What: Global trade policy shifts are compelling retailers to revolutionise their operations through technology adoption, focusing on AI-driven solutions for cost management and supply chain resilience.

Why it is important: The scale of trade policy changes, affecting 44% of US imports, demands unprecedented operational adaptation, making technological innovation no longer optional but essential for maintaining competitive advantage in global retail.

The retail industry faces a transformative challenge as new tariffs threaten to disrupt established supply chains and operational models. Advanced supply chain solutions are emerging as critical tools, enabling retailers to rapidly integrate enterprise-wide data and assess country-specific risks. Through AI-powered analytics and predictive modeling, companies can now pinpoint high-risk SKUs and proactively adjust their strategies to maintain profitability. The integration of real-time simulation capabilities for multiple tariff scenarios has become a competitive necessity, allowing businesses to analyze duties, evaluate alternative vendors, and automate pricing adjustments swiftly. This technological evolution extends beyond immediate operational concerns, encompassing sophisticated risk management strategies that address both current challenges and future uncertainties. The industry's response demonstrates a clear shift towards data-driven decision-making, with retailers leveraging AI to optimise supply chain efficiency, balance inventory, and ensure product availability despite tariff challenges.

IADS Notes: The retail industry's response to tariff pressures has accelerated significantly in early 2025. As reported in March 2025, retailers are implementing AI-powered analytics for supply chain optimisation, while BCG's projections of USD 640 billion in additional import costs are driving widespread operational changes. February 2025 saw the elimination of the USD 800 de minimis rule, further complicating international trade. Despite these challenges, January 2025 data shows that 87% of early AI adopters achieved significant revenue increases, though only 10% of retailers have successfully scaled their AI applications, highlighting both the potential and challenges of technological adaptation.

Tariff turmoil: How retailers adapt to shifting trade policies