Here’s What Happened in Supply Chains in March

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Many organizations were probably more than happy to close the door on March and start with a clean slate in April, but many of the challenges supply chain operators were dealing with last month are expected to follow them right into April. Interest rates remain high, inflation is threatening a comeback and tariff whiplash all kept organizations on edge last month. 

The back-and-forth that took place on tariffs was of particular interest to U.S. producers. Frwves reported that 25% tariffs on all aluminum and steel imported into the U.S. went into effect on March 12, prompting Canada and the European Union to immediately retaliate by imposing duties on about $49 billion worth of U.S. goods.

Ted Krantz, CEO of Interos.ai, told the publication that the steel and aluminum tariffs could hit the U.S. automotive manufacturing industry hard. “Our data shows there’s 400,000 companies impacted, and 3% of that is manufacturing for the auto industry,” Krantz told FreightWaves. “We anticipate, just in terms of carry costs on vehicles, assuming…the $25,000 average cost, that’s an incremental almost $6,500 in additional costs that ultimately have to be passed on to the consumer.”

Trump then paused (until April 2) across-the-board tariffs that had been set for March 4 on goods from Canada and Mexico that comply with the United States-Mexico-Canada Agreement. He also imposed a 10% tariff on Chinese goods in February and later doubled the rate to 20%. China responded with up to 15% duties on U.S. foods such as beef, chicken and pork that began March 10. According to FreightWaves, the president may impose reciprocal tariffs on Canadian lumber and dairy products soon.

Supply Chain Disruption Continues

The massive COVID-era supply chain disruptions may have faded in the rearview mirror, but their lasting impacts are still being felt in some sectors. For example, IndustryWeek says Honeywell International Inc.’s aerospace group is still wrestling with problems in its supply chain even as it’s been steadily ramping up production.

“The mechanical side is still very fragmented. It’s still very non-robust,” Jim Currier, president and CEO, said at a recent industry conference. “There’s still a lot of lack of resiliency in the mechanical supply base. It’s an ongoing issue. It will be an ongoing issue for some time.”

Currier did say that the situation with various parts makers and other suppliers is improving and that that company is using strategies like dual-sourcing and multi-sourcing to unlock new capacity.   

Industry Week says hiccups in the aerospace sector’s supply chain have been a multi-year concern, outlasting similar issues in other industries that were steadily resolved as the economy emerged from the upheaval of the pandemic. Last summer, for example, Boston Consulting Group analysts called out foundries and forges as having become “a critical choke point for new aircraft production and aftermarket servicing.”

A Shift from Certainty to Chaos

According to Supplyframe’s latest Commodity IQ report, there was a shift from “certainty to chaos” in global electronics supply chains during the first quarter of the year. It says seasonal buying patterns have “gone haywire as imposed tariffs, threats of tariffs and retaliatory tariffs have spurred an unseasonal electronic component sourcing surge in Q1.”  

The Commodity IQ Inventory Index for all electronic components fell 29 points between January and December, falling to less than half of the 2020 index baseline, signaling contraction and leaving the electronics industry vulnerable to potential shortages. 

“Welcome to 2025,” said Supplyframe CEO Steve Flagg, in a press release, “when frequently changing tariff policies and the continuing transformations wrought by AI have made commodity planning extremely challenging and left supply chain management organizations scrambling to keep pace.”

Supplyframe says the electronics supply chain has been experiencing unpredictable fluctuations in global trade actions, worldwide macroeconomic headwinds and resurfacing U.S. recessionary risks. “With circumstances changing rapidly, buyers face difficulty assessing the situation and developing response strategies,” Flagg said. “Under these conditions, buyers need to closely track demand and pricing conditions and be prepared to react quickly to further unexpected developments.”