The effect of tariffs on inventory performance: The moderating role of supply base characteristics

Tariffs have taken a prominent role in the recent news cycle as politicians around the world have increasingly enacted protectionist trade policy to incentivize reshoring and local sourcing. Our study seeks to understand what impact tariffs have on inventory levels and inventory leanness using data from the auto industry. We also explore the moderating impact dimensions of supply base complexity on the relationship between tariffs and inventory. Our findings indicate that tariffs are associated with higher inventory levels and less lean supply chains. We also find that there are several complexity dimensions which can reduce the impact of these tariffs.