Rising tariffs between major economies are reshaping global trade flows and for many businesses, it’s becoming clear that this disruption is not just a challenge but also an opportunity to build smarter, more resilient supply chains.
That’s the argument made by Edmund Zagorin, co-founder of Arkestro, a predictive procurement platform that utilizes AI, behavioral science, and machine learning to enhance procurement processes, says that tariffs are “the wake-up call supply chains needed.” Rather than treating tariffs as an external cost shock, he urges procurement leaders to see them as a strategic signal to modernize sourcing operations through AI-driven, predictive procurement systems.
The escalation of tariffs in 2025 stands as one of the most consequential shifts in international trade policy in a generation. According to Yale’s Budget Lab, the new tariffs imposed by the United States this year alone have generated more than US $88 billion in revenue, pushing the average effective tariff rate from 2.4% to over 11% by mid-year. The WTO projects that global trade growth will slow to just 0.9% in 2025, far below earlier forecasts as companies and suppliers scramble to adjust to rising costs, policy uncertainty, and disrupted trade flows.
Yet, amid this upheaval, a new geography of opportunity is emerging. The tariff shock has exposed the fragility of global interdependence and accelerated the diversification of manufacturing and sourcing networks with Southeast Asia quickly rising as the biggest beneficiary.
At their core, tariffs act as a powerful signal, a price, risk, and timing shock all at once, compelling companies to revisit long-standing assumptions about cost efficiency, supplier concentration, and supply-chain resilience. When tariffs increase, the effect cascades through every link in the chain: manufacturers face compressed margins, buyers confront higher procurement costs, and retailers must decide whether to absorb or pass on those costs.
For decades, companies optimized for cost above all else, tariffs shattered that equilibrium, revealing how over-optimization around a single geography or supplier can expose entire networks to systemic risk. Studies show that tariffs rarely act alone, they coincide with delays, compliance burdens, and capacity shifts. A 2025 calibrated model found that delivery delays for foreign inputs have grown by over 20 days on average, contributing to an estimated 7.3% output loss and 1.8% increase in production costs globally. These figures shows that tariffs magnify the cost of complexity and delay, forcing companies to value reliability and resilience as highly as price.
The result is structural change. Multinationals are redesigning global footprints, reassessing suppliers, and spreading production across multiple regions. In this realignment, Southeast Asia has emerged as the winner. The region is attracting unprecedented investment as manufacturers search for stable, cost-effective, and tariff-friendly production bases.
According to the Asian Development Bank (ADB), the ASEAN bloc now accounts for nearly 10% of global manufacturing exports, up from about 7% just five years ago. Tariffs elsewhere are accelerating this momentum. Manufacturers eager to escape US – China trade volatility are setting up alternative hubs in Indonesia, supported by improved logistics infrastructure, free-trade zones, and competitive government incentives.
But geography alone won’t determine who wins this new era of global trade, technology will. The companies that interpret that signal through data and analytics, instead of panic will lead. The use of artificial intelligence to model supplier behavior, forecast market changes, and automate sourcing recommendations are increasingly indispensable, particularly in Southeast Asia, where supply networks are complex, multi-layered, and often opaque. According to the World Bank’s 2025 Logistics Performance Index, ASEAN economies continue to improve their customs efficiency and transport infrastructure, yet gaps remain in data integration and supplier visibility.
As tariffs push global companies to reconsider their production networks, Indonesia offers a compelling combination: abundant resources, growing domestic demand, competitive labor, and strong policy support for value-added manufacturing. However, to fully realize this potential, local industries must embrace modernization, adopting technology-driven procurement, deepening supply-chain visibility, and integrating with regional digital trade platforms. Without this digital leap, Indonesian firms risk losing out to regional peers with faster, more transparent, and more data-driven operations.
The global tariff environment is complex, but it is also catalytic. Tariffs expose inefficiencies that long went unchallenged, forcing companies to elevate procurement and logistics from routine operations to strategic disciplines. For Southeast Asia, and Indonesia in particular, this disruption offers a rare advantage.
As a leading and reliable logistics partner, we help companies navigate this shifting landscape, ensuring the supply chains remain resilient, efficient, and future-ready. We’re ready to help forward-thinking businesses lead the next chapter in supply-chain excellence.
