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South Africa is not the only country facing a tough economic climate. One of the countries the current environment has most impacted is the US, as changing consumer demand and trends have forced many retailers to decrease the massive footprint they traditionally enjoyed in the world’s largest economy.
Bed Bath & Beyond filed for bankruptcy in April 2023 and indicated it would begin closing its remaining 360 Bed Bath & Beyond stores and 120 Buy Buy Baby locations. Up until the announcement of the liquidation, Bed Bath & Beyond closed 400 stores over 12 months.
A wildcard thrown into this mix is the trade tariffs announced by US President Donald Trump. While there is a lot of focus on the impact these tariffs will have on the rest of the world, I recently read an interesting article on the Harvard Business Review Website (HBR) about the tariffs’ impact on the US.
Current Supply-Chain Challenges include the following.
The uncertainties about the outcome of the tariff war make it impossible to plan far ahead
The HBR article notes that shifting cross-border supply chains takes time and major investments, particularly in hard goods. For example, moving production for auto parts might take a year, assuming there is enough slack capacity in the domestic supplier base to take on the work. Building sufficient new capacity to replace current semiconductor import volumes could take hundreds of billions of dollars and a decade or more.
When tariff rates or other import restrictions change as quickly as they are doing today, business leaders will hold off on investment until they see things settle down. It will chill investment rather than encourage it.
Many producers have no ability to absorb tariff costs, which will result in higher prices
The HBR article adds that a fresh fruit grower with operations in Florida and California told us that the margins in fruit and vegetable farming are razor-thin, often in “single digits at best.” In addition to the cost of imported inputs for their operations, many US-based growers may also have to contend with the tariffs on produce imported from farms in Central and South America because they often source fresh produce from those farms during the US off-season.
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Unable to absorb tariff costs, they will be forced to increase prices, diminishing the purchasing power of the average American household, worsening inflationary pressures, and reducing overall demand.
Retaliatory actions can change the economics of production
The HBR article points out that many countries have threatened retaliatory tariffs on US goods, which could impact export markets and destabilise an already fragile system. Our Florida grower noted that Canadian customers have already cancelled orders for his strawberries—one example of a boycott of American products spreading worldwide, with negative narratives being amplified across social media. China’s retaliatory tariffs on US agricultural products will likely inject huge uncertainty into next year’s planting season for soybeans, oilseeds, and grains, and will spill over into the agricultural equipment sector.
Meanwhile, Canada has put its contract to purchase Lockheed Martin F-35 fighter jets under review, and other potential European customers are expressing doubts about relying on US suppliers. The F-35 program received funding from partner countries, and aggregated purchasing volumes are essential to moving down the learning curve and lowering the unit cost. The prospect of reduced volumes has already been reflected in Lockheed Martin’s share price.
Changing trading rules can lead to unexpected consequences
The HBR article adds that the global logistics infrastructure that moves goods worldwide is built on stable regulations and assumptions. Changes that are not well thought out can have unexpected consequences.
A revealing example is the recent Section 301 hearings at the United States International Trade Commission on proposed fees of up to $1.5 million per US port call by Chinese tonnage. The proposal failed to recognise the structure of most container shipping routings, which consist of a series of calls in a “rotation.”
For example, a ship sailing from China to the US West Coast might typically stop first at Los Angeles and Long Beach ports to discharge imports, before going to Oakland to pick up agricultural exports, or continuing to Seattle/Tacoma before returning to Asia. One container line told a customer we talked to that it would simply drop its Oakland port calls as economically unjustifiable, potentially causing significantly higher export costs for California Central Valley exporters and accentuating congestion at the already crowded Los Angeles/Long Beach complex. Maybe that is why the hearing turned into a “brainstorming session.”
US infrastructure is not equipped for sudden increases in tariff collection and inspections
The HBR article points out that enforcing and collecting tariffs relies on an infrastructure of international trade documentation and collection mechanisms. From the 1980s until the mid-2010s, the world experienced a steady decline in tariffs and more free-trade agreements or exemptions, leading to the easier flow of goods. Reversing course means adding infrastructure and processing costs.
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For example, when Trump issued an executive order in February 2025 to eliminate the de minimis exemption (which allowed imports valued under $800 to enter the United States duty-free), chaos ensued. New York’s John F. Kennedy International Airport was backlogged with over one million packages, overwhelming customs inspectors and logistics providers. With only 48 hours’ notice, the executive order also forced the United States Postal Service (USPS) to temporarily stop accepting packages from China and Hong Kong while it tried to figure out how the duties could be collected.
The exemption has been extended until May 2, which is causing panic in trans-Pacific air cargo lanes as importers rush to bring shipments in. The CATO Institute estimates that eliminating the de minimis exemption would require hiring and training an additional 22,000 US Customs and Border Protection officers. To keep things running smoothly, the United States will need to invest in infrastructure reform heavily, modernise import classification systems, and embrace automated solutions.
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What are the key highlights from the HBR article?
- Investment Hesitation Due to Uncertainty: The rapid shifts in tariff rates and import restrictions create a climate of uncertainty that leads business leaders to postpone investments. This reluctance to commit resources can stifle economic growth and innovation, preventing companies from moving forward with long-term strategic plans;
- Supply Chain Adjustments Take Time and Capital: Modifying cross-border supply chains, especially for industries like automotive and semiconductors, demands significant time and capital investment. The process could span years or even decades, emphasising the importance of stable trade policies for efficient transitions;
- Impact on Prices and Consumer Spending: Many producers, particularly in agriculture, may struggle to absorb the additional costs from tariffs, resulting in increased prices for consumers. This price inflation can reduce disposable income for average households, further exacerbating inflationary pressures and diminishing overall demand;
- Retaliatory Tariffs and Market Instability: The threat of retaliatory tariffs from other nations can adversely affect US export markets and create volatility. Cancelled orders from Canadian customers and China’s tariffs on US agricultural products illustrate how interconnected global supply chains are vulnerable to political manoeuvring, leading to economic uncertainty; and
- Infrastructure Strain and Implementation Challenges: The US infrastructure is currently not equipped to handle a sudden influx of tariff collections and inspections, as seen during the chaotic implementation of tariff changes in 2025. Mismanaged infrastructure and processes can lead to significant backlogs and inefficiencies, underscoring the need for comprehensive upgrades to support new trade realities.
In this environment, advice from business rescue practitioners and turnaround professionals can be the key difference between survival and financial distress. Reach out, engage and grow.
