MSU researchers unveil how 2025’s tariff upheaval disrupted trade and pricing systems worldwide, with consequences for Michigan and beyond.
2025 Tariff Shock Hikes Created Unprecedented Trade Disruption
EAST LANSING, Mich. – A sweeping study by Michigan State University warns that the United States’ 2025 tariff hikes — the largest since the 1930s — created a turbulent economic shock that continues to ripple across global supply chains. Researchers at MSU’s Broad College of Business say the rapidly enacted and reversed trade policies in 2025 exposed severe weaknesses in how firms adapt to such volatility.
The paper, titled “Shock and Awe: A Theoretical Framework and Data Sources for Studying the Impact of 2025 U.S. Tariff Increases”, was published in the Journal of Supply Chain Management and authored by Jason Miller, the Eli Broad Endowed Professor in Supply Chain Management at MSU.
“Unlike previous trade wars, the 2025 actions came with extreme uncertainty,” Miller said. “We wanted to provide a framework to help researchers and practitioners make sense of what’s happening and what to expect going forward.”
Supply Chain Theory Updated With Real-World Instability
The study introduces a framework based on three cost categories firms face in response to trade shocks: adjustment costs, transaction costs, and opportunity costs of acting too early or too late. These concepts help explain how companies hesitate or pivot in sourcing, production shifts, and pricing decisions…