06 Jun 2025 Tariff-ic or Tariff-ying? Navigating the Current Tariff Landscape
Written By Jeffrey Cartwright, Managing Partner – 4 min read
Decisions on sourcing, whether through relocating manufacturing operations or establishing new supply chains, are among the most critical and strategic choices a business can make. These decisions carry long-term implications and must account for financial, operational, and geopolitical factors. While Shoreview Advisors is reluctant to draw conclusions or make definitive predictions about the current tariff situation until a final state is reached, it’s clear that tariffs are creating both challenges and opportunities. Despite the uncertainty, this is not the end of global trade as we know it. It is a disruption—significant, but one that resilient companies and the United States as a whole are fully capable of navigating successfully.
The Importance of Strategic, Long-Term Decisions
Switching factories or re-establishing supply chains is costly and resource intensive. These decisions must be made with an 8–10-year horizon in mind, considering operational stability and financial feasibility. Reacting to short-term tariff changes without a strategic plan can exacerbate business risks. Instead, companies should focus on long-term resilience and adaptability.
In this confusing period of policy shifts, there are key truths businesses can count on:
- The United States remains a service-driven economy, not a manufacturing-dominated one.
- Labor costs in the U.S. are too high to support the return of many manufacturing jobs, and workforce challenges (such as immigration policies and low unemployment) further limit the ability to staff factories domestically at scale.
- China’s behavior—marked by increased militarization, disregard for arbitration, and unfulfilled trade obligations—has eroded trust, underscoring the need for diversified supply chains.
- The COVID-19 pandemic demonstrated that critical industries, including semiconductors, rare earth materials, and pharmaceuticals, cannot rely on China as the primary source. The U.S. must prioritize self-sufficiency and source from trusted allies.
A History of Resilience in the Face of Challenges
The United States has proven time and again that it can adapt and emerge stronger from disruption. From the Civil War to the Great Recession, and from WWII to COVID-19, America has consistently demonstrated resilience in the face of adversity:
- The Civil War devastated the Southern economy, yet the country rebuilt and achieved economic unification.
- World War II necessitated a military expansion that transformed the U.S. into a global superpower, defeating formidable adversaries.
- The Cold War was won through strategic military and economic investments that brought down the Soviet Union.
- Even amidst financial catastrophe, the Great Recession was resolved with record economic recovery, and the U.S. economy has been in recession for only two months since.
While headlines may paint a dire picture, the underlying fundamentals of the U.S. economy remain strong. The stock market reflects this: on 80% of trading days since the Great Recession, it has recorded positive gains despite persistent recession predictions in the news.
Assessing the Impact of Tariffs on the U.S. Economy
Tariffs have become a flashpoint for businesses and policymakers, but their overall impact on the U.S. economy is often overstated. Imports account for just 13.6% of the U.S. economy, half of which is sourced from Mexico, China, and Canada.
Even if tariffs rise to 10% on global goods, 40% on Chinese imports, and 50% on specific products like steel and aluminum, the total effect on inflation would be less than 2.5%. Furthermore, this is a one-time event; it does not create ongoing inflationary pressure. While certain industries and product categories may experience short-term pain, consumers have options to switch purchases or delay demand, mitigating broader economic harm.
The size of the U.S. economy provides critical perspective:
- The United States accounts for 26% of global GDP, with an economy 55% larger than China and twice as large as the European Union.
- In technology sectors, the U.S. contributes 50% of global high-tech profits, compared to China’s 6%.
- Demographic trends favor the U.S., with a growing working-age population, while China’s is projected to shrink drastically by 2100.
These structural advantages enable the U.S. to weather tariff disruptions and thrive in the long term.
What Companies Can Expect Going Forward
Despite uncertainties surrounding tariff negotiations, companies are not standing still. Over $2 trillion in investments have been announced in U.S. manufacturing since the beginning of 2025, including new steel mills, aluminum smelting plants, and major pharmaceutical and semiconductor manufacturing facilities. These investments underscore a shift toward securing strategic supply chains and reducing reliance on China.
It is also clear that bipartisan consensus considers China an existential threat, ensuring that tariffs will remain part of U.S. policy. While businesses may delay decisions amidst uncertainty, the long-term trajectory is clear: less reliance on China, greater diversification, and a focus on building alliances with trusted trading partners like Mexico, Southeast Asia, and India.
While the final state of tariff levels is yet to be determined, it is likely that negotiated rates will fall between extremes—higher than 10% globally but less aggressive than initial proposals. Companies should plan for a world where tariffs are a consistent factor but not an insurmountable barrier.
Navigating Tariffs: A Path to Resilience
Resilient companies don’t dwell on the negatives—they adapt and thrive in challenging environments. Despite the noise and the headlines, the world isn’t ending. This is simply another chapter in global trade’s evolution, and the United States has the resources, ingenuity, and resolve to emerge even stronger.
Businesses that take a long-term view, invest in resilient supply chains, and explore near-shoring options will be well-positioned to navigate this climate. Tariffs may add complexity, but they also create opportunities for innovation and adaptation.
At Shoreview Advisors, we help businesses rise to these challenges with strategic guidance and solutions tailored to their unique needs. Together, we can turn these disruptions into building blocks for a stronger future.