Watch: Are Tariffs Creating Supply Chain Havoc?

Risk management using artificial intelligence can identify and mitigate tariff exposures across multi-tier supply chains, says Kit Conklin, global head of risk and compliance at Exiger.

While supply chains in every vertical are affected by increased tariffs, Conklin sees those in pharmaceuticals, semiconductors and critical minerals as particularly vulnerable. Moreover, so-called Section 232 tariffs allow the U.S. government to dive deeply into particular supply chains for national security purposes and, possibly, apply additional tariffs to those products and their derivatives.

“Think about how complex that could be,” Conklin says. “If you’re trying to understand where your tariff exposure is, think about how many semiconductors are in every type of product imaginable. And those derivative products now are being affected by these tariffs in a way that they’ve never been before.” 

As for pharmaceuticals, Conklin says the bipartisan consensus in Washington is that an over-reliance on China for certain types of products exists, not least in drug manufacturing. “That’s a national security risk that both Democrats and Republicans in Washington believe should be addressed.”

Building resilience is important, but, “If you don’t know where that tariff exposure is, there’s no way to figure out how to be resilient,” Conklin says. “You need to figure out where that exposure is before you can figure out a way to mitigate that risk.”

A “one-plus-one” approach to geopolitical risks may be in order, he says. In other words, “Instead of being totally reliant on China, companies are going to diversify their supply chains to be China plus India, China plus Brazil, or China plus somewhere else. We’re seeing that across every possible industry vertical. That doesn’t get rid of all of the tariff risk, of course, but it certainly lowers that geopolitical heat that you’re going to start to see from a regulatory and compliance perspective.”