Why this matters:
- 2025 saw the largest U.S. tariff increases since the Great Depression.
- The study outlines a theoretical framework for understanding how increases in tariffs as well as uncertainty about tariffs affect importer and exporter behaviors.
- Researchers also provide guidance for studying tariff impacts across industries, from consumer goods to agriculture.
EAST LANSING, Mich. — In the wake of the largest series of U.S. tariff hikes since 1930, a new study from Michigan State University explores how this economic shock is reshaping global supply chains and offers a framework to help researchers and policymakers make sense of the chaos. The study was recently published in the Journal of Supply Chain Management .
"Unlike previous trade wars, the 2025 actions came with extreme uncertainty," said Jason Miller , lead author of the study and the Eli Broad Endowed Professor in Supply Chain Management at MSU. "We wanted to provide a framework to help researchers and practitioners make sense of what's happening and what to expect going forward."
The paper outlines a theoretical framework around categories of costs firms must navigate in response to tariffs: adjustment costs, transaction costs, and the opportunity costs of responding too early or too late.
These costs influence a firm's ability, and willingness, to shift suppliers, relocate production or pass price increases on to consumers. The framework builds on and extends existing theory by directly incorporating the role of uncertainty and potential misconduct in firm responses, offering a more comprehensive view of how firms navigate trade shocks. Unlike previous trade disputes, the 2025 tariffs were enacted, reversed and reinstated in rapid succession, creating a volatile environment that makes planning nearly impossible.
"I've spoken with industry professionals who have described large importers having at least five, and sometimes 10, different plans sketched out because they cannot anticipate what the final form of tariffs will look like," said Miller.
Societal impact of the tariffs
While the study is anchored in supply chain theory, the authors emphasize that these disruptions have real societal consequences for households and consumers.
"Imported food products, from fruits to coffee, are particularly sensitive to trade policy changes," said David Ortega , a study co-author and the Noel W. Stuckman Chair in Food Economics and Policy at MSU. "When tariffs are imposed or threatened, that leads to price increases, sourcing challenges and more strain on lower-income households."
The authors note that products with limited domestic production, such as bananas or pineapples, offer little room for substitution, which makes food prices especially vulnerable to trade shocks.
"Tariff-driven price increases have real-world consequences," said Ortega. "They shape what people can afford at the grocery store, and retaliatory actions from other countries can impact what farmers grow. These ripple effects matter and affect everyone."
A roadmap for research and policy analysis
Beyond the framework, the paper outlines various research directions and provides a curated list of data sources, ranging from firm-level trade records to import/export price indexes and sector-specific data. These tools allow researchers to analyze:
- how and when firms shift sourcing to different countries;
- the extent of tariff pass-through to retail prices;
- the timing of inventory buildups or front-loading of imports;
- instances of potential misconduct, like falsifying country-of-origin documentation.
Yao "Henry" Jin , associate professor at Miami University's Farmer School of Business and a study co-author, said the study aims to equip scholars and practitioners alike.
"The framework offered by our research can help the industrial sector navigate our new and uncomfortable reality as a stable global supply chain built on a belief in free trade gives way to rising geopolitical uncertainty and protectionism," Jin said.
The authors said they hope the framework can serve as a launchpad for more empirical work on the short- and long-term impacts of trade shocks, especially in areas like sourcing strategies, retail pricing and global manufacturing realignment.
"We need better ways to study and manage the consequences of these trade actions," Miller said. "Whether you're a policymaker, an importer, retailer or a consumer — you're affected when supply chains are thrown into turmoil. This research helps us understand how and why."
