Tariff Pressures Accelerate Shift Toward Agile, Tech-Driven Supply Chains

Watch more: Need to Know: Andrew Fullam, HSBC

Tariffs aren’t just a policy lever anymore; they’re becoming a structural challenge for many CFOs and supply chain leaders.

“Uncertainty is probably the key word here,” Andrew Fullam, CFO, U.S. & Americas at HSBC, told PYMNTS.

“Country-specific tariffs have been agreed in some places with some partners,” Fullam explained, “and then it’s been overlaid with sectoral tariffs — some of those existing, some new ones — specifically when you look at pharma and semiconductors. And this has been further complicated by carve outs.”

That complexity has bred caution, and this caution is threatening to widen the performance gap between companies well-insulated from global supply chain shocks and those deeply exposed.

“Companies are very reluctant to make major strategic decisions,” Fullam said. “That’s especially true in the international mid-market space, which is one of our focus areas.”

Yet in the face of this restraint, certain patterns have emerged. Many firms accelerated imports earlier this year, effectively front-loading inventory to avoid anticipated tariff increases. And digital innovation is being embraced.

“On the positive side, we are seeing that uncertainty has also been a catalyst for innovation and digital solutions, with companies really thinking about diversifying their supply chains and distribution models,” Fullam said.

“Tariffs, if you will, are kind of this year’s hot topic,” he added. “But for an international bank like us, there’s always something going on somewhere in the world that’s requiring us to be cognizant of multiple outcomes.”

Still, the tone of corporate decision-making remains hesitant, tactical, and searching for resilience.

The Mid-Market Squeeze

What’s becoming increasingly clear as the months roll by is the disproportionate impact tariffs and uncertainty are having on mid-market companies. These firms are typically international enough to feel the full brunt of policy shifts but may not be large enough to easily absorb or offset rising costs.

“Mid-market companies are struggling a little more to absorb rising costs without passing it on to consumers. And then also maybe some lower sales volumes putting pressure on lower profit margins,” Fullam said, noting that this dynamic has forced companies to juggle both cost control and capital allocation with unusual care.

The squeeze isn’t just about tariffs on finished goods. It’s also about higher input costs and broader commodity inflation.

“Whether that’s the direct impact of tariffs on imported end products or it’s the increase in prices from suppliers and the commodities used to manufacture goods, scale matters,” Fullam said.

And reshaping supply chains to mitigate tariff risk is arguably the most significant strategic shift underway. Some firms have adopted a “China plus one” strategy — maintaining Chinese sourcing but adding capacity in other Asian nations or in Latin America. This shift has opened new opportunities for banks like HSBC to provide financing for suppliers in emerging markets as they scale up to serve multinational clients.

“How do I think about my supply chain differently? How do I remap that and therefore diversify and hopefully mitigate some of the impacts of tariffs and other things?” Fullam asked rhetorically. “That is by definition a multiyear process.”

Finance as a Shock Absorber

Perhaps the most distinctive advantage HSBC can offer its clients is not capital or technology but perspective. In a moment when supply chains and policy regimes are in flux, knowing how governments in different parts of the world are likely to respond to U.S. tariff policy can be critical.

“Our clients tell us that one of the things they most value … has been the perspective that we can bring to them from operating in so many different environments,” Fullam said. “Not just hearing what’s going on in the U.S. press and what’s the position being taken by the U.S. government, but how are the various governments in Asia going to potentially react to that? What does that mean in the U.K., et cetera?”

The bank’s role extends beyond traditional lending to include risk mitigation, especially in areas such as foreign exchange volatility and interest rate exposure.

“How clients use their cash and unlock the best use of that across their balance sheet is a key part of how our bank and others are looking to help clients in this space,” Fullam said. “Efficiency is really at a premium here, whether it’s looking at cost of goods sold, working capital optimization, [or] how you can manage costs.”

Andrew Fullam is CFO, U.S. & Americas at HSBC, responsible for the region’s financial operations, including accounting, regulatory reporting, stress testing and capital management.