Why supply chain diversification efforts are here to stay no matter what tariffs hit

That’s because decisions to move sourcing to places like Vietnam and Thailand have been at least five years in the making, Barrocas said — ever since the coronavirus pandemic triggered major disruptions to importing and shipping. “What Covid showed us was it’s not great to have everything in one place,” Barrocas told Modern Retail. “In today’s world, you have to expect the unexpected, because the unexpected is going to come.”

Many companies are continuing their plans to move supply chains out of China amid potential changes in international trade policy. At Shoptalk this year, SharkNinja and other companies shared their supply chain strategies with Modern Retail even as the Trump administration announced that proposed tariffs to hit on April 2 will be narrower than expected. China is the top supplier of U.S. imports, according to the U.S. Trade Representative, making up about 16.5% of all imports in 2022 at a value of $536.3 billion.

But rather than find a mad dash out of China or any other country hit by a tariff, Barrocas said that his company is well-served by a diversified supply chain. SharkNinja plays in multiple categories, from kitchen appliances to vacuums to hair tools, and it’s beneficial to have multiple options if there’s a potential issue securing goods from one location.

“What we’re really good at is spotting the smoke and then pivoting really quickly,” Barrocas said. “Your plan is only as good as your plan is until the playing field changes. Once the playing field changes, we think that, with our scale, our speed, and our ability to adapt, we will be in as good a position as anyone for whatever the global landscape looks like.”

Anh Trousdale, co-founder and CEO of instant pho startup Pholicious, said this summer the company will start sourcing all of its spices from Vietnam instead of China. Currently, it derives ingredients from both. But the switch will save the company around 10% in business costs. Part of the decision is because Trousdale is from Vietnam, and the cost increase provides a reason to start building a bigger network there.

But in the short-term, she said she’s doing it to stay competitive. Pholiicous sells in retailers like H-E-B and hundreds of Walmart locations, and Trousdale said they want competitive pricing. But she can’t lower the cost to where they want her to be if she’s paying higher supply chain costs, she said.

“In order for us to get into more retailers, they want a bulk price,” Trousdale said. “What we’re trying to do is change where we’re sourcing these items so we can meet in the middle.”

Shark Tank judge and venture capitalist Kevin O’Leary, who appeared on a panel at Shoptalk Tuesday around brand growth, told Modern Retail that businesses will have a “less chaotic” view of tariffs come April 2. He has more than 50 companies in his portfolio at present and said, while he’ll certainly scour the latest proposals to see which stand to be affected, he doesn’t think it will sink their ships.

 O’Leary said he’s “a little more optimistic than most people” about tariffs because they are likely to be reciprocal.

“It’s going to be short-lived,” he said of tariff-related pain. “It’s going to, effectively, probably interrupt three quarters’ worth of businesses, one way or the other, but it will be resolved. … When you’re taxing one guy’s bar of soap the same as the other guy’s bar of soap, you say, ‘Why are we taxing our soap? May the best soap win.’ That gets over and done with pretty quick.”

O’Leary recently invested in Pholicious when it was on Shark Tank, and he said decisions like the ones Trousdale is making will have benefits that pay off beyond the tariff-related cost-savings.

“These are long-term plays that are going to remain successful because of the alchemy of what they’ve created,” he said. “[They include] storytelling, figuring out retail, judicious use of capital and exploring new channels.”