## Supply chains are breaking down as companies calculate tariff costs – what US data teaches us

The situation in the US market is becoming increasingly complicated. Although recent inflation readings suggest a slight cooling of price pressures, the reality for the corporate sector looks very different. Footwear manufacturers from **Wolverine Worldwide**, managing brands like **Merrell** and **Saucony**, face a challenge that illustrates deeper tensions in the economy. Through trade tariffs, the company must deal with additional costs of around **$10 million** this year and as much as **$55 million** in **2026**. The response is a restructuring of the global supply chain – production is moving from China (below **10%** of production) to Bangladesh, Cambodia, and Indonesia.

## Tariff uncertainty paralyzes business planning

However, the biggest problem is not the level of import taxes themselves but their unpredictability. As **Christopher Hufnagel**, CEO of Wolverine, explains: “If you know what the bad news is, you can solve it. It’s the lack of transparency – when everything can change overnight – that makes scenario modeling the hardest for us.” This uncertainty forces companies to freeze new investments and hiring, while simultaneously raising product prices by **5%** to **8%**.

## US federal data shows easing, but the picture remains distorted

On the other hand, the US Department of Labor published a report on the **Consumer Price Index** on Thursday, indicating an annual increase of **2.7%** in November – down from September’s **3%**. However, this improvement is distorted by extraordinary circumstances: the report was delayed by eight days due to a **43-day federal government shutdown**, and data for October is missing. Economists, including **Diane Swonk** from KPMG, warn that the numbers may be skewed. Energy prices rose in November by **4.2%**, and core inflation (excluding food and energy) was **2.6%** – the lowest reading since March **2021** – but even this result requires cautious interpretation.

## Trade pressures complicate monetary policy decisions

The current situation presents a dilemma for the **Federal Reserve**. The central bank must decide whether to continue cutting interest rates to support the labor market or wait for further inflation easing. Last week, the Fed made its third rate cut this year but signals only one more cut in **2026**. The decision will largely depend on the December CPI report, which will be released in mid-January – just two weeks before the next policy committee meeting. This timing convergence means that December data could be pivotal for the trajectory of interest rates at the start of the year.

## Consumers are increasingly cutting back on spending

Meanwhile, households seem to be becoming more cautious. A recent **AP-NORC survey** shows that the vast majority of American adults have noticed higher-than-usual prices for food, electricity, and holiday items in recent months. About half of respondents report difficulty affording gifts at their desired level. Many households are postponing larger purchases or reducing spending on non-essential goods – a trend already impacting company revenues. The combination of high prices and weakened demand creates pressure on profit margins, forcing producers to make tough choices between maintaining profitability and keeping prices competitive.

## Global shift in production structure

The business response is a radical restructuring. Companies are transforming their supply networks, seeking countries less exposed to tariffs or without them. Wolverine has reduced its dependence on China even compared to the previous administration, when significant production had already been shifted to Vietnam. Now, expansion is heading toward Southeast Asia. This is not a tactical move – it’s a necessary overhaul of the business model. However, such shifts involve transitional periods, financial losses, and the need to invest capital in new infrastructure.

## Uncertainty remains the dominant market force

To sum up: US data indicates a technical easing of inflation, but the economic reality is more complex. Tariffs force supply chain restructuring, tariff uncertainty paralyzes corporate planning, consumers are pulling back, and the Fed is waiting for clearer data. The December CPI report will be a key reference point, but it’s already clear that the coming months will be a period of adaptation, not stabilization.