It is fair to say that it has been a turbulent few years for business owners, particularly when it comes to the US supply chain. Factors like rising US import costs, tariff pressures, and currency shifts are all having a huge impact on supply chains, so it is wise for business owners to be aware of these issues and strategies for mitigating exposure. Keep reading to find out more.
The US Dollar & Inflation Dynamics
First, it is important to understand the relationship between the US dollar’s strength and inflation. Generally, a stronger dollar lowers import prices and eases inflation, while a weak dollar leads to an increase in costs. However, recent statistics show that it is not that straightforward. In June 2025, import prices fell 0.2% year on year, despite headline inflation of around 2.7%, indicating mixed transmission to consumer goods.
Rising Tariffs & Cost Pass Through Effects
Of course, recent tariff hikes are also having a significant impact on the supply chain. Steel and aluminum tariffs have skyrocketed between 25 and 50% with the average import duty rate now sitting near 18%. These sharp increases have led to significant input costs for manufacturers, particularly in industries like furnishings and electronics. Increases are being passed through the supply chain, leading to higher retail prices and tightening profit margins.
Supply Chain Disruption & Trade Flow Shifts
With so much uncertainty around tariffs and inflation, many companies are changing their sourcing and logistics strategies. For instance, some companies have accelerated imports ahead of expected tariff hikes to avoid paying higher duties, while others, such as Jaguar Land Rover, have paused exports to the US temporarily. These changes have led to fluctuations in trade volumes and resulted in supply chain reconfigurations. Data from the New York Federal Reserve in 2025 suggests easing of these pressures in the months to come, which points to gradual stabilization.
Mitigating Risks Through Foreign Exchange Hedging
With so much turbulence, it is understandable that business leaders are looking for ways to mitigate these risks. One strategic tool that can be used is foreign exchange hedging. By using forwards, options, and currency swaps, businesses are able to lock in exchange rates and lower the risk of adverse currency fluctuations that impact costs. This can protect profit margins amid dollar and inflation volatility.
Strategic Adaptations & Resilience for B2B Players
There are also tactical responses that businesses can use to mitigate the effects. This includes steps like diversifying supplier bases, near-shoring or resourcing from lower-tariff regions, and renegotiating contracts. Forward-looking companies will also forecast pricing, manage volatility, and plan inventory to cushion inflation and FX headwinds.
US dollar inflation and tariffs are creating a great deal of turbulence and uncertainty, which makes it a challenging time for business owners. This post should be informative and give you a few ideas for ways to navigate the shifting global landscape.
