Policy Shocks + Business Risks = The New American Supply Chain Equation

The US is entering a new phase of supply chain policy, where security and sovereignty will dominate the agenda.

In August, the Trump administration proposed nearly $1 billion in investments to accelerate domestic development of critical minerals and materials, essential for everything from EV batteries to semiconductors (see Critical Minerals Are The New Energy Bottleneck And The Scramble Has Already Begun). The goal is to reduce dependence on China and bolster national security amid mounting geopolitical uncertainty – though, in an ironic twist, a significant share of that uncertainty stems from US policy volatility itself.

Onshoring critical minerals can improve sustainability outcomes by enhancing traceability, enforcement of environmental and labour standards, and community engagement. However, the real trade-off is pace and design: how quickly capacity is built versus how rigorously projects are permitted, monitored and remediated (think water use, tailings, biodiversity, Indigenous rights). Done well, onshoring is a sustainability upgrade; done poorly, it simply relocates risks rather than reducing them.

In parallel, the Trump administration has ended the de minimis exemption, bringing tariffs and customs scrutiny to all shipments, not just high-value imports. The sharpest near-term effects will land on e-commerce platforms such as Shein and Temu, which depend on high-volume, low-margin, just-in-time parcels. These firms are expected to pivot to duty-inclusive pricing and tighter logistics controls.

Social compliance risks are also tightening. The Uyghur Forced Labor Prevention Act (UFLPA) has been vigorously enforced to block imports from Xinjiang or by entities on the UFLPA Entity List, under the presumption of forced labour. In its 2025 strategy update, the Forced Labor Enforcement Task Force (FLETF) highlighted adding 78 new entities to the list in the past year, bringing the total to 144 Chinese organizations now barred from sending goods into the United States. The update also designated new high-priority sectors for enforcement – caustic soda, copper, lithium, red dates and steel. Alongside this, the Countering America’s Adversaries Through Sanctions Act (CAATSA) applies similar restrictions on goods linked to North Korean labour. Together, these measures signal a more muscular US stance on labour rights in supply chains.

These shifts are not contained within US borders. Because supply chains are deeply interconnected, the impacts of American policy changes cascade globally, forcing multinationals to adapt sourcing, pricing and compliance strategies across their entire networks.

For businesses, the convergence of tariff exposure, environmental costs and labour enforcement reframes sustainability as a core risk management issue. Supply chain disruptions already cost firms an average of $184 million annually. When sustainability risks crystallize, they amplify losses through procurement inefficiencies, reputational damage, legal liabilities and investor attrition.

To stay resilient, businesses must:

• Map dependencies and diversify sourcing beyond a single geography.
• Pilot alternative supply networks, even at higher upfront cost, to preserve continuity.
• Integrate environmental and social audits from the outset so speed does not outrun safeguards.

Supply chain agility and sustainability are now prerequisites for resilience in a tariff-uncertain, politically fragmented global economy.

For deeper insights, see Strategic Focus: Mitigating ESG And Sustainability Risk In The Supply Chain. And if you missed our recent webinar on supply chain solutions for the future, you can watch it on demand here.