Tariffs, Trade Talks & Supply Chain Shifts: May 2025 Operations Highlights

Global operations leaders are navigating a volatile landscape this May, marked by escalating trade tensions, shifting supply chains, and mixed economic signals. The U.S. and China are having high-level trade talks in Geneva, aiming to de-escalate a tariff war that has disrupted global markets and supply chains . As these negotiations unfold, businesses are bracing for potential impacts on logistics, sourcing, and overall operational strategies. The U.S. and U.K. have made a tentative trade deal, boosting optimism that more international deals will follow.

In the U.S., the manufacturing sector continues to contract, with the ISM Manufacturing PMI slipping to 48.7 in April, down from 49.0 in March, indicating a second consecutive month of decline . This downturn is attributed to the strain of new tariffs on imported goods, which have led to elevated input prices and supply chain disruptions. Conversely, the ISM Services PMI rose to 51.6 in April from 50.8 in March, signaling expansion in the services sector . This divergence highlights the uneven impact of trade policies across different sectors.

The imposition of new U.S. tariffs has led to a surge in imports, as companies rushed to stockpile goods ahead of increased costs. U.S. container imports rose 9.1% year-over-year in April, reaching over 2.4 million TEUs. However, this near-record streak is expected to end in May, with the Port of Los Angeles projecting a 35% decline in import cargo and the Port of Long Beach forecasting a 20% year-over-year drop . These shifts underscore the volatility in global trade and the need for agile supply chain strategies.

Amid these challenges, companies are reevaluating their supply chain footprints. For instance, Puma has reduced U.S. imports of goods sourced from China in response to the new tariffs . Additionally, the New York Fed's global supply chain pressure index stood at -0.29 in April, indicating lower-than-normal supply chain pressures despite broader unsettled conditions . As trade talks progress and policies evolve, operations leaders must remain vigilant and adaptable to navigate the complexities of the current economic environment.