Supply Chain Stress Testing for Tariff Shocks and Trade Conflicts: Methods, Models, and Reciprocal Influence of Operations and Economics

Abstract

This paper is induced by novel decision-making settings entailed in supply chains in the wake of the global tariff crisis in spring 2025. Their context and scope differ from traditional risks and resilience analysis. In situations such as a global tariff crisis, economic shocks can propagate through supply networks, leading to ripple and bullwhip effects. In this paper, we discuss methods and models for supply chain stress testing for tariff shocks and trade conflicts. We begin with an analysis of the short-term and long-term impacts of tariff shocks on supply chains, supply chain responses to tariff crises, and their consequences for economics. We show that tariff conflicts is a unique type of systemic shock characterized by a combination of immediate and delayed effects, cross-industry ripple effects, and mutual interrelations of supply chain and economics decisions. Most importantly, this setting incurs a reciprocal influence of operations and economics, which has never been examined in supply chain stress tests before. This type of shock has been underexplored and can motivate new and substantial contributions to supply chain resilience, the ripple effect, and viability.

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