Navigating tariffs: Building resilient supply chains for a new trade reality

The recent changes in geopolitics, trade policies and retaliatory measures on goods are creating risks and new opportunities for Canadian businesses. For Canadian manufacturers, retailers, and distributors, tariffs introduce a level of operational uncertainty that many organizations are unprepared to manage while being under pressure to protect profitability and shareholder value.

This shift marks a fundamental turning point in how businesses must approach their supply chain strategies. Organizations can no longer rely solely on cost efficiency or just-in-time delivery models. The new imperative is resilience. Resilience means rethinking how suppliers are selected, how demand is forecasted, and how risk is managed across the entire value chain.

Impacts and existing response patterns

Manufacturers are facing escalating raw material costs and delayed production schedules as global sourcing channels falter. Some factories have reported backlogs due to constrained material flow.

“Current efforts to develop east-west trade corridors across Canada to counterbalance disruptions in traditional north-south U.S. trade relationships underscore the growing need for enhanced supply chain reconfiguration and agility.” Stephane Helstroffer, Vice-President, Consulting and Manufacturing Industry Lead.

For retailers, the ripple effects include cost increases for consumer goods which in turn will result in inflation and unpredictable demand, as price-conscious consumers seek more affordable alternatives.

“Canadian retailers use rigorous sourcing standards, and this practice is being challenged by the need to rapidly find new suppliers and products to meet customer demands for affordable products. Mitigation strategies are a top priority with a strong focus on maintaining product and data quality, meeting delivery timelines, and ensuring customer satisfaction, all while protecting sales and margins.” Brenda Ross, Manager, Business Consulting, Retail Expert

Logistics providers and transportation organizations are now navigating greater cross-border complexity, higher freight rates, and longer delivery timelines. While short-term freight volumes may rise as companies rush to beat tariff deadlines, long-term shipping demand is already softening as uncertainty curtails procurement and planning cycles, an effect likely to be felt across all sectors.

“Organizations adopt different strategies to protect their teams and their business. With reliable data and a clear plan, organizations are empowered to make informed decisions and are best placed to weather these tumultuous times.” Magali Amiel, Director Consulting expert, Transportation and Logistics expert.

These disruptions often trigger a domino effect. One delayed component can halt an entire production run. A shortfall in inbound inventory leads to stockouts on store shelves, frustrating customers and weakening brand trust. In response, many organizations have turned to inventory stockpiling as a stopgap measure. While this may provide temporary protection, it often exacerbates long-term challenges such as rising warehousing costs, tied up working capital, and increased risk of product obsolescence.

Gaps that need to be addressed in the short-term and long-term

The underlying issue in many cases is a lack of supply chain visibility and agility. Without real-time data, businesses struggle to make confident decisions during disruptions or to pivot quickly when needed. Siloed operations and manual processes amplify inefficiencies, locking organizations into reactive, short-term thinking. However, a combination of digital innovation and established methodologies offers a blueprint for building future-ready supply chains.

For instance, data analytics can help forecast demand with greater accuracy, allowing companies to balance inventory levels and reduce waste. Lean Six Sigma methodologies can identify bottlenecks and remove inefficiencies amplified by tariff-driven disruptions. IoT sensors and AI-based simulations can track and predict port delays or supplier risks in near real-time.

One of the most impactful strategies for building resilience is supply chain reconfiguration. One emerging example is the growing recognition of interprovincial trade barriers within Canada, which hinder the flow of goods between provinces and amplify reliance on north-south U.S. trade routes. Addressing these internal constraints is becoming increasingly important for enhancing regional sourcing strategies and building greater resilience in domestic supply chains.

Next steps

Impacted businesses need to conduct a structured supplier diversification assessment, identifying vulnerabilities and transition toward a more resilient and cost-effective supplier network. For the long term, businesses need to adopt a comprehensive approach to assess current maturity, identify vulnerabilities, and drive transformation across the supply chain ecosystem. By embedding data and/or AI into demand planning, optimizing supplier portfolios, implementing risk monitoring systems, and fostering a culture of cross-functional collaboration, businesses can build supply chains that are not just efficient, but resilient and future-ready.

Balancing inventory with data-driven demand planning is another critical tactic. By leveraging data to improve forecasting, companies can reduce inventory levels while maintaining high service levels. This approach lowers warehousing costs, frees up working capital, and helps avoid overstocking, an issue many companies struggle to manage.

Process optimization further enhances supply chain resilience. Data-driven analytics can model different sourcing and tariff scenarios to uncover more cost-effective options. Traditional tools like Lean Six Sigma remain essential for identifying inefficiencies, improving throughput, and maintaining consistent performance under variable conditions.

Most importantly, organizations must embrace data-enabled visibility and agility. Real-time supply chain control towers, predictive analytics, and cross-functional alignment between procurement, finance, logistics, and sales are essential to navigate sudden disruptions. Rather than reacting to events, companies can proactively plan for contingencies and maintain operational continuity.

Conclusion

Tariffs are a catalyst for change, urging Canadian businesses to rethink their supply chain strategies. By diversifying suppliers, balancing inventory with data analytics, optimizing processes, and leveraging data, companies can transform challenges into opportunities for growth and stability.

CGI’s global presence and proximity to clients in both Canada and the U.S. uniquely positions us to support integrated supply chain transformation across borders. Our teams understand the constraints and opportunities on both sides, enabling clients to navigate complex trade dynamics with confidence.

CGI brings deep expertise in supporting this transformation, combining technology, analytics, and supply chain advisory services to empower businesses in an increasingly uncertain world. CGI’s Three-Phase supply chain framework offers a structured approach to assess maturity, optimize operations, and establish strategic governance, empowering businesses to thrive. Supply chains have evolved from transactional cost functions to strategic enablers of competitive advantage. As tariffs and trade disruptions become more frequent, the organizations that thrive will be those that blend disciplined execution with adaptable, digitally enabled capabilities.