Coupa: Tariffs to Bring Higher Prices and Lower Margins
Coupa, the AI-native spend management specialist, has unveiled in-depth research mapping the impact of tariffs on suppliers, consumers and procurement professionals.
The findings exhibit a climate of heightened uncertainty, where suppliers weigh threats to profit margins and buyers rethink sourcing strategies in response to trade policy changes.
Coupa's report points to widespread consumer concern over price increases, with 88% believing cost hikes will reach them. Simultaneously, 29% of global suppliers identify tariffs as the most serious external risk to profits in 2025.
Ultimately, the data reflects a wider pattern of strategic shifts and pricing pressures throughout supply chains.
Suppliers prepare for impact ahead of peak season
Supply chains have always faced disruption, but tariff unpredictability is placing fresh strain on profit margins. In the US, 42% of suppliers expect tariffs to pose the biggest threat during the busy holiday period later in the year. Of those surveyed, more than two-thirds (69%) expect a fall in revenue this year because of tariffs.
Key consumer sectors are feeling the strain most. For toys and games, three in five suppliers name tariffs as the top threat; in electronics, the figure comes in at 50%. These risks are driving pricing strategies, with 49% of global suppliers saying they plan to raise prices and 46% increasing inventory in response.
Interestingly, in consumer electronics, nearly a third are turning to onshoring – the process of moving production or sourcing back to the home country – to mitigate tariff risks. This shift forms part of a broader strategy aimed at protecting availability and margins during periods of volatility.
Buyers also acknowledge the threat. More than half (55%) anticipate a negative impact from trade policies in 2025, affecting financial performance. With margins under pressure, the industry expects changes to ripple across all points of procurement.
Though no supplier surveyed plans to raise prices above 20%, the reality remains that 56% are forecasting a 5–10% increase. This translates into at least US$300 a month in added household expenses for average consumers. The result is likely to be a reduction in discretionary spending during a time typically marked by higher purchases.
Nari Viswanathan, Senior Director of Supply Chain Strategy at Coupa, says: “Amidst the uncertainty of new and increasing tariffs, businesses that fail to swiftly adapt risk losing their competitive edge and will experience impact to their bottom-line.
"Now is the time for businesses to embrace AI and leverage technology and scenario modelling to fortify supply chain resiliency and safeguard profitability.”
Buyers diversify sourcing and adjust procurement networks
Buyers are re-evaluating sourcing patterns amid global economic pressures.
Coupa finds that three-quarters have increased or intend to increase nearshoring, where production or sourcing is shifted to nearby countries. Onshoring is also on the rise, with 61% either implementing or planning it.
Despite these shifts, 56% of buyers still report increased offshoring, but changes in sourcing regions are clear. Sourcing from China is down (36%), followed by the US (29%) and Germany (23%), pointing to a broader effort to reduce exposure to trade policies.
What buyers want from suppliers is also evolving. The most important factors include proven quality and reliability (60%), stable and competitive pricing (57%) and regulatory compliance (42%).
Prashanth Ravishankar, SVP of Coupa Advantage and Supplier Strategy, adds: “Diversification becomes a crucial strategy for businesses as global uncertainty around trade mounts.
"While taking clear steps to prepare for potential tariff impacts is important, there is also a huge opportunity to drive long-term success by enhancing supplier resiliency and collaboration.”
Consumers alter behaviour amid rising prices
While suppliers and buyers adjust operations, consumers are making their own changes in response to inflation and tariff-induced pricing.
More than half (54%) of consumers say they now seek deals or discounts on essential goods, and a similar share (53%) are cutting back on non-essential spending. Meanwhile, some 67% have shifted where they shop to reduce costs.
The overall picture points to a more cost-conscious consumer base, which procurement professionals must now factor into planning and supplier strategies.
As the pressures of trade policy, logistics and sourcing continue to reshape procurement, the shift towards resilience, agility and cost transparency will remain central.
