[**Rethinking Production to Prepare for Tariff Volatility**](https://www.settle.com/blog/rethinking-production-to-prepare-for-tariff-volatility)

Rising tariffs are disrupting supply chains, forcing CPG brands to rethink production and financing strategies. Learn how reshoring, supplier diversification, and alternative funding options can help brands navigate trade uncertainty and stay competitive.

LearnApril 9, 20254 min read

[Ankur Thakkar, Product Marketing](https://www.settle.com/authors/ankur-thakkar)

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_**Note:**__Trade policies and tariffs are shifting rapidly, and new changes could impact supply chains at any time. The information in this article reflects the latest updates as of publication._

Rising tariffs are shaking supply chains and leaving CPG brands scrambling for solutions.

While some brands may choose to absorb the added costs, many are looking for ways to restructure their operations. This means moving production closer to home, exploring alternative sourcing options, or securing financing to alleviate the financial strain.

With trade policies constantly changing, inventory and e-commerce brands that take a proactive approach will be better positioned to navigate [tariff uncertainty](https://www.settle.com/blog/the-cpg-guide-to-managing-tariff-uncertainty) and maintain stability in their supply chains.

### Tariff trends and their latest impact on CPG brands

Given the impact of tariff increases, businesses that rely on international imports should evaluate whether maintaining current production strategies remains financially viable.

Some good news: the [de minimis rule](https://www.nftc.org/de-minimis-a-vital-tax-exemption/) currently allows shipments valued at less than $800 to enter the U.S. duty-free. However, this rule is under review and efforts are being made to close this loophole and/or limit this exemption from certain countries. If that happens, small and mid-sized businesses relying on low-cost cross-border shipping will need to adjust quickly.

### Can reshoring help brands navigate trade uncertainty?

With rising costs, many brands are rethinking where they manufacture their products. Despite the challenges, some view reshoring as a long-term investment in stability.

A growing number of [consumers are willing to pay a premium](https://www.pwc.com/gx/en/issues/c-suite-insights/the-leadership-agenda/on-sustainability-consumers-have-made-up-their-mind.html#:~:text=The%20findings%20build%20on%20those,or%20to%20a%20great%20extent.) for goods that are produced domestically and ethically. For inventory businesses with strong positioning around sustainability, craftsmanship, or premium quality, reshoring may allow them to differentiate themselves in a crowded market.

**PRO TIP: A predictable supply chain allows businesses to reduce disruptions, improve quality control, and react quickly to market demands.**

### How brands can fund the shift to domestic manufacturing

Financing is a critical piece of the puzzle for inventory brands considering reshoring or adjusting their supply chains.

The upfront costs of transitioning production, securing new suppliers, and maintaining cash flow can put a financial strain on businesses already dealing with tariff-related cost increases. Several funding options can help companies navigate these challenges.

[Purchase order financing](https://www.settle.com/blog/how-purchase-orders-benefits-startups) allows businesses to fulfill large orders without depleting their cash reserves. This can be particularly useful for brands shifting their supply chains but still need to meet customer demand.

Another option is working capital loans, which can cover operational expenses like securing new supplier agreements, expanding warehouse space, or increasing domestic production capacity.

[Non-dilutive financing](https://www.settle.com/blog/non-dilutive-funding) allows businesses to secure funding without giving up ownership, making it a strong alternative to traditional investment.

### What it takes to reshore production and stay profitable

For companies considering reshoring, these strategies have helped brands transition successfully while maintaining profitability:

- **Invest in automation and efficiency:** Offset higher U.S. labor costs by streamlining production with automation and lean manufacturing practices.
- **Secure financing early:** Use [alternative financing](https://www.settle.com/blog/settle-x-dtc-experts-beyond-conventional-funding--alternative-paths-for-dtc-brands) to cover supplies and raw materials costs.
- **Shift fulfillment domestically:**Reduce exposure to tariffs by moving inventory and warehousing stateside instead of relying on cross-border logistics.
- **Diversify supplier networks:** Work with multiple suppliers across different regions to reduce dependency on any one country and minimize risk from trade disruptions.
- **Renegotiate supplier contracts:** Lock in better terms with domestic manufacturers or explore co-manufacturing partnerships to reduce costs.
- **Adjust pricing strategy:** Factor in new [production costs](https://www.youtube.com/watch?v=aj7uYifFOYs&feature=youtu.be) and communicate the value of U.S.-made goods to justify pricing shifts.
- **Monitor trade policies closely:** Stay informed on tariff changes and potential government incentives that could support reshoring efforts.

By taking a strategic approach, brands can successfully transition to domestic production while maintaining stability and long-term growth.

### How inventory brands can prepare for further trade shifts

The current wave of tariff increases is unlikely to be the last.

As trade policies shift, businesses that don’t adapt quickly may fall behind. To stay competitive, brands should reassess supplier relationships, track policy changes, and explore financing options for stability. Understanding how to [calculate landed costs](https://www.settle.com/lp/landed-costs) is equally as important.

By making strategic decisions now, inventory businesses can protect themselves against uncertainty and build a more resilient operation for the future.

[**Schedule a demo**](https://www.settle.com/demo-request)**to see how Settle can help streamline your financial operations.**

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