“Logistics Pulse” is your cheat sheet and to-do list for everything about trade, the supply chain and logistics. We dive deep into the latest news headlines and industry trends and equip you only with actionable insights you can use to improve your business—no matter your industry or role in the supply chain. Presented by Mothership.

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President Donald Trump paused reciprocal tariffs on more than 180 countries and economies this week, but hiked tariffs on Chinese imports up to 125%. We break down how U.S.-China tariffs are changing supply chains, impacting freight costs and putting pressure on business logistics across industries like electronics, cars, packaging materials and everyday consumer goods.

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We explore how companies have already adapted to the tariffs, including China's retaliatory tariffs of 84% on U.S. goods, to keep their supply chains moving. We unpack some companies' new sourcing strategies and logistics shifts and what the tariffs mean for company balance sheets, customer wallets and the economy in 2025.

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U.S.-China Trade War: How much are tariffs?

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Host 1  00:00

Hey everyone, welcome back. We're diving into some pretty significant changes happening in trade between the U.S. and China.

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Host 2  00:07

Yeah, this is big, and we're going to break it down.

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Host 1  00:09

We're talking about the tariff escalation that just happened, and we've got some really interesting insights for you, coming straight from a report we've been digging into.

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Host 2  00:17

It really lays out what these tariffs mean, you know, in practical terms, what's actually happening on the ground and what it means for businesses, maybe even for you directly.

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Host 1  00:25

Absolutely, so to start, let's just lay out what happened.

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Host 1  00:46

The U.S. imposed a 104% tariff on a pretty broad range of imports coming from China.

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Host 2  00:51

And of course, China didn't just sit back, right? They hit back with their own retaliatory tariffs: 84% on American goods.

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Host 1  00:59

Tit for tat. Right, but it gets even more interesting when you see how high the U.S. actually went with some of these tariffs.

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Host 2  01:05

Oh, you mean?

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Host 1  01:06

125% on some goods.

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Host 2  01:08

Wow!

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Host 1  01:09

I mean, that's essentially like saying we don't want these goods coming in at all.

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Host 2  01:12

Yeah, at that point, it's a statement.

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Host 1  01:14

It's definitely a strong signal.

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Host 2  01:16

And to understand just how significant this is for you, for everyone listening, think about this: China makes up about 14% of all the goods the U.S. imports. So, when you add these tariffs, especially at these levels, on everything from industrial components and electronics to consumer goods and machinery, that's going to ripple out.

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Host 1  01:35

It's bound to have a big impact.

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The impact of U.S. tariffs on China: What businesses can do

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Host 2  01:36

Right. But it's important to remember that for businesses, this isn't an immediate hit. The full impact is going to take some time to be felt.

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Host 1  01:45

Exactly. You see, a lot of companies have existing inventory, goods they already have in stock.

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Host 2  01:51

So that acts as a buffer.

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Host 1  01:53

Exactly. They'll continue to sell what they have at the pre-tariff prices.

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Host 2  01:57

Makes sense.

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Host 1  01:58

But once they have to restock, they'll have to order new goods that were imported after these tariffs went into effect.

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Host 2  02:04

That's when it's going to get real.

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Host 1  02:05

That's when the higher costs are really gonna hit.

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Host 2  02:07

So, how long before that buffer runs out? When should we expect to really see the effects?

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Host 1  02:13

Well, it varies. It could be a few weeks for some things, a few months for others. It depends on the industry, how fast they sell their products and any contracts they had in place before these tariffs hit.

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Host 2  02:23

I see. So, let's look at some specific sectors, starting with electronics and tech hardware. That's an area that affects, well, practically everyone.

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Host 1  02:32

Yeah, for sure.

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Host 2  02:32

What's the outlook for businesses in this sector? Let's say in the near term, from now through the summer.

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Host 1  02:38

Well, if you're involved in manufacturing electronics here in the U.S., or if you deal with components and tech hardware, you're probably already seeing costs going up.

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Host 2  02:46

That makes sense. As those new components with the tariff added in start coming in.

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Host 1  02:50

Yeah, exactly. And what this means for the consumer is that we might see prices going up, probably starting with smaller items, you know, things like phone chargers, maybe accessories for your computer, keyboards, mice, that kind of thing.

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Host 2  03:02

Quicker turnover items?

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Host 1  03:04

Exactly. And this could start happening as early as late Q2.

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Host 2  03:08

And as we move further out, maybe into Q3?

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Host 1  03:10

By then, you're going to start seeing those higher costs reflected in the prices of bigger electronics.

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Host 2  03:16

TVs, laptops, all that?

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Host 1  03:17

Right, all of that. And companies that rely heavily on components sourced from China, things like semiconductors, display panels, even casings for devices, are going to be particularly hit hard.

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Host 2  03:28

Yeah, that makes sense. So, what are these companies doing long-term? Are they just going to have to eat these costs?

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Host 1  03:34

Well, the interesting thing is, remember, a few years back, between 2020 and 2023? There was a lot of talk about nearshoring, bringing production back closer to home or friend-shoring, sourcing from countries that are more politically aligned.

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Host 2  03:48

Right. I remember that.

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Host 1  03:49

Well, this situation might really speed that process up. But even with those efforts, we're still expecting to see profit margins squeezed for both the companies that make the electronics and the retailers that sell them to you.

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Host 2  04:02

Especially in the second half of the year.

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Host 1  04:04

Exactly, unless they can find alternative suppliers, or, you know, raise prices for consumers.

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Host 2  04:09

Speaking of raising prices, let's switch gears to automotive and heavy manufacturing. What are the expectations there?

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Host 1  04:17

Well, for the next three months or so, you're probably not going to see a huge change in the price of new vehicles.

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Host 2  04:22

Why is that?

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Host 1  04:23

Because most manufacturers and their suppliers are still working through existing inventories, the cars that are already at dealerships.

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Host 2  04:29

Okay, so if I buy a new car right now, I might not be hit with that tariff price increase,

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Host 1  04:34

Probably not right away. One place you might start to see it is in car repairs.

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Host 2  04:38

Oh, interesting.

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Host 1  04:39

Yeah, if you need to get your car fixed, some parts that come from China, like those, info-tainment systems, sensors, electronic components, even some interior trim pieces, you might see the price of those going up.

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Host 2  04:50

So, repairs get more expensive before new cars do?

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Host 1  04:54

In the short term, yeah, but once we get further out, say, three to six months down the road, automakers are going to be facing some tough choices.

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Host 2  05:02

Like, what?

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Host 1  05:03

Well, they'll have to decide whether to raise the prices of new vehicles, cut back on some features to save money or absorb those higher costs themselves, which would obviously hurt their profits.

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Host 2  05:14

And how much could prices go up, realistically?

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Host 1  05:17

The report suggests that the average price of a new vehicle could go up by thousands of dollars.

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Host 2  05:22

Wow!

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Host 1  05:23

Yeah. It really depends on how many parts in that car come from China.

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Host 2  05:26

And what about the long game? What are automakers doing to plan for the future?

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Host 1  05:30

Well, the long-term play will likely be to find more suppliers here in North America.

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Host 2  05:34

Bringing it back home.

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Host 1  05:36

Exactly. But that's not a quick fix. It takes time to onboard new vendors, get their parts certified for use in vehicles. We're talking about a year, maybe even 18 months or more.

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Host 2  05:47

So, it'll be a while before that solution kicks in.

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Host 1  05:49

It will, and, in the meantime, we might see an increase in demand and higher prices for used vehicles.

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Host 2  05:56

As people hold off on buying new cars.

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Host 1  05:58

Precisely.

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Host 2  05:59

Okay, makes sense. Now, let's talk about those everyday items, the general consumer goods, packaging materials, all that. What's happening in those areas?

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Host 1  06:06

This is where you might see the quickest price increases.

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Host 2  06:09

Really?

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Host 1  06:09

Yeah, those fast-moving consumer goods, things like packaging, low-margin, everyday products, even basic plastics, those are likely to be the first to show the impact of these tariffs.

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Host 2  06:19

We're already seeing it in some wholesale prices.

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Host 1  06:22

Right. And by Q3, it's going to hit companies that rely on industrial inputs from China—plastics, chemicals, fixtures, basic metals, things that were once cheap and easy to get, could suddenly become big expenses.

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Host 2  06:34

So, for businesses dealing with these kinds of goods, what's the takeaway?

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Host 1  06:37

For a lot of them, they're going to have to raise prices, but also look internally for ways to be more efficient.

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Host 2  06:43

So you're saying, don't just pass the costs onto the consumer.

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Host 1  06:47

Right. There are other things they can do. They can simplify their packaging, maybe offer fewer product variations, optimize their logistics, basically find ways to cut costs elsewhere to offset the tariff impact.

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How the U.S.’s tariffs on China will affect consumers and the economy

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Host 2  06:59

Makes sense. So, zooming out a bit, let's talk about the broader economic implications. What are the big things that listeners should be aware of?

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Host 1  07:07

Well, one of the biggest potential impacts is inflation. Economists are estimating that these April tariffs could add a couple of percentage points to U.S. inflation, maybe two, maybe three.

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Host 2  07:18

So, we're all gonna feel that pinch.

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Host 1  07:19

We will, and it's going to be even more concentrated at the business level.

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Host 2  07:23

Meaning?

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Host 1  07:23

Businesses that rely on physical goods, global supply chains and retail distribution are going to be hit hardest. And what we're looking at here is what's called cost-push inflation. Prices go up because the cost of production goes up.

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Host 2  07:37

Because of the tariffs.

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Host 1  07:38

Exactly.

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Host 2  07:38

So, all those business models built on low-cost global sourcing, they're in trouble.

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Host 1  07:43

They're definitely going to face some serious challenges. And it's not just the cost of goods.

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Host 2  07:48

What else?

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Host 1  07:49

Logistics companies are also seeing higher costs for materials, fuel, labor, transportation, all while trying to meet deadlines and keep prices reasonable for consumers.

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Host 2  07:59

That's a tough spot to be in.

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Host 1  08:00

It is, and from a financial standpoint, it makes forecasting really difficult.

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Host 2  08:05

Yeah, when costs are so volatile, how do you plan?

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Host 1  08:08

Exactly. It squeezes profit margins, makes pricing strategies much harder to manage, and, for operations leaders, being able to adapt quickly has become absolutely essential.

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U.S.-China Trade War: What businesses should do to prepare

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Host 2  08:19

So, with all this disruption, what's the game plan? What should businesses be doing right now?

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Host 1  08:24

Well, first and foremost, companies need to really understand their supply chains.

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Host 2  08:28

Know where everything is coming from.

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Host 1  08:29

Exactly. They need to map out exactly where those Chinese-origin items fit into their product portfolios, prioritize them for cost analysis and start looking for alternative sources.

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Host 2  08:39

Back to that nearshoring or friend-shoring idea.

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Host 1  08:42

Right. And they need to quantify the financial risk, figure out how much they stand to lose if those supply chains are disrupted.

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Host 2  08:49

Okay. So map it out, assess the risk. What's next?

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Host 1  08:52

Then, they need to really examine their pricing strategies. Can they pass on those higher costs to customers? If not, how much can they absorb and for how long?

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Host 2  09:02

Tough decisions.

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Host 1  09:03

They are, and they need to consider different pricing tactics, maybe tiered pricing or limited-time promotions.

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Host 2  09:09

Yeah, get creative with it.

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Host 1  09:10

Exactly, and then, they need to find the right logistics and sourcing partners.

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Host 2  09:15

Ones that can help them adapt.

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Host 1  09:16

Exactly. While completely changing suppliers can be a long process, working with flexible logistics providers can help by offering real-time visibility, different modes of transportation, flexible warehousing. It's about being nimble.

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Host 2  09:28

Being able to pivot.

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Host 1  09:29

Right. And then there's inventory.

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Host 2  09:31

We talked about existing inventory as a buffer, but what about going forward?

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Host 1  09:36

It's a balancing act. Companies may need to build up inventory on high-risk items. You know, get those pre-tariff prices while they can.

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Host 2  09:43

But, they don't want to overstock either.

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Host 1  09:44

Right. Because what if the situation changes again? They need to do scenario planning, think through different possibilities, and, internally, companies need to be working together more closely than ever.

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Host 2  09:54

Cross-departmental collaboration.

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Host 1  09:55

Exactly. Finance, procurement and sales teams need to be on the same page, reviewing projections, discussing pricing, understanding the impact on profits, and communication with customers and partners is key.

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Host 2  10:09

Transparency is so important.

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Host 1  10:11

It is, and finally, businesses need to stay informed. This tariff situation is fluid. Things could change—policy shifts, legal challenges, new exemptions, trade negotiations, anything that could change the game, even having someone dedicated to tracking trade policy weekly.

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Host 2  10:28

Wow, that's dedication.

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Host 1  10:30

It's about staying ahead of the curve.

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Host 2  10:31

So, the big takeaway is that while the initial shock waves were felt in the financial markets, the real story is unfolding now, and it's going to develop for a while.

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Host 1  10:41

That's right, it's a significant shift, and it's going to lead to higher costs, tougher pricing decisions, and probably some operational challenges. But this isn't the first time businesses have faced trade tensions.

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Host 2  10:52

And it won't be the last!

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Host 1  10:53

Nope, and the companies that will succeed are the ones that are proactive, that understand their supply chains and build strong relationships with their suppliers and logistics partners.

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Host 2  11:04

It's about resilience.

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Host 1  11:05

Exactly. It's not necessarily about bringing everything back home or passing all the costs onto the consumer, but it's about having a strategy, a plan to adapt.

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Host 2  11:14

So, for our listeners: The April 2025 tariffs mark a turning point in the economic landscape. You might not see huge price jumps immediately, but those business decisions being made right now will eventually make their way to you.

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Host 1  11:26

And here's something to think about: With global supply chains so interconnected, how might these tariffs affect sectors that don't seem directly linked to trade with China? It really highlights the need to think about economic resilience on a broader scale.

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Host 2  11:41

It makes you wonder what the future holds for global commerce.

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Host 1  11:44

It does, it really does.

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