Shock and Awe: A Theoretical Framework and Data Sources for Studying the Impact of 2025 Tariffs on Global Supply Chains

Abstract

In the first few months of 2025, the US government embarked on an unprecedented effort to upend decades of trade liberalization by undertaking the largest series of tariff increases since 1930. Subsequently, many of these tariffs were reduced by the executive branch or faced legal challenges, generating a tremendous degree of tariff uncertainty. These tariff hikes and the accompanying tariff uncertainty represent the greatest exogenous shock to global supply chains since the onset of the COVID-19 pandemic. The profound impact of these developments makes it imperative for supply chain management (SCM) researchers to examine their wide-ranging consequences. In this societal impact article, the authors develop a theoretical framework to organize and guide SCM research on tariff impacts. This framework proposes that importer and exporter actions, both legal and illegal, are affected by firms experiencing heterogeneous adjustment costs, transaction costs, opportunity costs for responding early, and opportunity costs for responding late in response to tariffs. Various research directions are outlined, relevant data sources are discussed, and initial model-free evidence is provided.