How to turn constant disruption into an advantage.
The worst thing that business leaders can do right now in reaction to the constantly changing global tariffs saga is to just complain and hope that “this too shall pass.” The best response is to assume tariffs will persist and build an organization that can absorb the impact and adapt.
They should treat the latest wave of duties and tariffs—imposed by President Donald J. Trump after the U.S. Supreme Court ruled that many of the previous tariffs he had instituted were unconstitutional—as just one more force in a broader era of disruption marked by pandemics, wars, climate events, environmental constraints, and social unrest. The best supply‑chain leaders have responded that way. They continuously strive to minimize the total landed cost of their products, protect revenue growth, and preserve flexibility. They view friction in trade as normal and believe that their supply chains should be designed to perform superbly despite it. That is what I learned in my roles as a chief supply chain officer and a chief procurement officer in product companies, manufacturing services, and semiconductors during the 1990s, 2000s, and 2010s. Today, as a supply‑chain advisor, I see leaders hesitate on the next move. Many get stuck debating tariff tactics instead of building a repeatable strategy. One standout exception is an Australian company: Breville, the maker of small kitchen appliances. It offers a useful example of how a strategic response can pay off. I have been working with Breville as a consultant since 2021 to help it aggressively relocate its production from China and figure out how to navigate Trump’s tariffs. I’ve known Jim Clayton, Breville’s CEO, for more than a decade, since we worked together at LG Electronics in Seoul. The result: On February 11, Breville reported that its revenues for the second half of 2025 rose 10.1%, its gross profits increased 6.3%, and more than 80% of its gross profits from products sold in the United States were coming from products manufactured outside of China versus 15% just three years ago. In an industry that had long built products almost exclusively in China, Breville redesigned its supply network: First, it began to dual‑source items from China and Mexico and then it added suppliers in Indonesia, Vietnam, and Cambodia. From Breville’s approach and my decades of experience, I have deduced 10 practical rules leaders can apply in a tariff‑driven world. Rule 1: Preserve capability by helping suppliers move. One of the fastest ways to neutralize a tariff is to help proven suppliers expand or relocate. Co‑investing in a move can preserve hard‑won capability while removing punitive duty structures. Replacing suppliers outright is slower, riskier, and often more expensive. Clayton told me that he used the tariffs to get Breville’s existing suppliers to accelerate their efforts to build new operations or expand existing ones outside of China: “I used the crisis,” he said. “Our partners had other priorities. Tariffs gave us the reason we needed to do it now.” Rule 2: Build local capability. Leading companies invest in in‑country teams that can qualify suppliers, accelerate transitions, and surface new sources. In many regions, capable manufacturers already exist—waiting for demand, partnership, and credibility. Local presence improves speed, execution, and visibility into true landed cost. At Breville, Clayton asked Nico Stiegler, the company’s general manager of engineering, to build a “boots on the ground” team to lead the effort. Rule 3: Diversify broadly, not symbolically. Risk is not mitigated by a simple “China plus one” strategy. Effective leaders diversify across multiple geographies—adding countries such as Vietnam, Indonesia, and Mexico—to avoid concentration risk in a constantly shifting tariff landscape. The objective is resilience, not redundancy. Rule 4: Treat speed as a strategic asset. Cost matters, but speed often matters more. Sacrificing a small amount of margin to protect growth, service levels, and strategic revenue is frequently the correct tradeoff. Delayed response often proves far more expensive than higher unit cost. Rule 5: Recognize how flat the world has become. Over the last two decades, manufacturing and technical skills have expanded rapidly across developing economies. Leaders who look beyond traditional hubs are often surprised by the depth, quality, and scalability available. At Breville, the teams Stiegler built in Mexico and Hong Kong helped mature operations in Vietnam, Indonesia, and most recently Cambodia. “The capabilities we uncovered were amazing,” Clayton told me. “We had to align what these countries already did well to building high‑quality kitchen appliances. It wasn’t immediate or easy, but within a few years we had equal‑to‑better products being built around the world.” Rule 6: Don’t let AI distract from fundamentals. Productivity gains still come primarily from efficient product design and effective manufacturing. AI can assist analytics and decision‑making, but it does not replace disciplined operational execution. Leaders who chase technology narratives without fixing fundamentals will be disappointed. Rule 7: Maintain options by preserving relationships. Smart companies expanding beyond China continue to retain core products and relationships there. Decades of accumulated capability should be leveraged—not discarded—in the pursuit of diversification. Optionality is a strategic asset in an uncertain world. Rule 8: Let competition work in your favor. Once sourcing is diversified, new suppliers often compete directly with incumbent suppliers. That competition drives down prices, improves performance, and strengthens negotiating leverage across the entire network. Rule 9: Stay anchored to total cost. Tariffs matter, but cost—like water—ultimately flows to the lowest point. Leaders who remain anchored to total cost, rather than reacting tactically to headline tariff rates, make better long‑term decisions. Rule 10: Retain control of the bill of materials. Control over parts sourcing is the foundation of flexibility and cost management. Because tariffs are often applied to value add, deliberately placing components and labor across regions remains one of the most powerful levers available. Surrendering that control limits strategic choice. . . . Treating tariffs and duties as permanent and not a temporary disruption, changes everything: It forces clarity on processes, decision rights, and operating models. All should be built for resilience. Thanks to globalization, leaders now have more options for sourcing, manufacturing, and capability than ever. Tariffs are a forcing function to evaluate those options with discipline.
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