INSIGHT

Turning tariffs into strategy: How sustainability future-proofs your supply chain

Tiffany Huey • May 14, 2025

Services: Environmental, Social & Governance (ESG)

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Earlier this week, the U.S. and China reached a deal to temporarily de-escalate their trade war — slashing the eye-popping tariffs imposed just last month and agreeing to a 90-day pause. While global markets rallied, the agreement brings more questions than clarity. Tariffs remain historically high and there’s no guarantee a lasting solution will follow. 

In short: volatility is here to stay. And businesses are left navigating a fragile, fast-changing trade landscape — with rising costs one month and diplomatic reversals the next. 

It’s a reminder that no matter what happens in Washington or Beijing, resilience must be built into your operations. 

That’s why forward-looking companies are embedding sustainability into their supply chains — not just to respond to rising tariffs, but to prepare for the unexpected. 

Tariffs may fall today — but volatility is the new normal 

The recent U.S.–China agreement to ease tariffs offers short-term relief, but it does little to resolve the broader uncertainty facing global trade. From climate-aligned tariffs in the EU to retaliatory measures in Asia, businesses are navigating a wave of shifting rules, rising costs, and geopolitical risk. 

Even temporary pauses don’t eliminate exposure. Volatility is here to stay — and that makes proactive, sustainability-driven supply chain planning more critical than ever. 

These trade shifts have already created significant ripple effects:  

• Delays in renewable energy projects 

• Higher prices for solar panels, EVs, and wind infrastructure 

• Complex supply chain rewiring 

• Budget cuts to ESG initiatives, as companies absorb unexpected costs  

Some businesses are turning to domestic suppliers, which may reduce transportation emissions — but could increase overall emissions if the local energy mix is more carbon-intensive. 

Meanwhile, the EU’s Carbon Border Adjustment Mechanism (CBAM) is redefining the trade landscape — aligning tariffs with product-level carbon emissions. It’s a preview of a future where trade and sustainability are inseparable.  

So, how are forward-looking companies responding?  

Sustainability as a tariff defense strategy 

Some companies are using this moment to adapt — embedding sustainability into operations not just as a values-driven initiative, but as a resilience strategy. While the examples below are illustrative, they reflect the kinds of strategic shifts we’re seeing across industries as businesses rethink sourcing, risk, and regulation. 

Here’s how:  

1. Circular supply chains reduce tariff exposure. Circular models prioritize reuse, remanufacturing, and recycling — lowering reliance on tariffed virgin materials. 
    
   Example: A consumer electronics company redesigned its warranty program to reclaim used devices. By refurbishing components in-house, they reduced reliance on imported rare earth minerals and improved margins.  

2. Local sourcing strengthens resilience. Regionalizing the supplier base shortens lead times and limits exposure to cross-border trade barriers. 
    
   Example: A specialty food brand, once reliant on European glass packaging, switched to a U.S. supplier using recycled materials. When tariffs hit imports, they avoided a 15% cost increase and improved brand reputation.  

3. Material innovation future-proofs operations. Sustainable alternatives to traditional inputs protect against future supply shocks and policy shifts. 
    
   Example: A furniture company replaced imported hardwoods with bamboo and recycled composites. When tariffs hit wood imports, their costs remained stable — while competitors scrambled to adjust. 
    

4. Climate-aligned compliance reduces regulatory risk. As ESG and trade policy merge, companies that track emissions and align with global standards stay ahead of regulatory changes.  
    
   Example: An industrial supplier that had tracked product-level emissions was able to meet a buyer’s climate procurement requirements — winning the contract while others were disqualified.  

5. Sustainability unlocks cost avoidance and growth. ESG investments can qualify companies for tax incentives, preferred supplier status, and access to new markets. 
    
   Example: A construction firm that invested early in low-carbon materials gained eligibility for infrastructure contracts requiring ESG compliance — winning bids competitors couldn’t pursue. 

Your next move: ESG as an operational playbook 

If you lead finance, legal, procurement, or supply chain functions, this is your moment. 
You don’t have to overhaul everything overnight — but staying still is no longer safe. 

Start here:  

• Map opportunities for reuse and circularity 
• Evaluate local sourcing through a sustainability lens 
• Rethink materials and their tariff/regulatory exposure 
• Align ESG efforts with climate and trade policy trends 
• Build ESG into procurement, contracts, and supplier engagement  

Partner with BPM to build resilience amid trade volatility 

The 90-day pause in U.S.–China tariffs is a welcome development — but it doesn’t solve the underlying uncertainty businesses face in global trade. Whether tariffs rise again or shift in scope, companies that embed sustainability into their sourcing, procurement, and operations will be best positioned to adapt. 

At BPM, we support clients in exploring how sustainability can strengthen supply chain resilience. Our team helps assess risk exposure, identify sustainability integration opportunities across procurement and operations, and align sustainability efforts with evolving policy and regulatory trends. Our tax professionals also help clients evaluate eligibility for financial incentives — including applicable Inflation Reduction Act (IRA) tax credits — to support more sustainable business decisions. 

Get in touch to explore how BPM can help your organization navigate trade uncertainty and move toward a more sustainable, future-ready supply chain.