Firms are scrambling to root themselves in resilient supply chains, bracing for shocks ahead as US President Donald Trump’s unpredictable imposition of tariffs and new sanctions upend global trade, according to a DP World-supported Economist Impact Trade in Transition 2025 report (pdf) that surveyed over 3.5k senior executives from six industries from across the world.

Friendshoring is standing out as one of the most desired strategies for combatting geopolitical risks, with some 34% of respondents saying their businesses are adopting the policy. Almost 46% of firms are diversifying their business geographically by accessing new markets to defend themselves against disruptions, while 42% have chosen to localise supply chains to cap transport costs and advance oversight.

SOUND SMART- Friendshoring is when companies relocate their production to politically aligned nations to cap geopolitical risks to trade. Western governments — especially the US — have pushed firms towards friendlier market places through export controls, sanctions, and tariffs.

Diversification is also popular: Some 43% of respondents stressed the importance of diversifying regions and suppliers. An overwhelming 75% of firms are currently diversifying their supplier roster to secure greater flexibility when potential shocks arise.

And dual supply chains are on the horizon, with Western firms opting to operate two parallel supply chains — one linked to China and another entirely independent — in a bid to hedge against long-term trade wars. The move aims to maintain access to China’s market and manufacturing capabilities while avoiding geopolitical risks. Around 32% of global companies are integrating dual supply chains to mitigate region-specific risks, the report estimates.

On the flip side, Chinese firms are developing parallel supply chains to sidestep Western trade restrictions and secure market access, while simultaneously boosting domestic operations. Several Chinese companies have already shifted production to Southeast Asian countries including Vietnam, Thailand, and Malaysia to avoid the tariffs.

More firms are shifting away from stockpiling goods, with only 20% believing that developing inventories is the best form of resilience. Some companies dropped their inventory buffers to 8.6 weeks last year, down from 10.2 in 2022.

Non-aligned nations including the UAE, Mexico, and Vietnam, stand to benefit as they emerge as supply chain safe zones, with 71% of those surveyed stressing that these countries can help businesses manage risks by serving as politically palatable and insulated trade partners. Nearly 69% of respondents believe that neutral countries act as go-betweens and fill supply gaps caused by trade conflicts between geopolitical blocs.

But it’s not all blue skies ahead: Over 63% of businesses are concerned that regulatory inconsistencies could undermine the capacity for neutral states to act as reliable middle grounds, leaving them hesitant to bolster trade with non-aligned nations.

REMEMBER- The EU and Mexico reached a political agreement last week to expand their 25-year-old trade accord after nine years of stalled negotiations. The agreement — pushed forward by the looming threat of US tariffs with Trump’s inauguration — will reduce barriers for EU companies wishing to operate in Mexico and remove or lower barriers on new sectors, such as services and agricultural products.

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