Retail Sourcing Report I 2025 Indicators

FOREWORD

For many years, TradeBeyond’s Retail Sourcing Report series has provided insight
into the issues and trends impacting global sourcing professionals at many of the
world's leading retailers and brands. Now published bimonthly, our reports cover a
broad range of topics relevant to sourcing, retail merchandising, and other
functional areas.

These topics include economic conditions in buying and sourcing countries,

shipping trends, currency exchange, commodity rates and a significantly
increased coverage of the complex ESG environment. With this added focus on
sustainability, we are now providing a deeper update on the evolving regulatory
climate, trends and best practices to help you make the right decisions for your
business.

With each report, we strive to grow and expand our coverage of the issues that
are top-of-mind for our valued customers and the greater retail community.

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Statement of Indemnity: TradeBeyond recommends that any information provided in this report be weighed
against other sources and experts on the individual topics covered. As such, TradeBeyond bears no legal or
fiscal responsibility for any potential harm or outcome which may result directly or indirectly from information
provided in this report.

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Retail Sourcing Report I 2025 Indicators

What’s Inside

Foreword 2
Contents 3
Executive Summary 4
From the CEO’s Desk 5
Global Supply Chain Volatility Index 6
Regional Sourcing and Manufacturing Outlook 7
Eurozone/U.K. 7

North America 9
Eastern Europe and Türkiye 10
East Asia 12
South Asia 13
Southeast Asia 15

South America 18
Africa 19
Container Freight Rates and Trends 20
Trading Currency Rates and Trends 22
Commodity Rates and Trends 24
Focus Topic: Strategies to Navigate Global Trade Uncertainty in 2025 27

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 3

Retail Sourcing Report I 2025 Indicators

Executive Summary
If we could pick one word as a catch-all theme for 2025, it would be tariffs. The Trump administration has
taken tariff threats well beyond posturing and bluster by implementing or threatening taxes not only on
historical foes such as China but also on allies such as Canada and Mexico.

These aggressive trade strategies have shaken up trade partnerships and are forcing a rethink— and in
some cases a realignment— of global sourcing and global trade relationships. Most countries targeted
with U.S. tariffs are preparing reciprocal tariffs on U.S. imports into their countries, which likely means that
global consumers will pay the real price in these trade wars.

This climate of trade wars has shifted attention from regional wars in the Middle East and Eastern Europe
and placed the U.S. at center stage as the driver of a new take on the world order. Analysts predict 2025
will be a year of slower economic growth than 2024, especially in more advanced economies in Europe.
Robust growth is still expected in emerging Asian economies such as India, Vietnam and Indonesia.

While the double-digit growth years of China are over, Beijing is responding to the escalating U.S. trade
war through domestic stimulus and building stronger partnerships with other emerging economies such
as India and Brazil. Four years of the current U.S. administration is a small blip in China’s long game,
which will likely end with China playing a bigger role on the world stage.

In the meantime, the U.S. dollar and economy should remain strong, with China expected to let their
currency depreciate, which could alleviate the stress of tariffs, making their exports cheaper. On the plus
side, inflation should continue to soften through 2025, with central banks adding more rate cuts.

Container shipping rates, another consideration in the global sourcing mix, are expected to fluctuate,
with lower demand offset by stretched capacity due to the need to avoid the Red Sea. Some analysts
predict the Red Sea might be open for business later in 2025, but this is still a question mark.

For most commodities, except for safe haven metals such as gold and silver, including steel, iron-ore,
rubber and crude oil, we expect to see flat to declining prices in 2025, due to sufficient supply and lower
demand for consumer goods in a softening global economic climate.

While the crystal ball is still providing a murky outlook for 2025, the mood is one of uncertainty, restraint,
and realignment of interests. As always, we hope that the analysis and trends we have highlighted help
inform your global sourcing tactics and strategies through 2025.

Sincerely,

Russel Beron
Special Projects Consultant
TradeBeyond

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 4

Retail Sourcing Report I 2025 Indicators

From the CEO’s Desk

Building Agility Amid Uncertainty

Thank you for your continued engagement with our Retail Sourcing Report series. The incredible
response to recent installments has reinforced how vital these insights are for navigating today’s
complex sourcing challenges. I’m excited to share that 2025 will be an even bigger year for these
reports, with in-depth breakout editions devoted to the most pressing concerns in retail right now.

2025’s inaugural report arrives at a moment of heightened volatility. Geopolitical tensions and uncertain
tariff policies are disrupting traditional supply chains, making agility more critical than ever. For retailers
and brands, success will hinge on how effectively they can adapt sourcing strategies and diversify
supplier networks—balancing cost efficiencies to offset tariffs while ensuring supply chains remain agile
enough to respond to rapid policy shifts.

At TradeBeyond, we remain committed to supporting this transformation. We’ve continued to expand

the scope of our solutions to provide the transparency and resilience retailers need to navigate
mounting uncertainties while maintaining operational efficiency.

We’re proud to be your trusted partner and look forward to another year of delivering insights that
empower smarter, more informed sourcing decisions.

Warm regards,

Michael Hung
CEO
TradeBeyond

About TradeBeyond
Retail's leading extended supply chain management solution provider, TradeBeyond, helps brands and
retailers streamline product development and sourcing all the way through order, production, and delivery.
Through innovative sourcing management, product lifecycle management (PLM), and production and order
management solutions, TradeBeyond empowers more efficient, responsible supply chains for many of the
world’s largest retailers. TradeBeyond is also the provider of Pivot88, retail’s most trusted quality, compliance,
and traceability platform. For more information, visit tradebeyond.com and pivot88.com.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 5

Retail Sourcing Report I 2025 Indicators

Global Supply Chain Volatility Index

The GEP Global Supply Chain Volatility Index (SCVI) is a leading supply chain indicator, based on a
monthly survey of 27,000 global businesses, which tracks demand conditions, shortages, transportation
costs, inventories, and backlogs. The higher above zero the SCVI index goes, the more stretched supply
chains are. Conversely, readings below zero indicate underutilized supply chain capacity. The latest
reading (Feb. 12, 2025) of the SCVI index was -0.21, which shows supply chains are effectively running
slightly below underutilized levels, in other words at high efficiency levels.

Highlights
Global supply chains are working at close to full capacity, with many companies diversifying to
“China-plus-one countries” — except for Europe, which is in an industrial recession with no
turnaround in view.
Global manufacturers are not stockpiling inventories to mitigate against the uncertainty of tariffs and
protectionism. In January/February 2025, inventory stockpile levels were below those of the prior
two months, suggesting that companies are taking a “wait-and-see” approach.

Demand: Purchasing of raw materials is recovering slowly, especially in Asia and North America, but is still
hesitant given general softness in global economic conditions.
Inventories: The desire to stockpile inventories remains contained, with few factories reporting abnormal
increases, suggesting companies are waiting for tariff negotiations to unfold.
Material Shortages: Shortages of commodities, components, chemicals and food products were at the
lowest level in five years, given stable demand and supply.
Labor Shortages: Factory employment is on a shrinking trend, primarily due to hesitancy in hiring due to a
softer global economy, with reports of rising backlogs in orders.
Transportation: Global transportation costs rose to their highest level in six months early in Q1 2025, due
to tight container capacity, along with front-loading of orders due to global trade uncertainty..

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 6

Retail Sourcing Report I 2025 Indicators

Regional Sourcing and Manufacturing Outlook

In this section, we include data points and analysis from both a country and regional perspective. We
cover over 30 countries, including mature (North America and Europe) and emerging economies (Asia,
Africa, Eastern Europe and Latin America) to provide an indication of general supply and demand
conditions. Indicators covered include: Manufacturing Purchasing Manager’s Index (PMI), real GDP
growth, inflation, imports, exports and minimum wages (see footer below for more detailon sources).

GLOBAL OVERVIEW
GDP growth forecasts for most countries across the globe indicate slower growth for 2025 compared to
2024. Euromonitor predicts global growth of 3.3% for 2025, lower than the 3.7% historical annual average,
which is in line with other forecasts. Advanced economies are expected to see growth of around 1.8%,
while emerging economies will see growth of around 4.2%.

Global inflation is forecast to trend downward in 2025 with cooling expected in labor markets and weaker
demand. Most forecasts predict that global headline inflation will decline to between 3.9% (DIW/KOF) and
4.2% in 2025 (MF World Economic Outlook).

Given recent policy shifts of the U.S. administration, volatility will be an ongoing theme for 2025,
characterized by tariff wars, protectionist measures and realignment of trading partners. The risk of
regional wars and geopolitics spilling into broader conflicts is also an ongoing concern for global sourcing.

EUROPE & UNITED KINGDOM

United Kingdom Economic Indicators and Projections for 2025
The U.K. saw a weak start to 2025 with subdued demand for products both
Manufacturing PMI domestically and overseas. Optimism among manufacturers remained at
two-year lows, attributed to government policies, fears of a recession,
Nov 24 Dec 24 Jan 25
inflated costs, and supply chain stressors. High input prices and low demand
48.6 47.0 48.3 resulted in layoffs in recent months, especially among smaller businesses.
The U.K. is forecast to see economic growth in the range of 1.5% in 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
0.9 % 1.6%(f) 2.6% 2.1%(f) -1.1% 1.7%(f) -6.0% -1.1%(f) US $2,304

Regional Sourcing and Manufacturing Outlook Section Sources:

i. Manufacturing PMI: We use Purchasing Managers’ Index (PMI) manufacturing data from S&P Global to highlight sourcing trends. The index
is based on information collected from over 27,000 private companies across more than forty economies worldwide including manufacturers
and retailers. This data includes output, new orders, stock levels, employment, and prices. A reading below 50 indicates contraction from the
previous month, while a reading above 50 indicates growth.
ii. GDP Sources Consulted: IMF (January 2025 forecast/projections), OECD, World Bank, EIU
iii. Inflation Sources (average consumer price, annual % change): IMF, Asian Development Bank; OECD, Euromonitor
iv. Import and Export Sources: IMF, World Bank, OECD (Figures indicate % change from previous year)
v. Minimum Wage Sources: News articles, reports, various Government bureaus
vi. Symbols: (f) = forecast, (e) = estimate, red font = yoy contraction, green font = yoy growth

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Retail Sourcing Report I 2025 Indicators

Eurozone Economic Projections for 2025

The Eurozone is expected to see subdued growth of around 1.2% in 2025, with 2% inflation expected in
Europe this year. Similar to the U.S. and other countries, the European Central Bank (ECB) is expected
to continue lowering interest rates.

France Economic Indicators and Projections for 2025

French manufacturing continued a trend of deep contraction early in
Manufacturing PMI 2025, but made gains relative to the previous 6 months. Employment
remained soft and companies continued to reduce purchasing and
Nov 24 Dec 24 Jan 25
inventories in response to weak domestic and export demand. Most
43.1 41.9 45.0 French businesses were pessimistic about the prospects for the rest of
2025 given the choppy geopolitical climate.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.1% 0.8%(f) 2.3% 1.6%(f) -1.2% 1.8%(f) 3.0% 2.7%(f) US $1,869

Germany Economic Indicators and Projections for 2025

While Germany saw a slight uptick in their manufacturing sector early in
Manufacturing PMI 2025, indicators point to a recessionary climate. Export conditions in
Germany remain weak, with uncertainty around U.S. tariffs and ongoing
Nov 24 Dec 24 Jan 25 geopolitical tensions. The automotive, machinery and equipment sectors
all saw declines in export orders. The German election could bring a
43.0 42.5 45.0 change in policy and in turn impact the German economic outlook.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
-0.2% 0.3%(f) 2.4% 2.0%(f) -2.5% 2.1%(f) 0.2% 1.9%(f) US $2,242

Italy Economic Indicators and Projections for 2025

Italy’s manufacturing downturn continued in early 2025, with softness in
Manufacturing PMI purchasing activity, new orders, and employment along with declines in
production. Weak economic activity among key trade partners such as
Nov 24 Dec 24 Jan 25 Germany, France and China contributed to the economic downturn. The
U.S. tariff issue has also created uncertainty for Italy in 2025, given that
44.5 46.2 46.3
10.7% of Italy’s exports go to the U.S, second only to Germany.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
0.6% 0.7(f) 1.3% 2.1%(f) -0.6% 0.3%(f) 0.3% 0.2%(f) US $1,245

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Retail Sourcing Report I 2025 Indicators

NORTH AMERICA
United States Economic Indicators and Projections for 2025
While the U.S. manufacturing sector received a boost with the new
Manufacturing PMI administration, the economy is expected to see a modest decline in
growth in 2025, compared to 2024. Indicators suggest inflation is now
Nov 24 Dec 24 Jan 25 in check and employment stable, with more Federal Reserve Bank rate
cuts expected. Given the tariff climate, the U.S. will likely see inflation
48.8 49.4 51.2
on a range of products. While the business climate in early 2025 is
optimistic, a shadow of uncertainty will likely remain through the year.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.8% 2.7%(f) 3.0% 1.9%(f) 4.4% 1.6%(f) 2.4% 4.2%(f) US $1,218

Canada Economic Indicators and Projections for 2025

Canada’s economy is expected to pick up in 2025, with growth above 2%,
Manufacturing PMI compared to 1.3% growth in 2024. While inflation is forecast to reach
central bank targets, uncertainty prevails over an escalating tariff war with
Nov 24 Dec 24 Jan 25
the U.S., Canada’s largest trading partner. Companies reacted to the
52.0 52.2 51.6 unknowns of U.S./Canada tariffs in some cases by pushing orders forward,
but also with hesitancy in buying and lower business confidence.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.3% 2.0%(f) 2.4% 1.9%(f) 0.9% 4.0%(f) 0.8% 2.3%(f) US $2,070

Mexico Economic Indicators and Projections for 2025

Mexico is expected to see a reduction of their economic growth in 2025,
Manufacturing PMI compared to 2024 GDP growth. Manufacturers expressed weaker
business confidence due to the overall U.S./Mexico and global trade
Nov 24 Dec 24 Jan 25 climate. Companies pulled back on purchasing, relying on existing
inventories. Reduced costs and lower demand, both domestic and
49.9 49.8 49.1
foreign, resulted in softer selling prices in early 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.8% 1.4%(f) 4.7% 3.8%(f) 1.2% 2.4%(f) -1.4 1.7%(f) USD $373

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Retail Sourcing Report I 2025 Indicators

EASTERN EUROPE AND TURKEY

Czechia Economic Indicators and Projections for 2025
While manufacturing activity picked up marginally in early 2025, Czech
Manufacturing PMI manufacturers continued to face weaker demand for their goods, both
domestically and for exports. On the plus side, while input costs increased,
Nov 24 Dec 24 Jan 25
inflation remained subdued and the forecast for overall economic growth
46.0 44.8 46.6 in 2025 expanded to 2.4%, from 1.1% in 2024. Export growth is also forecast
to pick-up, with geopolitical tensions the key risk this year.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.1% 2.4%(f) 2.3% 2.0%(f) -1.7% 2.2%(f) -0.3% 3.2%(f) USD $870

Poland Economic Indicators and Projections for 2025

Poland’s manufacturing sector pulled closer to positive territory in early
Manufacturing PMI 2025 but remained in contraction as demand from European and other
export partners remained soft. Poland’s GDP is expected to see healthy
Nov 24 Dec 24 Jan 25
growth of 3.5% in 2025, from 2.8% in 2024. Inflation is forecast to remain
48.9 48.2 48.8 high (in the 4.5-5% range), but Poland also increased their minimum
wage by 18% in 2024.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.8% 3.5%(f) 3.9% 4.5%(f) 4.2% 5.9%(f) 1.3% 2.3%(f) USD $1,176

Russia Economic Indicators and Projections for 2025

Russian manufacturing continued to expand through early 2025, with
Manufacturing PMI strong domestic, but also export demand, despite EU sanctions. Most of
Russia’s exports (and trade) in 2025 will go to Asia (China), followed by the
Nov 24 Dec 24 Jan 25
EU, Africa, and CIS countries (e.g. Belarus, Kazakhstan, etc.). Russia’s GDP
51.3 50.8 53.1 growth is expected to slow significantly to 1.4% in 2025, from 3.8% in 2024,
with inflation cooling, but remaining close to 6%.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
3.8% 1.4%(f) 7.9% 5.9%(f) 8.0% 5.2%(f) 4.5% 3%(f) US $245

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Retail Sourcing Report I 2025 Indicators

Romania Economic Indicators and Projections for 2025

Romania faced structural issues in their manufacturing sector in early
Manufacturing PMI 2025, with low demand and a challenging economic climate, with
geopolitical factors also impacting business sentiment. GDP is expected
Nov 24 Dec 24 Jan 25
to increase in 2025, assuming external demand for Romanian products
48.0 46.4 46.1 continues. Inflation is forecast to moderate to around 3.6% in 2025, from
5.3% in 2024, with monetary policy expected to be restrictive.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.2% 2.6%(f) 5.3% 3.6%(f) 7.0% 4.6%(f) -0.6% 2.6%(f) US $853

Türkiye Economic Indicators and Projections for 2025

Türkiye had a slow start to the year with declines in output, new orders
Manufacturing PMI and employment, alongside high inflation. While inflation is set to
moderate from above 60% to slightly above 30%, it remains a problem.
Nov 24 Dec 24 Jan 25
Türkiye is forecast to see a slight contraction in GDP growth for 2025,
48.3 49.1 48.0 from 2.8% to 2.6%, with declines expected in domestic demand due to
high product prices impacting household consumption.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
3.5% 2.6%(f) 60.9% 33%(f) -4.7% -0.2%(f) -0.1% 2.0%(f) US $664

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Retail Sourcing Report I 2025 Indicators

EAST ASIA
China Economic Indicators and Projections for 2025
China’s manufacturing remained in positive territory in early 2025, driven
Manufacturing PMI more by domestic demand as the export market continues to soften.
Government subsidies will continue to support the broader economy, while
Nov 24 Dec 24 Jan 25
businesses focus on cost control and filling capacity. China’s larger economy
51.5 50.5 50.1 is expected to see moderate yoy GDP growth in 2025 of 4.6%, as concerns
over ongoing trade wars and geopolitics could put a damper on growth.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
4.8% 4.6%(f) 0.4% 1.7%(f) 4.3% 3.2%(f) 14.9% 7.6%(f) US $364

Japan Economic Indicators and Projections for 2025

Japan’s manufacturing sector declined for the seventh consecutive month
Manufacturing PMI
in early 2025, with the medium-term outlook looking similarly muted. With
Nov 24 Dec 24 Jan 25 subdued demand, manufacturers lowered inventories of finished goods
and raw materials. Confidence prevailed that output would increase
0.0 49.0 48.7 through 2025, with exports expected to approach 3% growth, supported by
the automotive and semi-conductor markets.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
-0.2% 1.5%(f) 2.2% 2.0%(f) 2.1% 4.1%(f) 0.8% 2.9%(f) US $1,137

South Korea Economic Indicators and Projections for 2025

South Korea had a positive start to 2025, with momentum in their
Manufacturing PMI manufacturing sector driven by stronger exports. Concerns remain over
high input costs and the global trade climate, with exports expected to
Nov 24 Dec 24 Jan 25
decline by 3.6% in 2025. Imports are also forecast to grow, partly due to
50.6 49.0 50.3 factory investments. On the plus side, inflation is forecast to cool, with the
Bank of Korea’s policy rate expected to bottom out at 2.5%.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.2% 2.0%(f) 2.5% 2.0%(f) 2.6% 4.3%(f) 7.2% 3.6%(f) US $1,209

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Retail Sourcing Report I 2025 Indicators

SOUTH ASIA
India Economic Indicators and Projections for 2025
Indian manufacturing grew robustly in early 2025, a trend expected to
Manufacturing PMI continue through the year. GDP growth is forecast at 6.5% in 2025,
similar to 2024, led by fixed investment in manufacturing and public
Nov 24 Dec 24 Jan 25 infrastructure. Private consumption growth should remain strong at 6%,
with inflation forecast to ease to the target of 4%. Risks to India’s growth
56.5 56.4 57.1
lie in the global geopolitical climate and in higher commodity prices.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
6.5% 6.5%(f) 4.4% 4.1%(f) -4.8% 7.1%(f) 3.5% 4.4%(f) US $64

The Trump administration has used tariffs as a real threat against any
country that doesn’t toe their current policy line; India is no exception. India
has been criticized by the U.S. administration for its protectionist policies
with regard to foreign trade. The 2025 Indian Union Budget is viewed by
some as an oppportunity for India to address concerns relevant to its
foreign trade interests.

The “Made in India” initiative that began in 2014 with the Modi government,
was part of a plan to build India into a more advanced economy. Favoring
Indian made products in the domestic economy is a key part of this
initiative, which the current Indian government will address if the India/U.S.
trade war heats up. The likelihood is that India will remove duty exemptions
on many imported products, with the goal of further boosting domestic
manufacturing and reducing reliance on imports from China.

Since the pre-pandemic US/China

trade war, India was a major
beneficiary of manufacturing that
shifted out of China. Today 17% of
India’s exports go to the U.S.,
making the U.S. a top trading
partner, on par with China. For the
U.S., India is its 10th largest trading
partner. This imbalance puts India
at risk if a U.S./India trade war
heats up. In 2025 India will look to
mitigate the risk of reliance on a
volatile partnership with the U.S.
That will likely mean a bigger
relationship with China.

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Retail Sourcing Report I 2025 Indicators

Sri Lanka Economic Indicators and Projections for 2025

Manufacturing PMI The manufacturing outlook for Sri Lanka is optimistic for the first part of
2025, with improved business conditions expected to bring employment
Nov 24 Dec 24 Jan 25 and material purchasing increases. This year, Sri Lanka is planning to expand
its free trade agreement network and simplify its import duty structure to
53.3 57.2 59.0 help small businesses access raw material materials more easily.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
5.0% 3.5%(f) 2.9% 5.0%(f) 4.7% 3.9%(f) 4.3% 3.6%(f) US $53

Pakistan Economic Indicators and Projections for 2025

Manufacturing conditions in Pakistan showed robust signs of recovery in
Manufacturing PMI early 2025, with businesses confident that production will continue to
expand through the year. Companies expect growth in export orders to
Nov 24 Dec 24 Jan 25
continue and have increased hiring and buying to meet production needs.
n/a 55.6 55.4 Raw material price increases led to higher consumer prices, with overall
confidence optimistic, even with potential tariffs.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.5% 3.0%(f) 23.4% 9.5%(f) 5.7% 7.9%(f) 26.5% 4.7%(f) US $114

Source: Pakistan Ministry of Finance, IMF, Economist Intelligence Unit

Bangladesh Economic Indicators and Projections for 2025

Bangladesh is expected to see a sluggish economy in 2025 with high
Manufacturing PMI
inflation and persistent financial sector challenges. The IMF noted “the
Nov 24 Dec 24 Jan 25 outlook remains highly uncertain, with risks skewed to the downside.” The
World Bank noted that growth in recent years has not generated enough
62.2 61.7 65.7 jobs, especially for women, youth, and educated people.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
5.2% 3.8%(f) 9.7% 10.7%(f) -12.2% 10.5%(f) -7.6% 8.6%(f) US $73

Sources: Bangladesh PMI, World Bank

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Retail Sourcing Report I 2025 Indicators

SOUTHEAST ASIA
Cambodia Economic Indicators and Projections for 2025
The National Bank of Cambodia forecast that the country will achieve
Manufacturing PMI economic growth of 6.2% in 2025, with inflation staying moderate at
2.6%. This growth, higher than the World Bank’s forecast of 5.5% GDP
Nov 24 Dec 24 Jan 25 growth, is expected to be driven primarily by garment exports and non-
n/a n/a n/a
garment products, along with tourism and agriculture. Risks lie in U.S.
protectionism policies and geopolitical uncertainty.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.1% 6.2%(f) 0.7% 2.6%(f) 10.2% 7.9%(f) 4.6% 5.8%(f) US $204

Indonesia Economic Indicators and Projections for 2025

Indonesia’s manufacturing sector had a solid start to 2025, with
Manufacturing PMI production demand expected to continue through the year. Robust
domestic consumption is forecast to drive a big part of the 5.2% GDP
Nov 24 Dec 24 Jan 25
growth in 2025, supported by low inflation of 2.5%, similar to 2024
49.6 51.2 51.9 levels. Some risk lies in Indonesia’s dependence on Chinese
commodities and the choppy geopolitical climate.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
5.1% 5.2%(f) 2.5% 2.5%(f) 8.8% 10.7%(f) 0.3% 5.5%(f) US $130-$325

Malaysia Economic Indicators and Projections for 2025

With a slowdown in manufacturing conditions, Malaysian companies
Manufacturing PMI cut selling prices in early 2025 for the first time since June 2023.
Overall, though, optimism prevailed for 2025 that demand will improve,
Nov 24 Dec 24 Jan 25 with GDP forecast to grow by around 5% and inflation to moderate to
2.5%. Domestic demand is expected to be the primary growth driver in
49.2 48.7 48.6
2025, along with a healthy increase in exports.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
5.7% 5.1%(f) 2.8% 2.5%(f) 4.9% 4.0%(f) 4.9% 3.6%(f) US $318

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 15

Retail Sourcing Report I 2025 Indicators

Myanmar Economic Indicators and Projections for 2025

Myanmar started 2025 with a decline in their manufacturing sector,
Manufacturing PMI characterized by supply chain issues and inflated costs coupled with
ongoing political instability. Companies kept lean inventories driven by
Nov 24 Dec 24 Jan 25 both material shortages, transportation challenges and unpredictable
demand. Myanmar’s GDP contracted by 9% from 2020 to 2024, with
49.8 50.4 47.4
inflation forecast to stay in the high double digits in 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.1% 0.9%(f) 22% 14.2%(f) -4.4% 4.4%(f) -6.7% -0.3%(f) US $48

Philippines Economic Indicators and Projections for 2025

Manufacturing in the Philippines continued to expand in early 2025,
Manufacturing PMI driven by domestic and export demand. While supply chains remained
under pressure due to transportation issues, companies built up pre-
Nov 24 Dec 24 Jan 25
and post-production inventories to high levels. The Philippines is
53.8 54.3 52.3 expected to dodge the impact of U.S. tariffs in 2025 because of their
low export to GDP ratio and their status as a strong U.S. ally.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
5.8% 6.1%(f) 3.3% 3.0%(f) 4.8% 10.6%(f) -4.2% 4.9%(f) US $128-$299

Thailand Economic Indicators and Projections for 2025

Manufacturing PMI Thailand saw a slower start to their manufacturing in early 2025, with
declines in new orders, higher backlogs, and a continued freeze in
Nov 24 Dec 24 Jan 25 hiring. Businesses are optimistic that the economy will improve through
the year, which matches with forecasts for GDP to increase to close to
50.2 51.4 49.6 3% in 2025, driven partly by domestic consumption and low inflation.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.7% 3.1%(f) 0.5% 1.2%(f) 3.8% 3.9%(f) 1.6% 1.9%(f) US $207

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 16

Retail Sourcing Report I 2025 Indicators

Vietnam Economic Indicators and Projections for 2025

Vietnamese manufacturing saw a disappointing start to 2025, with subdued
Manufacturing PMI
demand and declines in new orders and output. There was some respite in
Nov 24 Dec 24 Jan 25
inflation, enabling companies to reduce selling prices. Exports are expected
to still be robust in 2025, growing by more than 16%, with key markets still
50.8 49.8 48.9 China and the U.S. Some risk lies in the potential impact of U.S. tariffs, given
the large volumes of Chinese production that has shifted to Vietnam.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
6.9% 6.5%(f) 4.1% 3.5%(f) 17.6% 16.5%(f) 16.4% 16.1%(f) US $140-$202

In 2024, the U.S. was Vietnam’s second largest trading partner after China and also the biggest destination
for Vietnamese exports. Given the country has a trade surplus with the U.S., it could be impacted by
threatened U.S. tariffs. On the plus side, one consultant notes that Vietnam could mitigate the impact of
tariffs by making a deal to increase American imports and make it easier for American companies to do
business in Vietnam. As the charts below indicate, 2024 was a record year for FDI in Vietnam.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 17

Retail Sourcing Report I 2025 Indicators

SOUTH AMERICA
Brazil Economic Indicators and Projections for 2025
Brazil saw fractional growth in their manufacturing sector in early 2025,
Manufacturing PMI with most indicators suggesting it will be a year of challenges. While
inflation is forecast to decline to 3.6%, Brazil’s overall economic growth is
Nov 24 Dec 24 Jan 25
also expected to fall to just over 2%. With ongoing cost pressures and
52.3 50.4 50.7 declining demand, businesses drew off existing inventories, cutting back
on purchasing. Companies also held back on permanent hiring.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
3.7% 2.2%(f) 4.3% 3.6%(f) 2.5% 0.7%(f) 2.5% 4.5%(f) USD $259

Latin America’s 2025 Outlook

For their 2025 overview of the Latin American
region, the Americas Quarterly spoke to two
dozen influential political and business
leaders. The findings indicated higher
concerns with regional giants Brazil and
Mexico, with optimism for the outlook of
smaller countries such as Dominican Republic,
El Salvador and Uruguay.

Much of the concern for the economic

outlook in 2025 lies in uncertainty over the
impact of the trade policies being
implemented by the new U.S. administration.
Mexico is clearly in Trump’s cross hairs, so the
concern makes sense. Source: America’s Quarterly

Colombia Economic Indicators and Projections for 2025

Colombia’s manufacturing sector showed strength in early 2025,
Manufacturing PMI especially relative to most of 2024. However, the expectation for the rest
of 2025 is less optimistic. Inflation is forecast to ease to around 4.5% from
Nov 24 Dec 24 Jan 25
6.7%, but Real GDP growth is expected to decline to below 1%. Lower
53.4 49.9 53.8
demand, high input costs and supply issues will likely continue to impact
Colombia’s manufacturing sector in 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
1.1% 0.9%(f) 6.7% 4.5%(f) -1.5% 1.7%(f) -5.4% -1.5%(f) USD $204

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 18

Retail Sourcing Report I 2025 Indicators

AFRICA
Nigeria Economic Indicators and Projections for 2025

Nigeria’s private sector saw growth in early 2025, with expansion in

Manufacturing PMI
employment, purchasing and inventories, despite higher input costs and
Nov 24 Dec 24 Jan 25 output prices. The overall economy is expected to see moderate growth,
but inflation is still a concern, forecast to reach 25% in 2025, moderating
48.9 52.7 52.0 slightly from 32.5% in 2024. The removal of fuel subsidies and the
liberalization of the foreign exchange markets are also concerns for 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
3.1% 3.2%(f) 32.5% 25.0%(f) 5.2% -1.2%(f) -6.8% 4.0%(f) USD $76

Egypt Economic Indicators and Projections for 2025

Egypt’s manufacturing sector saw modest growth in early 2025,
Manufacturing PMI signalling optimism for the year. Inflation, while still in the double digits, is
expected to moderate to around 21% in 2025. Overall, the Egyptian
Nov 24 Dec 24 Jan 25
economy is expected to see growth of between 3.5-4%. Ongoing conflict
49.2 48.1 50.7 in the Middle East and an unsteady global trade climate still poses a risk
to business conditions at least for the first half of 2025.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
2.4% 3.6%(f) 33.3% 21.2%(f) 9.2% 5.1%(f) -15.9% 11.2%(f) USD $125

South Africa Economic Indicators and Projections for 2025

South African business conditions deteriorated in early 2025, with a
Manufacturing PMI sharp drop in demand, affecting the first quarter. While inflation
moderated, tighter economic conditions and unpredictability over USD
Nov 24 Dec 24 Jan 25
exchange rates and the policies of the Trump administration made for
48.1 49.9 47.4 economic uncertainty for the first half of 2025. Suppliers took advantage
of lower input prices and lower demand to overcome order backlogs.

Real GDP Growth Inflation Imports Exports Min. Wage/

2024 2025 2024 2025 2024 2025 2024 2025 Month
0.8% 1.5%(f) 4.7% 4.5%(f) -3.5% 3.7%(f) -1.5% 2.8%(f) USD $225

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 19

Retail Sourcing Report I 2025 Indicators

Container Freight Rates and Trends

2024 was a challenging year for container shipping, with the need to avoid the Red Sea resulting in
reduced container capacity and longer travel times, along with port strikes and an uncertain economy.
These challenges carried into 2025, with the addition of the U.S. presidential election affecting rates and
creating unknowns for freight spend. Container shipping rates on major trade lanes picked up
significantly in Q1 of 2025, after declining through Q4 of 2024, as many companies front-loaded
shipments ahead of potential tariffs.

02of the biggest risks for container freight prices in 2025 is the escalating tariff wars and geopolitical
One
uncertainty. Drewry has forecast year-on-year global capacity growth of 4.9% in 2025. Despite the
shipping industry adding capacity, the continuing need to avoid the Red Sea and tariff uncertainty will
keep rates high. If the Middle East situation is resolved, rates could see a drop. Another factor to
consider is the introduction of new shipping alliances in Q1 - such as the Gemini Cooperation and
MSC’s new network, which are expected to affect capacity, service arrangements and rates.

“The threat of these tariff increases continues to impact global trade both by accelerating the
shift of U.S. sourcing away from targeted countries like China, and by pushing shippers to pull
forward orders from those that could face tariff hikes soon, including Mexico.”
Judah Levine, head of research, Freightos

Weekly Annual
Route Route code 30-Jan-25 06-Feb-25 13-Feb-25
change (%) change (%)

Composite Index WCI-COMPOSITE $3,364 $3,273 $3,095 -5% -17%

Shanghai - Rotterdam WCI-SHA-RTM $3,274 $3,125 $2,887 -8% -33%

Rotterdam - Shanghai WCI-RTM-SHA $518 $498 $496 0% -48%

Shanghai - Genoa WCI-SHA-GOA $4,400 $4,236 $4,163 -2% -20%

Shanghai - Los Angeles WCI-SHA-LAX $4,771 $4,717 $4,392 -7% -8%

Los Angeles - Shanghai WCI-LAX-SHA $721 $707 $703 -1% -1%

Shanghai - New York WCI-SHA-NYC $6,288 $6,212 $5,874 -5% -5%

New York - Rotterdam WCI-NYC-RTM $839 $833 $832 0% 34%

02 - New York
Rotterdam WCI-RTM-NYC $2,732 $2,469 $2,463 0% 13%

Sources: Xeneta, Drewry, Freightos, Journal of Commerce, News and Analyst Reports

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 20

Retail Sourcing Report I 2025 Indicators

Asia to Northern Europe Shipping Lanes

Uncertainty loomed over Asia-North Europe shipping routes, given factors such as whether Red Sea
routes would resume. Many analysts predict that shipping will resume in the Red Sea sometime in the
second half of 2025. According to rate benchmarking platform, Xeneta, carriers offered large discounts
to shippers on Asia-North Europe trade lanes who are willing to sign contracts longer than six months.
Rates on Asia-North Europe fell by almost 50% since the beginning of January. The market for rates on
the European route is expected to decline for at least the first half of 2025. A recessionary climate in
Europe and the threat of more tariffs on European products is also a concern. Trump has threatened
tariffs on around $600 billion of goods imported from European Union countries.
02

Asia to North America Shipping Lanes

Robust demand, along with fears over additional tariffs on China continue to drive container shipping
rates higher on trans-Pacific trade routes. We are likely to also see fluctuations in container traffic as
shippers continue to diversify their supply base in reaction to the geopolitical climate. Global Port
Tracker forecasts strong demand on the Asia to U.S. West coast trade lanes for 2025. Rates on the trans-
Pacific
02 route for a 40-foot container went from around $4,000 per container in December 2024, to
$6,000 in early January (50% increase), while rates to the East coast increased by around 30%.

Sources: Xeneta, Drewry, Freightos, Journal of Commerce, News and Analyst Reports

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 21

Retail Sourcing Report I 2025 Indicators

Trading Currency Rates and Trends

2025 Overview & Forecast: The following are exchange rates and indicators for major trading
currencies commonly factored into global sourcing decisions.

Tariffs are probably the biggest factor impacting international trade and global sourcing in 2025. The
impact of U.S. trade policy began to be felt soon after the U.S. election, which saw immediate
weakening in the Chinese yuan and the euro. On the plus side from a global sourcing perspective, a
weaker yuan helps Chinese exports remain competitive, similarly for other major exporters to the U.S.
which the Trump administration has targeted with tariffs. Both Mexico and Canada’s currency have
depreciated considerably against the dollar from Q4, 2024 to Q1, 2025. We can expect more of the
same tension, posturing and volatility for the remainder of 2025, with currency trends likely to
continue on the same course they have in late 2024 and early 2025.

EURO/USD (February 2024 - February 2025)

The U.S. Federal Reserve made several 25-basis point (bps) rate
EUR/USD 2-year 1-Year 1-Month
cuts in late 2024, lowering interest rates to 4.25%. These rate cuts,
along with easing inflation rates and worries over a potential U.S. Low 1.02 1.02 1.02
recession have kept the dollar from appreciating further. Opinions
High 1.12 1.12 1.05
differ, but stronger than expected growth in the U.S. economy,
aggressive trade tactics and a weak Eurozone economy could
bolster the dollar through 2025.

Cost of 1 euro over past year in dollars: Low $1.02 / High $1:12

Sources: XE.com, IMF, News & Analyst Reports

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 22

Retail Sourcing Report I 2025 Indicators

EURO/CNY (February 2024 - February 2025)

China’s yuan currency has weakened since Trump’s re-election and EUR/CNY 2-year 1-Year 1-Month
the forecast escalation in the U.S./China trade war, which is likely to
continue unless the U.S. economy falters. Further depreciation in
Low 7.30 7.40 7.40
the yuan is more likely through 2025, which Beijing is expected to High 8.08 7.98 7.63
tolerate to support exports. With ongoing weakness in European
economies, the euro is likely to continue the trend of depreciation.

Cost of 1 euro over past year in yuan: Low ¥7.40 / High ¥7.98

USD/CNY (February 2024 - February 2025)

Uncertainty over tariffs in general and additional 10% tariffs on USD/CNY 2-year 1-Year 1-Month
Chinese imports to the U.S. have made for volatility in the USD/CNY
currency pairing. As of Q1, the dollar has seen some appreciation
Low 6.81 7.01 7.24
since Q4 2024, from a one-year low in September 2024 to a one- High 7.34 7.33 7.31
year high in January. Retaliatory tariffs from China on U.S. imports
will add to the fluctuation and volatility in USD/CNY exchange rates.

Cost of 1 dollar over past year in yuan: Low ¥7.01 / High ¥7.33

Sources: XE.com, MTFX, News & Analyst Reports

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 23

Retail Sourcing Report I 2025 Indicators

Commodity Rates and Trends

2025 Indicators and Forecast: Giving rising geopolitical tension, softening inflation and declining
interest rates, prices and demand for most commodities used in production, are expected to remain flat
in 2025. Except for certain emerging economies, global economic growth is expected to still be
subdued this year, with the ongoing strength in the U.S. dollar making it more expensive for international
buyers purchasing commodities in USD.

Crude Oil

The U.S. Energy Information Administration (EIA) forecasts a reduction in demand will contribute to
declining oil prices by the end of 2025. Global oil inventories are expected to increase in the latter half
of 2025 and into 2026, which should push prices down. Brent crude oil prices are forecast to average
$74/bbl in 2025 and $66/bbl in 2026, compared to $80/bbl in 2024.

OPEC+ production cuts should reduce oil inventories and sustain prices in the first half of 2025.
Production growth outside of OPEC should remain strong, with global production of petroleum and
other fuels forecast to increase by two million barrels/day in 2025. Growth in oil consumption is
expected to come from emerging markets such as India as opposed to advanced economies.
Consumption in OECD countries is forecast to decline by two hundred thousand barrels/day in 2025
due to weaker industrial production and manufacturing growth in the U.S. and Canada.

For almost 30 years, China accounted for half of all oil growth, but some analysts suggest China’s
oil demand has peaked and will fall by 25-40% over the next decade. In 2024, China’s crude oil
imports fell by 1.9%, the first annual decline in 20 years (aside from the pandemic). China’s EV
boom is also a factor in declining demand. Demand from India is now larger than China, with
India less focused on clean energy.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 24

Retail Sourcing Report I 2025 Indicators

Metals
Forecasts for metal commodity prices in 2025 are still mixed. Some metals such as gold and aluminum are
expected to increase in price due to higher demand along with supply constraints. Gold, as a traditional
safe haven investment is likely to continue to gain value due to ongoing economic volatility. Other metals
used in production, such as iron ore and zinc are likely to see flat demand or see price declines based on
a sluggish global economy, potential oversupply, and sustained strength in the U.S. dollar.

Some unknowns include ongoing geopolitical and trade tensions, with the impact of tariffs on metal
imports and exports. Demand from China is also unknown, with continued weakness in the property
sector. Additional stimulus measures from Beijing could drive increased demands for metals in China.

Rubber
Natural rubber prices are forecast to trend moderately downward in 2025, with analysts predicting a
slight decline from current prices to around the 190 cents/kilogram mark, based on a loosening of
supply constraints and stabilization in markets. Prices reached highs through 2022-2024 due to supply
shortages and adverse production conditions in key rubber producing countries but have since
entered a period of sustained stability. Strong demand from consumers in China is expected to
continue, but this could be offset by a global economic slowdown and the ongoing geopolitical
tension. Increased production of synthetic rubber is an added pressure on natural rubber prices.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 25

Retail Sourcing Report I 2025 Indicators

Cotton
Cotton prices hovered around 70 cents per pound in Q1 of 2025 but are expected to decline to around
sixty cents/pound by the end of the year, based on weaker demand and declining production. In 2025
we are seeing a trend of China producing more cotton and in turn importing less, pushing it behind
Bangladesh and Vietnam as the largest cotton import destinations. Brazil has grown into one of the
largest cotton exporters, followed by the U.S. and Australia, partly due to Brazil’s tropical climate, which
allows it to produce two cotton crops in one growing year.

Most forecasts are bearish on the prospects for cotton in 2025, including Asian textile mills which are
projecting a work slowdown due to a shortage of new business and high levels of unsold inventory. We
could also see some volatility in supply/demand due to escalating trade disputes and the
macroeconomic environment.

World Cotton Production Recent Price Data

Million 480 lb Bales 2024/2025 Latest Latest Last 12
Value Month Months
Country ‘23/’24 Jan Feb Feb ‘24 -
Cent/lb Feb 11 Jan Jan ‘25
China 27.4 30.0 31.0 NY Nearby 67.4 67.5 75.6
India 25.4 25.0 25.0

Brazil 14.6 16.7 16.7 A Index 77.1 78.2 85.5

United States 12.1 16.0 16.0 CC Index 92.0 91.3 99.6
Australia 5.0 5.4 5.4
Rest of World 28.6 27.7 27.6 Indian Spot 78.1 79.5 86.7
World 113.0 119.4 120.5 Pakistani Spot 76.2 79.4 82.8

World Cotton Exports World Cotton Imports

Million 480 lb Bales 2024/2025 Million 480 lb Bales 2024/2025

Country ‘23/’24 Jan Feb Country ‘23/’24 Jan Feb

Brazil 12.3 12.8 12.8 Bangladesh 7.6 7.8 8.0

United States 11.8 11.0 11.0 Vietnam 6.6 7.1 7.4

Australia 5.7 5.5 5.5 China 15.0 8.0 7.3

India 2.3 1.4 1.4 Pakistan 3.2 4.8 5.0

Benin 1.1 1.2 1.2 Turkey 3.6 4.2 4.2

Rest of World 11.4 10.6 10.6 Rest of World 8.1 10.6 10.6

World 44.6 42.5 42.5 World 44.0 42.5 42.5

Commodity Section Sources: World Bank Commodity Markets, Oil Price.com, Indian Rubber Board, Daily Metal Price,
Bloomberg, Cotton Inc., Cotton Grower, ICAC, Home Textiles Today, News and Analyst Reports

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 26

Retail Sourcing Report I 2025 Indicators

Strategies to Navigate Global

Trade Uncertainty in 2025

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 27

Retail Sourcing Report I 2025 Indicators

Focus Topic: Strategies to Navigate Global

Trade Uncertainty in 2025
While 2024 had its share of supply chain disruptions, ranging from the Red Sea shipping crisis to port
strikes and geopolitical uncertainty, the biggest disruptor in 2025 is trade tariffs. In a White House fact
sheet, the Trump administration outlines what it calls the Fair and Reciprocal Plan. Whether or not this
plan is fair or will achieve its goals remains to be seen. The reality is that a range of protective and
reciprocal tariffs are set to take effect. If they have not already, retailers and brands need to prepare
themselves to navigate a volatile supply chain landscape in 2025. Following are a few strategies to
consider in managing through a year of volatility.

A recent report by RELEX, based on a survey of 579 retail, consumer packaged goods (CPG), and
wholesale professionals across multiple countries, found that as tariffs loom and market volatility rises,
60% of companies are overhauling their supply chains. Most companies are investing in
diversification, automation, and supply chain resilience in response to complex global trade relations.

The U.S. has targeted key trading partners with which it runs trade deficits. The largest deficits
are with China (-$252 billion) and Mexico (-$162 billion). The deficit with Canada is much smaller
(-$41 billion) which puts a question mark on the threat of 25% tariffs on Canadian imports.

Canada Mexico China Germany

500 45
54 20
400 86
44
300
485
200 427 428
355 323 47 46
100
149 160 42
77
0
-41
-100 -87
-162
-200
-252
-300
Canada Mexico China Germany
Goods imports Services imports U.S. Net trade deficit Goods exports Services exports Source: CFIB

Strategy 1: Optimize cost structures

In this climate of tariff volatility, companies need to take a proactive approach to cost management. A
study by the National Bureau of Economic Research looked at the impact of the 2018 U.S. tariffs on
washing machines across sourcing countries. It found that prices rose by around 12% across countries,
including for the U.S. produced washing machines (and dryers). The tariffs resulted in the creation of
1,800 domestic jobs, but the higher product prices cost consumers $1.5 billion more.

Consumer product businesses can counter the impact of tariffs by ensuring they have fully diversified
their supply chains, are running efficiently and have weighed whether passing costs onto consumers
makes sense. They can adjust prices across products, transfer costs to consumers where brand loyalty
is strong and also use hedging strategies to protect against currency and commodity price fluctuations.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 28

Retail Sourcing Report I 2025 Indicators

Strategy 2: Leverage advanced technology

While still in a nascent stage, the integration of artificial intelligence (AI) and predictive analytics is
readying to be a game changer for supply chain operations. These technologies promise to proactively
help companies predict demand fluctuations, forecast potential disruptions, and optimize procurement
processes in real-time. AI is expected to bring efficiency improvement across most of the supply chain.
We cover this topic in great detail in our recent Retail Sourcing Report: 2025 Supply Chain Trends.

Walmart used predictive analytics to forecast inventory needs and reduce delivery
times by up to 20%. Integrating AI helped Walmart streamline their operations and
reduce inventory costs, for savings of $18 billion in one year. One study highlighted
how AI-driven analytics could save the retail sector $300 billion annually. Advanced
technologies help businesses respond swiftly to market changes, improve overall
efficiency, and reduce costs, ensuring a resilient and agile supply chain and value
addition in dynamic trade environments. Upskilling employees to work alongside
advanced technologies maximizes their potential.

“The outdated and traditional way of operating isn't sustainable. Companies that lean into AI,
automation, and supplier diversification will not only weather this volatility but emerge
stronger. The ones that don’t, risk falling behind."
- Dr. Madhav Durbha, Group Vice President of CPG & Manufacturing at RELEX Solutions

Strategy 3: Broaden sourcing networks

Diversifying the supply base is not a new concept for most companies who have mature global sourcing
programs. Retailers and brands have learned hard lessons in recent years from relying too much on
Chinese or other single country suppliers. Increased trade tension and a climate of aggressive tariffs has
further made the case for supplier diversification. As highlighted by GEP, diversifying supplier bases is
key to enhancing supply chain resilience while reducing dependency risks.

Chinese suppliers are already well established in countries such as India, Vietnam, Malaysia and even
Africa. Eastern Europe and Latin America have also grown in recent years as alternative or
complementary sourcing destinations to mitigate risk. A priority for companies is finding a way to ensure
supply chain continuity, establishing long-term agreements with competitive pricing, and further
stabilize cost structures. Smart companies are also leveraging the available support from within supply
chain networks, using third-party logistics providers to streamline diversification.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 29

Retail Sourcing Report I 2025 Indicators

Strategy 4: Bolster supplier partnerships

Strong supplier relationships are an essential part of a contingency plan for navigating trade
uncertainties. Engaging in collaborative planning, risk-sharing arrangements, and diversified sourcing
strategies can foster a more resilient supply network. Openly sharing sustainability initiatives and
performance metrics with stakeholders is also key to building trust and differentiation. Robust reporting
practices reinforce credibility while ensuring adherence to emerging regulatory standards.

A study by PwC found that companies with deeply integrated supplier partnerships are 20% more likely
to maintain stable operations during periods of market volatility. Such strategic alliances facilitate rapid
adaptation to unforeseen challenges while ensuring continuity in supply. Diversifying supplier
partnerships also reduces localized supply chain risks.

Diversification is still the most

popular risk mitigation strategy

Despite political pressure for

companies to bring production
back onshore or to friendly trading
partners, the majority of businesses
(46%) surveyed by The Economist
still prefer diversification.

Strategy 5: Embrace nearshoring and onshoring

The case for nearshoring and ionshoring has grown in recent years, driven by higher costs and supply
chain disruptions such as the pandemic and geopolitical conflicts. Companies can gain greater control
over their supply chains, allowing them to further streamline operations and respond quickly to shifting
trade policies. While the argument for U.S. companies to nearshore to Mexico is more difficult in the face
of 25% tariffs, it should still be considered in a company’s global sourcing strategy.

Nearshoring, and onshoring, may not always be the best solution option, but can yield benefits such as
shorter lead times, faster response to consumer demand, reduced transportation costs, and improved
regulatory compliance. Companies also gain the flexibility to find alternate sources for components and
materials within their own region and can more easily customize products to suit local preferences.

A resilient supply chain

Amid escalating trade complexities and unpredictable global markets, building resilient supply chains
requires a multifaceted, data-driven approach. By broadening sourcing networks, embracing localized
production, optimizing cost structures, using advanced technologies, and nurturing robust supplier
relationships, companies can not only mitigate trade risks but also position themselves for sustainable
long-term growth.

© 1995-2025 Copyright by TradeBeyond. All rights reserved. 30

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Retail's leading extended supply chain management solution provider, TradeBeyond, helps
brands and retailers streamline product development and sourcing all the way through order,
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