Tariffs on Chinese goods reached an average effective rate of 7.7 percent in 2025, the highest level since 1947, according to the Tax Foundation. For American companies that source from overseas, particularly from lower-cost manufacturing hubs in Asia, that figure signals a seismic shift in cost structure. Most executives feel the pressure. Fewer had a coherent plan to address the disruption.
Michael Polk has been here before. The former CEO of Newell Brands, who spent nearly four decades managing large consumer goods portfolios at companies including Unilever and Kraft Foods, now works in Private Equity, leading Implus LLC, a roughly $350 million active lifestyle accessories company. Polk’s 19-brand fitness and active lifestyle accessories company depends heavily on overseas sourcing, and he has seen tariff exposure compound in real time over the last year.
“Businesses are usually successful if they adapt well to change. This is a core capability of some of the best businesses I have worked on. The approach the US government has taken to change its trade policy has made this period of time quite challenging. Policy changes have occurred frequently — that kind of unpredictability and volatility can make the right choices you’ve made in the business wrong the very next week or month,” Polk said.
That observation gets at a problem specific to the current trade environment. The challenge for companies is not purely the cost of tariffs. Unpredictability is the deeper issue. With the benefit of time and consistency, businesses can adapt to a 25 percent tariff on low-cost country imports through a combination of cost concessions from sourcing partners, price increases, and country of origin changes. They struggle to plan for a policy environment where rates fluctuate by double digits month-to-month.
Why Dual Sourcing Has Become Structural, Not Optional
For companies that import goods, the instinct during trade volatility is often to react immediately: find new suppliers, reroute logistics, absorb cost increases, or in some cases increase price. In this more unpredictable environment, Polk argues that moving too quickly can compound the challenge, creating new problems and costs.
“You have to be careful not to churn the organization with your response because that can lead to inefficiencies, that can lead to a lack of understanding within your company about why you’re making the choices you are making,” he said.
“The companies that will weather this environment best are those that build sourcing flexibility into their operating model. Dual sourcing across geographies and, in some cases, sourcing partners gives you options. A single-source model gives you exposure.”
His argument is structural. A business relying on a single country or supplier for a core product category carries concentrated risk. When tariff policy shifts, that company has few levers and limited time. A business with active supplier relationships across multiple geographies (Vietnam, India, Mexico, domestic manufacturers) can redirect volume. That doesn’t eliminate cost pressure. It makes the cost pressure manageable and keeps leaders in control of their choices.
The Tax Foundation estimates that the 2025 tariff changes cost the average US household approximately $700 annually. For companies, the arithmetic is more complex but the direction is identical: margins compress unless costs can be offset through pricing, efficiency, or sourcing alternatives.
Acting on Facts, Not Speculation
When the tariff environment turned volatile in April 2025, Polk’s advice to his team was deliberate. “I asked everybody to ‘just focus on the facts and not the various narratives’ you would read and hear about daily.,'” he recalled. “You don’t want to over-rotate in times like this.”
That posture reflects a broader philosophy. Polk describes it as the difference between acting on what you know versus what people are speculating about.
“There’s as much opportunity in windows of volatility as there’s risk. You mortgage your ability to capture the opportunity if you are too deliberate. Speed does matter, but your scope of response has to fit the facts.”
Most supply chain restructurings take 12 to 24 months to execute, including new supplier qualification, product testing, regulatory compliance, and logistics reconfiguration. Companies that began those processes before the tariff disruption have ended up with choices that others do not have.
For American businesses still weighing whether to diversify their sourcing, the question isn’t whether tariff policy will shift again. It will. In fact, there will be another round of volatility at the end of July 2026 when the current temporary tariff program expires, and new tariffs most likely will be imposed. The relevant question for most companies will be whether their supply chains have been built to absorb that shift or built to be disrupted by it.
Michael Polk’s answer is that the most effective hedge in that moment will be supply chain flexibility. The math on tariff exposure makes that case difficult to argue against.
