· 3 min read
In April 2025, the U.S. government introduced new trade policies, adding tariffs on a wide range of goods. While industries are already feeling the economic impact, the long-term effects on sustainability are just starting to show. Many companies are using data to navigate these challenges, but there’s still a lot of room for improvement. Here’s how these tariffs are affecting sustainability and what companies need to do next
Rethinking supply chains is more than changing where you source from
For retailers, the focus has been on finding ways to circumvent higher tariffs by shifting sourcing to countries with lower tariffs. While this might provide short-term relief from higher costs, it does little to address the sustainability of their supply chains. Patagonia, for instance, has faced rising material costs but continues to prioritise responsible sourcing and environmental impact over cutting corners to save money.
Patagonia isn’t just shifting its production for tariff relief, it’s also improving transparency and sustainability practices across the board. This approach ensures that even as the company faces tariff-induced challenges, its commitment to sustainable practices doesn’t change. Retailers must follow Patagonia’s example by deepening their supply chain analysis, focusing not only on tariff implications but also on ensuring the materials used meet environmental standards.
Alternatives to face manufacturing and energy rising costs
Manufacturers are seeing higher costs for raw materials like steel and aluminum. The shift toward bio-based materials offers a more sustainable and profitable alternative, attracting investors looking for innovative solutions. Companies like NatureWorks are developing bio-based polymers from renewable resources, reducing reliance on finite materials. Similarly, Algix is harnessing algae to create eco-friendly manufacturing materials.
The renewable energy sector is also feeling the strain, with tariffs on imported solar panels and components threatening to slow the clean energy transition. However, companies like SunPower are addressing this by developing modular solar panels that extend lifespans and reduce waste SunPower, 2025. Meanwhile, SolarCycle is innovating with biodegradable materials for solar panels.
AI and digital solutions for sustainable supply chains
Retailers and manufacturers facing tariff-related uncertainties are increasingly turning to AI and IoT for supply chain transparency. IBM Watson Supply Chain, for instance, uses AI to optimise supply chain operations, helping businesses reduce waste and emissions. Cisco Kinetic is deploying IoT sensors for real-time monitoring of emissions and resource usage.
Another promising approach is blockchain. LO3 Energy is using blockchain to track material lifecycles, improving supply chain accountability. Siemens is leveraging digital twins to simulate and optimise supply chain sustainability.
Microgrids as a key advantage in energy resilience
With renewable energy projects facing cost increases, companies are turning to microgrids for localised energy resilience. Schneider Electric is leading efforts to develop microgrids that generate and store energy locally, reducing dependence on central grids. ABB is integrating multiple renewable sources into microgrids, ensuring more stable and sustainable energy access. Brooklyn Microgrid is fostering community-based energy initiatives, providing localised solutions for sustainable power.
Conclusion: The companies that adapt now will lead the future
The 2025 tariffs have created major challenges, but they also present an opportunity for companies to rethink their strategies. Those investing in transparent supply chains, renewable energy, and AI-driven solutions will be better positioned for long-term success. The key is to go beyond quick fixes and commit to sustainability as a core business strategy.
Do you want to see how companies are really performing on sustainability? Explore the sustainability performance of all companies on illuminem's Data Hub™.
