Sourcing is becoming less about finding the lowest-cost manufacturing option and more about building a supply chain that can withstand constant change. Tariffs, shifting trade policies, geopolitical instability, rising input costs and longer lead times are forcing companies to rethink where they manufacture, how they manage supplier relationships and how they assess risk. From increasing interest in nearshoring to greater visibility into landed costs and supply chain dependencies, industry leaders say flexibility—not simply cost—will be critical to navigating the next phase of global sourcing.
Here, industry executives discuss how companies are building the flexibility needed to respond to disruption heading into 2027.
Nick Prentiss, Bread founder and CEO
For young apparel and accessories brands reliant on overseas production, shifting geopolitical sands present a constant moving target. Nick Prentiss, founder and CEO of elastic lace brand Bread, has learned to adapt quickly since launching the company three years ago. While rising tariffs and shifting trade policies directly impact landed costs, Prentiss argues that sudden policy changes—not raw costs—pose the greatest operational threat heading into 2027.
Sourcing Journal: Which geopolitical risks concern you most heading into 2027: tariffs, trade conflicts, regional instability or something else?
Nick Prentiss: As a company that sources frequently from overseas, tariffs have definitely been a topic of discussion. We’ve been adamant about maintaining strong supplier relationships, and those relationships have helped us maintain competitive pricing through a fairly tumultuous period.
What concerns me most heading into 2027 is uncertainty. Whether it’s tariffs, trade conflicts or sudden changes in trade policy, we can plan around a known cost increase. It’s much harder to plan around something that could change between placing an order and receiving it.
SJ: Have recent disruptions exposed any vulnerabilities you didn’t know existed?
N.P.: One vulnerability we’ve become increasingly aware of is how quickly overseas suppliers can be forced to change pricing for completely valid reasons outside of their control. Dependence on a small number of suppliers is a double-edged sword. You want to build deep relationships with your suppliers, because those relationships become extremely valuable during difficult periods, but at the same time you need optionality. Finding the right balance between those two has become increasingly important to us.
SJ: Which sourcing regions are becoming more attractive, and which are becoming harder to justify?
N.P.: Mexico has become increasingly attractive to us because of its proximity to the U.S. and the potential for a shorter, more responsive supply chain. China, on the other hand, has become a region that requires more consideration than it did when we started the company three years ago.
The majority of our sourcing experience has been in China, and we’ve built supplier relationships there that we value tremendously, so I wouldn’t say China is difficult for us to justify today. But growing trade and tariff pressure creates uncertainty. Suppliers can absorb changes for a period of time, but if their costs change materially, eventually those pressures have to make their way down the supply chain.
That’s why we’re increasingly interested in having optionality across sourcing regions.
SJ: How much are tariff concerns influencing sourcing decisions compared to labor costs, quality and speed?
N.P.: For us personally, tariffs are still secondary to quality, labor and production costs, and speed, but they’re becoming a larger part of the equation. We haven’t seen a meaningful deterioration in quality or production speed because of them. Where we have seen an impact is cost, along with some last-minute conversations around pricing and shipments as trade policies change.
Ultimately, we wouldn’t move production solely because of tariffs if it meant sacrificing quality, cost efficiency, speed or a strong supplier relationship.
SJ: What new data are you relying on to anticipate geopolitical disruptions?
N.P.: We’ve definitely had to pay much closer attention to political and trade news than we did when we started the company. I personally grew up fairly removed from politics, but when policy starts directly affecting landed costs and sourcing decisions, you learn quickly.
We now pay much more attention to tariff announcements, trade-policy changes, freight costs and what we’re hearing directly from our suppliers. Combining that information with our own sales and inventory data gives us a much better idea of where we could be exposed.
Sonia Lapinsky, AlixPartners leader of fashion retail and partner and managing director
Shifting trade rules, regional instability, rising raw-material costs and longer lead times are reshaping where products are made—and how companies calculate risk, margin and speed to market. According to Sonia Lapinsky, leader of fashion retail and partner and managing director at AlixPartners, the biggest vulnerabilities often lie beneath the surface: limited visibility into yarn and fabric origins, hidden dependence on China, unclear tariff responsibilities in supplier contracts and an overreliance on individual shipping routes.
Sourcing Journal: Which geopolitical risks concern you most heading into 2027: tariffs, trade conflicts, regional instability or something else?
Sonia Lapinsky: The bigger risk than any single tariff line is the instability of the policy itself. In roughly a year, we went from the IEEPA tariffs, to a flat Section 122 surcharge, to the Section 301 forced-labor duties of 10 percent to 12.5 percent that replaced Section 122 the moment it expired on July 24, now covering close to 99 percent of imports, plus a new Section 338 action of 50 percent on certain Canadian goods, which is paused (as of Aug 19) and under negotiation. Landed cost is a moving target, and that whiplash is harder to plan around than the absolute rate.
Regional instability is another concern, particularly the conflict with Iran and disruption around the Strait of Hormuz. Higher oil prices can increase raw material costs, including polyester, and change the economics of sourcing from different markets. More vertically integrated suppliers may be better positioned to manage those increases, which could partially offset some of the tariff advantages of sourcing outside China. Those cost pressures could also drive some shift toward cotton, though fashion trends will ultimately play a role.
The line between compliance and cost is gone. Where your materials come from used to be about avoiding a border hold. Now it also drives your tariff rate. Retailers have diversified finished-goods production well beyond China. But raw materials haven’t caught up. Much of the fabric and yarn still comes from China, which could become a real exposure if origin rules tighten.
In fashion, lead time is where you win or lose. Diversifying out of China lengthened it, vendors have added their own buffers into development to absorb retailer changes, and physical disruptions like the Red Sea reroute stretch it further, so the calendar is already long before goods even move. The longer and less certain the pipeline, the more you commit to product before you know what will sell, and you pay for it in markdowns and air freight, not in the freight rate.
SJ: Have recent disruptions exposed any vulnerabilities you didn’t know existed?
S.L.: Many retailers have invested in tracking fabric and suppliers. The harder gap is proving origin further upstream, down to the yarn and cotton, where visibility is still limited.
Another vulnerability is hidden China dependence. Moving production out of China didn’t move the materials. The fabric and yarn often still come from China, so “we left China” was only half true.
We’ve also seen gaps in landed-cost visibility. When the rules changed mid-season, most teams couldn’t recalculate true landed cost fast enough, and few supplier contracts said clearly who absorbs a tariff increase, the retailer or the vendor.
Lead times have also become a bigger vulnerability. Pipelines got longer and less predictable than the plan assumed. Diversification, vendor buffers and disruption all stretched the calendar, which forces earlier product commitments and shows up as markdowns and air freight when the read is wrong. There is also single-route freight risk. Too much dependence on one shipping lane means that when a corridor closes, there may be no fallback.
Quality is another thing I’m watching. As costs increase, there’s a risk that companies try to make up for them elsewhere in the product. That’s particularly concerning when consumers are telling us that value and quality are among the most important factors in what they buy.
SJ: Which sourcing regions are becoming more attractive, and which are becoming harder to justify?
S.L.: The Western Hemisphere is getting more attention, but the shift hasn’t fully materialized yet. Mexico and Central America are exempt from the new tariffs, so nearshoring looks obvious, but it isn’t showing up in the data and the region’s share has stayed roughly flat. In fact, Central America has accounted for roughly 15 percent of U.S. apparel imports since 2010 despite years of nearshoring interest. Capacity and capabilities are not fully developed, especially in Central America, though not everywhere. Brazil has world-class leather-footwear capacity, but a separate 50 percent tariff prices it out of the U.S. for many brands. The real lesson: even where the factories exist, one tariff line can make a region uninvestable.
We’re continuing to see diversification across Asia, with Vietnam holding the top spot and Indonesia and Cambodia growing fastest. Egypt is an emerging standout, up double digits into the U.S. on duty-free access and real government investment. Turkey is growing too, though its rising costs are pushing some of that work toward Egypt.
There are also two markets I’d put a caution flag on. India is an established source having a tariff-driven down year on U.S. goods, but the base is deep and this is a rough patch, not a decline. Africa is the more structural concern: a small share to begin with, early in its development and stalled because its duty-free program was renewed for only a year and expires at the end of 2026.
China is harder to justify for U.S.-bound product once you stack the tariffs, forced-labor scrutiny and refund complexity, as is any country where the labor savings are now smaller than the duty and freight riding on top.
My read is that the winner isn’t a country, it’s flexibility and knowing exactly where your product comes from. The map is moving too fast to bet on one place.
SJ: How much are tariff concerns influencing sourcing decisions compared to labor costs, quality and speed?
S.L.: Tariffs have moved to the front of the decision. Trade policy used to be a finance calculation run after sourcing picked a factory. Now it’s at the table when the decision itself gets made.
But optimizing for tariff alone is a trap. With the effective U.S. rate near 11 percent, the highest since 1943, small changes to classification, materials, construction or country of origin often move margin more than chasing the cheapest labor. Transportation costs and freight optimization also need to be part of that equation, starting with greater cost transparency and understanding freight separately from the cost of goods.
Speed and quality still decide the P&L through sell-through. A few points of duty are small next to the cost of buying the wrong thing or landing it late.
The first question is whether a sourcing option is viable: Can I land the product and document it? From there, it comes down to the usual trade-offs around labor, quality and speed.
SJ: What new data are you relying on to anticipate geopolitical disruptions?
S.L.: The core is our Global Trade Optimizer, a proprietary should-cost platform with thousands of cost models and live feeds on commodity inputs, raw material costs, labor rates and tariffs. In practice it means we can cost a product accurately early, before decisions are locked, and update it the moment an input or a duty moves.
Raw material costs are becoming an increasingly important part of that picture. Geopolitical events can quickly change input costs and shift the economics of different materials and sourcing markets. We’re also looking closely at transportation and freight costs so we have a true picture of landed cost.
That makes costing much more forward-looking. When a tariff or other input cost shifts overnight, we can see the margin impact across a line immediately and model the alternatives, different materials, construction or country of origin, rather than waiting to find out at landing.
It also means we can plan for a range of scenarios rather than relying on one fixed assumption. With rates this unstable, that’s increasingly important.
Underneath the data, the oldest signal still matters: people on the ground in sourcing hubs who see capacity and input shifts before they show up in any feed. The edge is combining both, the real-time model and the human read.
François-Ghislain Morillion, co-founder, Veja
The rollout of tariffs and the impact of supply chain disruptions is impacting businesses in many different ways. It is forcing executive leadership to shift approaches and rethink sourcing. But there are other risks leaders are dealing with as the industry heads into 2027.
For François-Ghislain Morillion, co-founder of Veja, climate-related risks are top of mind, which include droughts and floods as well as deforestation of the Amazon. With the supply chain, Veja has fortified its relationships with suppliers and vendors. And not just cotton suppliers and rubber tappers, Morillion told Sourcing Journal.
Sourcing Journal: Which geopolitical risks concern you most heading into 2027: tariffs, trade conflicts, regional instability or something else?
François-Ghislain Morillion: For us, it’s more the climate risks that are impacting our supply chains, and this is maybe the most impactful risk that we foresee heading into 2027. Not that there is no tariff risk, but the American tariff is so unpredictable that we are not going to make scenarios on something that changes, goes back, is canceled and then comes back again.
Second, Veja created very solid supply chains where we have deep relationships with our suppliers—not only the cotton or rubber tappers, but also the factories, cattle ranchers and industrial partners. Shoe brands usually have vendors all over the place and can move, but in our case, we are very intricate.
The main risks we see are:
- Deforestation in the Amazon: This is a very serious risk because we work with rubber tappers who live in the forest. If there is a government change in Brazil, the situation could get bad again if the focus on the forest disappears. We put in place monitoring systems through satellite to calculate deforestation, which shows big improvements due to paying the right price and government policy enforcement.
- Floods and Climate Events: Two years ago, there were very serious floods in the south of Brazil where we have most of our industrial operations and 90 staff members. One of our tanneries had to close and rebuild somewhere else. Looking at 2027 with El Niño being very strong, we know climate events will impact us, including unusual tornadoes in Brazil. We created an emergency fund and training so people are prepared for these recurring events.
- Droughts in Cotton Supply: The cotton supply chain has been impacted by droughts. This year, 1/3 of the families had no production of cotton at all. In our contracts, cotton farmers must plant at least two additional crops so they don’t rely fully on cotton. We are also helping our cooperatives diversify their contracts and crops (like sesame) to have more stability.
Our reaction to geopolitical and climate risks is to get even closer to our suppliers, stick together and find solutions together. For tariffs, we sat down with our partners and split the bill between the customer, Veja’s margin and the factory.
SJ: Have recent disruptions exposed any vulnerabilities you didn’t know existed?
F-G.M: These climate issues were kind of a surprise when they first hit you. Drought is something we’ve experienced for almost 20 years, but floodings are relatively new, or heatwaves in Europe that affect our bodies and minds. People coming to the office are tired because most don’t have air conditioning at home, so energy is different. This is the new normal.
SJ: Which sourcing regions are becoming more attractive, and which are becoming harder to justify?
F-G.M: Honestly, we are not really looking at these geopolitical aspects because we’re not going to move very quickly somewhere else and then move back. It takes so much time to create a new supply chain. For example, in Portugal, it’s been five years that we’ve worked with the factory in a long-term story.
We are not so dependent on tariffs, and we don’t make choices based on tax. We like to have our products true to price. If it is more costly to sell a product in a country because of a tax or tariff, so be it—that’s the true cost. We try not to impact the consumer too much, but we are not going to change a production site or office location because of tariffs or taxes, because then you go a bit crazy and take the wrong decision.
SJ: How much are tariff concerns influencing sourcing decisions compared to labor costs, quality and speed?
F-G.M: For us, not so much, honestly.
SJ: What new data are you relying on to anticipate geopolitical disruptions?
F-G.M: Honestly, it’s been hard to follow. The tariffs between Brazil and the U.S., the only data you have is what’s out there in the press, and even people working for the government are surprised. It’s changing, and sometimes it’s not really clear what’s going to be applied. But we don’t really have a choice, and again, we’re not going to move production from Brazil because of these unpredictable tariff things.
Omair Tariq, Cart.com co-founder and CEO
Cart.com provides unified commerce and logistics solutions to B2C and B2B companies, including apparel and footwear. The company coordinates about 80 million orders a year for thousands of customers, according to Omair Tariq, co-founder and CEO. From that perch, Tariq said Cart.com sees order velocity and inventory positions as well as lane costs across the market and in real time.
Sourcing Journal: Which geopolitical risks concern you most heading into 2027: tariffs, trade conflicts, regional instability or something else?
Omair Tariq: Energy is the one I watch first because it touches everything: ocean freight, trucking, parcel, warehousing and the consumer’s wallet. Apparel and footwear feel that faster than people think. A tariff changes the math on a product or a lane, but energy changes the math across the whole system.
If oil supply opens up and prices come down, brands could get some relief on transportation and landed cost. That helps, but the real risk is what happens next. American consumers tend to spend windfalls. If lower fuel costs put more money in their pockets and spending accelerates, inflation could stay more persistent than most people expect. That keeps the Fed hawkish, keeps capital expensive and makes it harder for brands to finance inventory moves, factory shifts or acquisitions.
That is why I would put energy and cost of capital ahead of tariffs heading into 2027. Tariffs still matter, especially for specific categories and lanes, but they are only one variable. For most apparel and footwear supply chains, quality, speed, financing costs and freight volatility will decide the year.
SJ: Have recent disruptions exposed any vulnerabilities you didn’t know existed?
O.T.: Pricing power. Every brand ran a live experiment over the past two years, whether it wanted to or not. Some raised prices, maintained their volume and found they had more room than they believed. Others raised prices, watched demand dry up and learned something uncomfortable about how their customers valued the product. Very few brands had tested that question before tariffs forced it.
The paperwork surprised people, too. That sounds boring until there is real money on the line. Refund entitlement under the Supreme Court’s IEEPA ruling runs to the importer of record. Brands that assumed a vendor, freight forwarder or logistics partner carried that exposure found out this spring that the paperwork decided who received the money. What’s interesting was the surprising number of companies that could not immediately say who their importer of record was on which lanes.
The slower vulnerability is product relevance. Brands spent three years absorbing one cost increase after another, and many stopped investing in assortment, creative and innovation. A balance sheet can be repaired with capital, but it takes far longer to rebuild customer interest after several underwhelming seasons.
SJ: Which sourcing regions are becoming more attractive, and which are becoming harder to justify?
O.T.: Vietnam, India, Indonesia and Mexico continue to absorb volume. The moves holding up best are the ones where the brand invested the time to qualify the factory properly before shifting production.
Mexico earns its place on speed. For an apparel brand, speed can be worth more than a modest difference in unit cost. When a brand can read demand, chase winners and avoid overcommitting too early, that shows up in margin.
The sourcing decisions becoming harder to justify are the ones brands made on the duty rate alone. A lot of that happened quickly across 2024 and 2025. Teams were handed a number to beat and went hunting for the lowest rate available. Some of those moves were sound, while others pushed production into factories that had never run the product at volume. The result showed up later as defects, rework, missed set dates and chargebacks.
Several brands are now moving some production back toward suppliers they had left because of their track record of delivering quality and consistency. A duty rate says exactly nothing about whether a manufacturer can consistently maintain tolerance rates across a full production year.
SJ: How much are tariff concerns influencing sourcing decisions compared to labor costs, quality and speed?
O.T.: Tariffs drove the decision for about 18 months. What we see is the industry is correcting for that now. Duty is just one line in landed cost. The number that matters accounts for the defect rate, rework hours, return rate, retailer chargebacks and expedited freight, tracked by supplier over several quarters. Brands that built that view are making better calls than brands still comparing rate tables.
Labor cost gets too much attention. For most apparel programs, the savings disappear fast if the factory misses a set date or quality falls apart.
Quality and speed usually come from the same place: a factory that knows what it is doing. When the work is consistent, the calendar is more predictable. When quality starts slipping, the brand pays twice: first in rework and then in air freight to protect the launch.
Trade policy will continue to evolve. Quality and speed keep their value regardless of what the tariff schedule says next quarter.
SJ: What new data are you relying on to anticipate geopolitical disruptions?
O.T.: Energy markets and producer behavior tell me more about the next two quarters than trade data alone. When an oil producer changes its relationship with OPEC or signals a different output strategy, that matters because output moves freight cost, freight cost moves landed cost, and landed cost moves pricing, margin and inventory decisions.
I also watch capital flows and acquisition activity closely. They show which companies have the balance sheet to absorb a shock and which are becoming someone else’s acquisition target.
Inside the business, we have far better data than we did three years ago. Cart.com coordinates roughly 80 million orders a year for thousands of customers, so we see order velocity, inventory positions and lane costs across a wide slice of the market close to real time. Demand and inventory models built on that data outperform manual projections by more than 40 percent.
I also watch carriers closely. Surcharge announcements and capacity decisions usually show up before the broader market admits conditions have changed.
This article was publish in SJ’s Fall Sourcing Report. Click here to read more.