether in-house or through a specialist advisory partner — that tracks tariff developments, export control changes, and rules-of-origin updates across every jurisdiction material to your supply chain, with regular reporting to the executive committee.
- Integrate trade policy risk into your enterprise risk register as a formally defined and actively monitored category, with a named risk owner at senior management level and quarterly review by the board’s risk committee.
- Conduct a scenario planning exercise for your three highest-tariff-exposure supply chains under three scenarios: current tariff environment, tariff escalation, and tariff negotiated reduction — and define the operational and sourcing responses your organization would execute in each.
KPMG notes that inventories are likely to remain slimmer across the industry as firms offset additional tariff costs — creating a systemic vulnerability to the next supply shock. Meanwhile, HBS research confirms that the reallocation away from China toward nearshore and friendshore partners is now happening in months, not years. Organizations that have been treating nearshoring as a medium-term strategic option are finding that their competitors are moving faster. The window to establish alternative supply relationships and build nearshore production capacity before the next tariff escalation is narrowing.
- Identify your top five single-source, high-tariff-exposure supply dependencies and develop documented alternative sourcing plans for each — including qualified alternative suppliers, lead times, and cost differentials under current and elevated tariff scenarios.
- Evaluate nearshoring opportunities for your highest-risk, highest-volume supply lines, prioritizing markets — particularly Mexico, Vietnam, and India — that have demonstrated the capacity to absorb reallocated production volume at scale.
- Review your inventory strategy for critical inputs in the context of tariff timing risk: where tariff escalation is a credible scenario in the next 12 months, assess whether strategic inventory builds are cost-effective as a buffer against supply disruption.
The DHL finding that AI-related products accounted for 42 percent of goods trade growth in 2025 is a signal that technology procurement is now one of the most tariff-exposed and export-control-sensitive categories in the enterprise. Organizations investing heavily in AI infrastructure — GPUs, networking equipment, data center hardware — face simultaneous exposure to tariff cost escalation and to export control restrictions that can disrupt vendor relationships and technology roadmaps with little warning.
- Require your technology procurement function to conduct a tariff and export control risk assessment for all major hardware and AI infrastructure investments, including an assessment of the vendor’s own supply chain exposure to US-China trade restrictions.
- Diversify your AI infrastructure vendor relationships where technically feasible — single-vendor dependency on hardware or software sourced from geopolitically exposed supply chains is a compounding risk in the current environment.
- Engage legal and compliance functions to ensure your organization’s technology procurement is monitored for export control compliance — particularly where products or components with dual-use classifications are involved.
The transformation documented in this month’s research — from tariff as disruption to tariff as standing cost — has direct implications for board governance. Supply chain resilience is no longer an operational matter that reports to the board through a supply chain or operations function. It is a strategic risk that belongs on the board’s agenda alongside financial risk, cybersecurity risk, and regulatory risk. Boards that lack visibility into their organization’s supply chain exposure, alternative sourcing capabilities, and trade policy monitoring function are not equipped to provide effective oversight of one of the most consequential risk categories of 2026.
- Present a supply chain resilience assessment to your board at the next scheduled board meeting, covering current tariff exposure, top-ten supplier concentration risks, and the organization’s alternative sourcing readiness.
- Define supply chain resilience metrics — including supplier concentration ratios, nearshoring progress indicators, and tariff cost as a percentage of input costs — and include them in the board’s regular risk reporting dashboard.
- Ensure your annual strategic planning process includes a supply chain resilience scenario that models the organization’s financial and operational performance under a sustained tariff escalation over 12 and 24 months.
Resilience Is the New Efficiency
For thirty years, supply chain strategy was synonymous with efficiency: reduce cost, reduce inventory, extend supplier reach, optimize every node for price. The past five years have systematically exposed the fragility that efficiency-first design creates. The organizations that have fared best through tariff shocks, pandemic disruptions, and geopolitical realignments are not those with the leanest supply chains — they are those with the most resilient ones: diversified supplier bases, nearshore alternatives, real-time trade intelligence, and boards capable of governing supply risk with the same rigor applied to financial performance.
KPMG’s characterization of trade policy as a standing cost is not pessimism. It is a strategic clarification. The organizations that internalize it — and build their supply chain governance accordingly — will be better positioned to compete in every scenario that follows.
Strengthen Your Supply Chain Resilience Strategy
Karysburg works with executive teams and boards to assess supply chain risk exposure, build resilience frameworks, and design governance structures capable of managing trade policy as a permanent strategic variable. From tariff exposure audits to nearshoring strategy and board-level supply chain risk reporting, our advisors work alongside your leadership to convert uncertainty into competitive advantage.
Book a supply chain resilience advisory session with our team today.