Navigating Tariffs with Lessons Learned from the Pandemic

By Tim Carroll | June 17, 2025

One distributor looks back at the challenges the electronics industry weathered during the pandemic and finds solutions that apply to today’s tariff situation.

The electronics industry faced considerable supply chain challenges during the pandemic. The lessons learned during that period of supply chain chaos taught components suppliers and distributors valuable lessons that are now becoming useful as we enter another period of instability. Though today’s tariff rollercoaster and economic uncertainty feel a bit like 2020, there’s a lot we can glean from our experiences of five years ago to help us weather the storm today.

The ongoing and continually changing tariff situation is challenging electronics companies in many areas. From determining pricing, planning inventory, and creating dynamic ordering processes, suppliers, manufacturers, and other users of electronic components must work closely to reduce the impact of tariffs.

Shifting purchasing decisions

Design engineers and procurement specialists shifted their purchasing decisions during the pandemic. When the supply chain was constrained, suppliers moved from selecting the best parts to choosing the parts with the most consistent price and availability. After these shifts occurred, many customers remained with the suppliers that had inventory available during this period. In some cases, engineers redesigned their end products to use parts that were in stock or designed their product from the start around available inventory.

DigiKey’s data shows that more than half of the website customers selected the products they purchased based on availability and price first, rather than other factors. Now tariffs are having a similar impact on purchasing decisions. Some suppliers are adapting their websites to address this new disruption. DigiKey, for example, added a filter allowing customers to search for tariffed and non-tariffed products to help customers avoid tariff fees when possible.

Suppliers must ensure their products are non-tariffed whenever possible and available for shipment. Failing to do so hurts immediate sales and can also exclude suppliers from the crucial 12- to 18-month design cycle that many OEMs and design teams rely on for selecting components for upcoming product development.

During the pandemic, when supply chain disruptions were widespread, some electronic component suppliers were unable to maintain adequate inventory levels or ensure reliable logistics. As a result, they were bypassed in favor of competitors who could meet demand and timelines, leading to a loss of an entire generation of design activity. Even after supply chains stabilized, these companies faced an uphill battle to re-establish themselves in design pipelines that had moved on without them.

Distributors can help mitigate tariffs

DigiKey has been navigating tariffs on incoming products from China since 2018. In 2020, the company established the largest FTZ in the United States to ensure a dynamic supply chain. This allows eligible products to be exported outside the U.S. without a tariff being applied because if a product enters the warehouse and ships out directly internationally, it legally has not entered the U.S. Partnering with DigiKey’s FTZ program allows DigiKey to become the Importer of Record (IOR), handling paperwork, declarations, and tariff management, resulting in lower costs and more competitive prices.

In some instances, duty drawback programs permit the recovery of tariffs paid on imported goods that are not consumed in the U.S. but are instead stored domestically and later re-exported to another country. DigiKey’s Marketplace platform also provides international customers with shipping options directly from the suppliers that offer efficiencies and limit add-on taxes.

Companies must continue to closely monitor and adapt to ongoing tariff changes. DigiKey remains optimistic about the overall outlook. For more information and resources on DigiKey’s tariff impacts and mitigation plans, visit DigiKey online.

Tim Carroll is the vice president of digital business at DigiKey.