Can Sourcing Partners Navigate Tariff Tensions?
Yes, the right partner can provide new options and deliver savings.
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We’ve blogged about this topic before [1], but now that we are In the wake of continued tariff tensions and persistent market softness, fine and specialty chemical procurement has seldom been more challenging. The once standard “China + 1” diversification model [2], where India played the preferred backup to Chinese suppliers, has unraveled as US tariffs on Indian chemical imports have climbed dramatically. For many procurement professionals, this sharp escalation all but eliminates India as a viable, cost-effective source for numerous chemical categories, throwing established sourcing strategies into question.
Recent US reciprocal tariffs have imposed a 25–26% duty on Indian chemicals, with certain segments including organic chemicals facing effective rates over 50%[3][4][5]. These rates, layered on top of existing logistics and compliance burdens, has had a chilling effect on the country’s competitiveness. Despite India’s earlier edge over China and Vietnam, the newest round of tariffs largely neutralizes those advantages, leading procurement teams to look elsewhere, or to negotiate aggressively with remaining compliant suppliers[3][4].
At the same time, global demand for chemicals remains tepid, driving what industry observers describe as pronounced market softness[6][7]. Faced with weak demand and shrinking margins, suppliers in India, China, and ASEAN are flooding procurement professionals with offers, sometimes at prices that appear deeply discounted, but often with substantial risk. These risks may include inconsistent quality, unreliable deliveries, and uncertain adherence to new tariff and regulatory requirements.
Procurement professionals must respond to this volatility with disciplined, strategic approaches:
Scrutinize New Supplier Offers: In a soft market with a flood of offers, thorough due diligence is essential to avoid costly disruptions from opportunistic, untested, or desperate vendors.
Expand Supplier Search Beyond Traditional Hubs: As Indian and Chinese options become less attractive, teams are increasingly considering sources in Southeast Asia e.g., Thailand, Vietnam, Indonesia; Latin America; and nearshore US-Mexico corridors for both strategic raws and key intermediates[8][9].
Leverage Third-Party Sourcing Partners: Global sourcing companies possess critical market intelligence and supplier qualification frameworks, which help procurement organizations filter credible, cost-effective alternatives from a crowded and often confusing field of offers[10].
In this environment, relying on historical sourcing patterns can invite both cost and supply chain risk. Caution, adaptability, and partnership with experienced third-party sourcing specialists are essential for navigating both tariff complexity and the ever-growing tide of supplier offers in a soft, highly competitive chemical market[3][4][6][10].
Want to learn more about sourcing of strategic raw materials and intermediates? Reach out today for an initial consultation.