The Unexpected Impacts of Tariffs

Baylor supply chain experts share insights on how tariffs increase costs, complexity 

June 17, 2025
Three experts on supply chains

(Credit: tdub303 / Collection: E+ / Getty Images Plus).

Tariffs – broadly defined as government-imposed taxes on imported or exported goods – play a pivotal role in shaping global supply chains. While U.S. trade policies continue to shift, three top supply chain experts from Baylor University’s Hankamer School of Business – Adé Oyedijo, Ph.D., Pedro Reyes, Ph.D., and Hannah Stolze, Ph.D. – consider how the unexpected impacts of tariffs may increase costs and complexity globally.

As economic nationalism rises and a push for centralizing manufacturing in the U.S. grows, the implications for the global supply chain have become increasingly challenging, among them rising costs, changing production strategies and uncertainty. However, Oyedijo, Reyes and Stolze also have noticed how those challenges are signaling a domino effect that could result in unexpected impacts, namely worker layoffs, reduced globalization and environmental benefits.

Reduced globalization

Ade Oyedjio headshot
Adé Oyedijo, Ph.D.

Through his work as an agenda contributor at the World Economic Forum, Oyedijo’s research and scholarship has informed critical global discussions on the supply chain and its impact. Now an assistant professor of management at Baylor, Oyedijo studies how global supply chains have played a key role in the growing industrialization of developing countries, leading to robust economic growth, emerging industries and new job opportunities. However, as the tariffs create a shift in the global order and a reduction in aid from the West, he said they put nations with political or economic fragility at higher risk of economic decline.

“For many African economies, which rely heavily on trade partnerships with more industrialized nations, this shift could pose serious challenges to growth and long-term development,” Oyedijo said.

One of the greatest challenges for sub-Saharan Africa is a concerning decline in Gross Domestic Product (GDP), driven by higher import costs and reduced access to export markets with industrialized nations, Oyedijo noted.

Ripple and bullwhip effects

Pedro Reyes Headshot
Pedro Reyes, Ph.D.

As a global supply chain expert, Reyes focuses his research on designing supply chain operations planning and control systems using technologies such as RFID, Blockchain and AI. Disruptions in the supply chains, he said, can cause major, lasting changes known as the bullwhip effect and the ripple effect.

A central short-term challenge for U.S. supply chains will be the disruption caused by a decline in imported goods, leading to underutilized ports, Reyes said. The opposite occurred during the pandemic. Ports of entry were filled to capacity, but a significant lack of workers due to COVID restrictions caused bottlenecks and lengthy delays at major ports.. Today, however, as tariffs slow the flow of goods, port workers may now see reduced workloads and downsizing.

“As fewer goods are imported, the capacity at the ports of entry will be under-utilized and lead to other disruptions,” Reyes said. “This ripple effect moves further downstream to the retail stores and manufacturing plants where the capacity is not needed and may cause worker layoffs.”

The bullwhip effect comes next, amplifying demand fluctuations as they move up the supply chain and causing inefficiencies and instability.

“The bullwhip effect will be seen later,” Reyes said. “When the goods being imported increases, the period of capacity not having demand will be needed.” 

Opportunities, environmental benefits

Hannah Stolze Headshot
Hannah Stolze, Ph.D.

Stolze, who serves as The William E. Crenshaw Endowed Chair in Supply Chain Management, considers the impact of tariffs from a standpoint of human flourishing and sustainability, which is central to her research on transformative supply chain management.

“One of the things globalization and global supply chains have done over the past 30 years is to create opportunities for industrialization in developing nations. This creates new industries and job opportunities,” Stolze said. “The global capitalist economy is not a perfect system. However, according to the World Bank, over 1 billion people have been lifted out of poverty in East Asia, the Pacific and South Asia since 1990. They attribute this to the robust economic growth in those regions of the world.”

At the same time, tariffs could provide an environmental benefit, as many products manufactured overseas are subject to lower environmental standards, specifically air and water pollution, due to the high costs associated with environmentally responsible policies, Stolze said.

“Bringing manufacturing back to the U.S. should indicate that products are made more environmentally friendly,” Stolze said. “However, with higher labor costs and manufacturing costs, this will come at a price to the end consumer.”

Is nationalizing supply chains even possible?

In today’s interconnected global economy, bringing supply chains completely back to the U.S. poses a massive risk for global fragmentation, but a rise in economic nationalism hasn’t left the possibility off the table completely.

“It is both expensive and sometimes impossible to completely nationalize many supply chains, so regardless of the final manufacturing location, long-term tariffs are guaranteed to increase costs and complexity,” Stolze said. “On the other hand, if the tariffs are merely a negotiation tool to decrease partner tariffs, then once negotiations are final, global supply chain costs may decrease, and little will change.”

ABOUT THE HANKAMER SCHOOL OF BUSINESS 

Baylor University’s Hankamer School of Business strives to further God’s kingdom through the realm of business, using God-given gifts and academic talents to do so. Faculty and students conduct purposeful research and participate in experiential learning opportunities, all while operating in a Christ-centered mission. Undergraduate students can choose from 13 major areas of study. Graduate students can earn their MBA on their terms, either through the full-time, online or a Dallas-based executive program. The Business School also offers three Ph.D. programs in Information Systems, Entrepreneurship or Health Services Research. The School’s top-ranked programs make up approximately 25% of the University’s total enrollment. Visit the Hankamer School of Business website for more information.  

ABOUT BAYLOR UNIVERSITY

Baylor University is a private Christian University and a nationally ranked Research 1 institution. The University provides a vibrant campus community for more than 20,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 100 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. Learn more about Baylor University at www.baylor.edu