Trade Wars, Tariffs, and Turmoil: Global Supply Chains Face Perfect Storm

01 July 2025

Shipping, Fuel, and Food at Risk as Global Supply Chain Warnings Peak

A global survey of procurement and supply professionals reveals that concerns over supply chain disruption have reached their highest level since tracking began, driven by fallout from new US tariff policies, deepening US-China trade tensions, and ongoing instability in the Middle East.

The Q2 2025 CIPS Pulse Survey, compiled by the Chartered Institute of Procurement & Supply (CIPS), shows sharp rises in concern for both short-term and 12-month outlooks, with many sectors bracing for double-digit price hikes and escalating supply risks.

Record-High Disruption Warnings from Procurement Leaders

• Short-term concern (next 3 months): 4.57 out of 7 (up from 4.36 in Q1 and the highest on record)
• 12-month concern: 5.03 out of 7 (up from 4.91 in Q1 — also a record high)

Ben Farrell, CEO of CIPS, commented: “Global procurement leaders are operating in uncharted waters. Between geopolitical shocks, tariff upheaval, and ongoing price volatility, we’re seeing levels of anxiety we’ve never recorded before. It’s no longer a question of ‘if’ disruption happens it’s about preparing for when and where.”

Dr John Glen, CIPS Economist, commented: “This pulse check clearly indicates the impact of escalating tariffs globally and increased geopolitical tension in the Middle East on procurement managers’ perception of supply chain risk. The volatility and uncertainty which has permeated global supply chains is providing unprecedented, in recent times, challenges to procurement professionals.”

Logistics Under Pressure, Prices Set to Climb

A growing number of spend categories are now forecast to face input price increases above 10%, with shipping and logistics remaining the most at-risk for the fourth consecutive quarter:

Top categories with expected >10% price increases in Q2 2025:

• Shipping & Logistics – 22% of respondents
• Petroleum & Mining – 22%
• Chemicals & Pharmaceuticals – 17%
• Food & Beverages – 14%
• Fabricated Metal Products – 13%

This is a notable increase from Q1 2025, when only three of these categories crossed the 10% concern threshold.

Biggest Price Rises Forecast: Impact on Consumers Looms

CIPS respondents highlight a growing number of categories facing input cost hikes of over 10% a warning sign for downstream consumer price inflation across everyday goods and industrial sectors.

Top categories projected to face 10% input cost increases in Q2 2025:

What This Means for Consumers:

• Shipping and logistics inflation will likely trickle down into higher prices for everything—from furniture and electronics to food and healthcare products.
• Fuel and petroleum-based input spikes may push up transportation, heating, and fuel pump costs, especially heading into Q3 and Q4.
• Food price pressure is re-emerging, raising the risk of grocery inflation across staples and processed goods.
• Pharmaceuticals and chemicals, including water treatment materials and medicines, could see availability constraints and higher costs.

Ben Farrell, CEO of CIPS, said: “We are entering a new era of supply chain risk, where political decisions thousands of miles away directly raise prices at the checkout. From shipping lanes to silicon chips, no category is safe from disruption. Procurement professionals are the economy’s early warning system and this quarter; the alarms are blaring.”

Dr John Glen, CIPS Economist, commented: “The fact that significant price increases are now appearing in multiple channels within supply chains will put additional pressure on organisations to increase final prices to consumers. This in turn may inhibit the ability of central banks to reduce interest rates in the short term and in doing so inhibit central bank’s ability to stimulate insipid level of economic growth in Europe and the UK.”

Global Events Driving Disruption: From the Middle East to Trade Wars

Geopolitical instability continues to dominate the global supply chain risk landscape, but the survey makes an important distinction between root causes of current disruption and overarching organisational concerns.

When asked to identify the top current causes of supply shortages, 53% of respondents pointed to geopolitical factors, with specific mention of the Israel–Iran conflict and strained shipping routes. In this context:

• US–China trade conflict surged to 36% (up from 25% in Q1)
• Labour shortages were noted by 24%
• US protectionism dipped to 23% (from 35% in Q1)

However, when asked a broader question “What are the top three risks your organisation is most concerned about?”, 66% of respondents cited geopolitical risk or political uncertainty the highest level ever recorded in the Pulse survey. This marks a continued rise from 63% in Q1, underscoring how conflicts like the Middle East and ongoing global political volatility are shaping long-term risk perceptions.

• Supplier instability increased to 36% (from 28% in Q1)
• Logistics disruption rose to 33%, displacing workforce and labour issues from the top three

Meanwhile, concern about inflation dropped sharply from 59% in Q1 to 41% in Q2, suggesting a shift in focus from cost volatility to structural supply risk. These changes show that procurement leaders are increasingly worried about access and continuity not just price.

As one respondent commented: “Israeli-manufactured goods represent a current concern – specifically phosphate derivatives for use in water treatment.” Another highlighted technology-related vulnerability: “Trump/USA policy on tariffs is likely to disrupt supply of networking equipment.”

How Organisations Are Responding

Procurement leaders are focusing on diversification, stockpiling, and contract strategies, though confidence is beginning to dip as global volatility becomes the norm.

Top continuity strategies (average importance score out of 6):

• Diversify number of suppliers – 5.37
• Extend contracts – 4.81
• Hold more stock – 4.48
• Insourcing – 4.39

While priorities remain unchanged, average scores are down from Q1, suggesting supply chain resilience efforts may be reaching saturation or proving less effective.

Dr John Glen, CIPS Economist, commented: “The increased volatility and uncertainty driven by geopolitical factors and increased, and uncertain tariff regimes has led, not unexpectedly, to an increased perception, by procurement professionals, of the risk in global supply chains. The turbulent global environment in which procurement professional now operate will put additional pressure on our colleagues to ensure that global supply chains continue to operate effectively and efficiently.”

Ben Farrell, CIPS CEO, joined BBC World Business Report this morning to discuss what this means for business, inflation and global trade. You can listen to his interview here. You can also see our Q2 Pulse Survey results here.

Notes to Editors:

The CIPS Pulse

The CIPS Pulse is a quarterly global survey of procurement and supply chain professionals. The Q1 2025 edition was conducted at the end of March, capturing insight from supply leaders with visibility into cost pressures and sourcing decisions across industries. Participants rank their concerns on a 1–7 scale, allowing CIPS to track shifts in sentiment and anticipate challenges facing global commerce.

Global Reach, Sector Insight

The Q2 2025 Pulse Survey gathered insight from 200 senior procurement and supply chain professionals across every continent.

• Government
• Manufacturing
• Construction
• Energy
• Healthcare
• Technology
• Banking & Education

The survey is a key component of the broader CIPS Global State of Procurement & Supply, supported by GEP, and continues to serve as a leading indicator of supply chain sentiment and risks.