When the Trump administration began imposing sweeping tariffs in 2018, the conventional wisdom was clear: companies would scramble to protect themselves by stockpiling inventory. Buy ahead. Build a buffer. Don’t get caught short.
It makes intuitive sense. If the cost of imported goods is about to spike, load up now while prices are lower. But new research from supply chain faculty at the University of Tennessee’s Haslam College of Business tells a more nuanced and, in some ways, encouraging story.
A Tug of War Inside Every Supply Chain
John-Patrick Paraskevas, Christopher W. Craighead, and Robert Wiedmer of Arizona State University set out to examine how manufacturing firms’ inventory efficiency changed in the wake of the 2018 tariffs. Their study, published in the Journal of Supply Chain Management, frames the issue as a genuine “tug of war” between two competing perspectives.
On one side is resource dependence theory, which predicts that firms facing supply disruptions will build protective buffers—in other words, they will hold more inventory as insurance. The result would be less efficient, less lean operations.
On the other side is social-ecological resilience theory, which holds that disruptions can catalyze transformation. Firms don’t merely absorb the shock; they reorganize, re-source, and emerge with a more efficient supply chain. The result is leaner operations.
So which won?
The Surprising Finding
Using a 16-year dataset—2003 to 2018—of publicly traded manufacturers and a rigorous difference-in-differences analysis, the research team compared firms in tariff-affected industries with similar firms that were not affected, before and after the tariffs took effect.
Unexpectedly, they found that firms hit by tariffs got leaner.
To understand what that means: inventory leanness measures how efficiently a firm manages its inventory relative to industry expectations. It’s an indicator of operational efficiency—and a higher leanness score is better. Companies in tariff-affected industries improved their inventory efficiency relative to their industry peers after 2018, and the effect wasn’t a blip. It grew over time. A firm at the median (50th percentile) for inventory leanness improved to roughly the 57th percentile in the first year and continued climbing toward the 64th and 65th percentiles by years two and three post-tariff.
Meanwhile, firms that were not affected by the 2018 tariffs actually became less lean over the same period.
What Does This Mean for Practitioners?
The research suggests that when tariffs forced companies to confront their supply chains head-on, many didn’t panic-buy. Instead, they adapted. That might look like re-sourcing tariff-affected products from alternative countries, redesigning products to reduce dependence on tariffed components, or reconfiguring global flows to avoid routing tariff-affected goods through the United States.
In short, the disruption became an opportunity to do things differently and, ultimately, more efficiently.
This doesn’t mean tariffs are good for business. Paraskevas and Craighead are careful to note that tariffs carry real costs, and the findings apply specifically to how firms adapted after the fact. The initial reflex of forward buying and inventory hoarding remains a documented response, as evidenced by the supply chain frenzy that followed the 2025 tariff announcements. But that knee-jerk reaction doesn’t appear to be the whole story.
The key takeaway for supply chain leaders is that firms that treated tariffs as a catalyst for transformation, rather than a fire to put out, ended up in a stronger operational position.
Why This Research Matters Now
With tariffs again dominating the supply chain conversation in the second Trump administration, this study offers a rigorous empirical examination of how the last major round of broad-based U.S. tariffs affected firms’ operational performance. The authors also lay out a rich research agenda for what remains unknown, including how different industries, firm sizes, and inventory types respond, whether the mechanisms behind the leanness gains can be identified, and what the 2025 tariffs may yet reveal.
For practitioners deciding whether to buffer or transform in the current environment, the evidence from 2018 offers a compelling case for leaning toward the latter.
Access an online version of “An Examination of the Tariff-Induced ‘Tug of War’ Between Inventory Buffering and Inventory Leanness,” by John-Patrick Paraskevas, Robert Wiedmer, and Christopher W. Craighead, published in the Journal of Supply Chain Management. Learn more about the range of expertise present among UT’s highly regarded supply chain management faculty.
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