Capitol News

In a new study published in the Journal of Supply Chain Management, researchers from Michigan State University examine the impact of significant U.S. tariff increases in 2025 on global supply chains. The study provides a framework to help understand and navigate the economic disruptions caused by these tariffs.

"Unlike previous trade wars, the 2025 actions came with extreme uncertainty," stated Jason Miller, lead author and Eli Broad Endowed Professor in Supply Chain Management at MSU. "We wanted to provide a framework to help researchers and practitioners make sense of what’s happening and what to expect going forward."

The research outlines categories of costs that firms face due to tariffs: adjustment costs, transaction costs, and opportunity costs associated with timing responses. These factors affect how companies manage their suppliers, production locations, and pricing strategies amid uncertainty. The 2025 tariffs were notable for being enacted, reversed, and reinstated rapidly, complicating planning efforts.

"I’ve spoken with industry professionals who have described large importers having at least five, and sometimes 10, different plans sketched out because they cannot anticipate what the final form of tariffs will look like," added Miller.

The study also highlights societal impacts resulting from these trade policies. "Imported food products, from fruits to coffee, are particularly sensitive to trade policy changes," said David Ortega, co-author and Noel W. Stuckman Chair in Food Economics and Policy at MSU. He emphasized that tariff-driven price increases could strain lower-income households due to limited substitution options for certain foods.

Ortega noted that "tariff-driven price increases have real-world consequences" affecting consumer affordability and agricultural production choices globally.

In addition to providing a theoretical framework for understanding tariff impacts across industries such as consumer goods and agriculture, the paper suggests research directions using various data sources. Yao “Henry” Jin from Miami University’s Farmer School of Business commented on the utility of this research: "The framework offered by our research can help the industrial sector navigate our new and uncomfortable reality as a stable global supply chain built on a belief in free trade gives way to rising geopolitical uncertainty and protectionism."

The authors hope their work will inspire further empirical studies on sourcing strategies, retail pricing effects, and global manufacturing adjustments following trade shocks. As Miller concluded: "We need better ways to study and manage the consequences of these trade actions."