Perspectives · Portfolio Management

Green Tariffs or Trade Barriers? How Supply Chain Shocks Are Threatening Sustainability

The global project environment is facing an unexpected but serious disruption—not from a natural disaster or technological collapse, but from policy. The return of Donald Trump to the U.S. presidency has brought with it a new wave of aggressive trade tariffs, with levies as high as 145% on a range of Chinese imports. These include critical goods such as electric vehicles, solar panels, lithium-ion batteries, steel, and other building blocks of the clean energy economy. Described by some as “green tariffs,” these measures are framed as tools to protect domestic industries from unfair competition and to penalise environmentally harmful practices abroad. But beneath the surface, a more troubling picture is emerging—one where trade policy is colliding head-on with sustainability goals, disrupting supply chains, and placing projects at serious risk. Beyond environmental and economic ramifications, the 2025 U.S. tariffs are exerting significant pressure on social sustainability across the United States, particularly for small and medium-sized enterprises (SMEs) that serve as the economic backbone of many communities. These businesses—often undercapitalised and dependent on predictable, affordable supply chains—are among the hardest hit. For example, WS Game Co. in Massachusetts reported having $500,000 in inventory stranded in China and experiencing over $16 million in lost orders due to shipping disruptions and import duties. Similarly, TeaHaus, a specialty tea company in Michigan, faces dwindling supplies and has been forced to raise prices, directly affecting its customer base and workforce. In Oklahoma City, pet supply firm 4Knines has warned that rising costs and inventory delays are eroding profit margins and threatening jobs (AP News, April 2025). These are not isolated cases. According to Flexport CEO Ryan Petersen, as many as 80% of small U.S. businesses reliant on Chinese imports could face bankruptcy under the current tariff regime, a scenario that could result in the loss of millions of jobs nationwide (Business Insider, April 2025). This wave of business closures would ripple across local economies—reducing employment, weakening consumer spending, and derailing community development efforts that depend on stable small business ecosystems. Far from strengthening domestic resilience, the policy may inadvertently hollow out the very communities that sustainability-focused investments aim to uplift.

Supply Chain Paralysis: Projects Caught in the Crossfire

Within weeks of the tariff announcements, global shipping patterns began to shift. Container shipments from China to the U.S. plummeted, with major carriers like Maersk and COSCO cancelling routes at a rate reminiscent of the COVID-19 peak (Investors Business Daily, April 2025). Ports reported containers sitting idle. Procurement managers scrambled to find alternate suppliers or paused orders altogether. This isn’t just noise in the background of project delivery. It’s a direct hit to projects in sectors that are foundational to the transition to net zero—clean transport, energy infrastructure, construction, and manufacturing. Project managers are now reporting:

• Delays in major infrastructure builds, especially in solar and battery storage rollouts.
• Cost blowouts, with the price of Chinese-sourced steel and solar components spiking due to redirected demand and constrained availability.
• Contractual risk, as delays and material substitutions impact timelines, warranties, and performance guarantees.

Portfolio managers, too, are facing a grim recalibration of value delivery. Projects originally framed as low-emissions, high-impact sustainability wins are now harder to resource, more expensive to deliver, and less certain in their environmental benefit.

The Dumping Dilemma: Redirected Products, Disrupted Markets

What doesn’t go to the United States will go elsewhere. This is the next phase of the crisis. As Chinese producers lose access to U.S. markets, they’re turning to Europe, Southeast Asia, Latin America, and India to offload excess inventory. Already, India has imposed new tariffs on Chinese steel in response to what it has identified as a surge of dumped products—goods sold at artificially low prices that undercut local industries (MENAFN, April 2025). Europe, too, is bracing for redirected flows of Chinese EVs and green tech components. The European Commission has launched investigations into potential distortions and is considering its own tariff measures in response (France24, April 2025). What does this mean for projects?

• Unstable pricing: A flood of low-cost imports can initially reduce prices—but later destabilise local markets, creating pricing whiplash and supplier failure risks.
• Sustainability erosion: Dumped goods often come from lower-efficiency production with weak environmental oversight, threatening lifecycle sustainability metrics.
• Procurement integrity challenges: Sustainability-aligned procurement policies may be tested as cheap alternatives flood the market, tempting buyers under financial pressure.

This dumping effect doesn’t just introduce financial volatility. It risks undermining the very supply chains and local innovation ecosystems we need to build long-term resilience.

The Hidden Carbon Cost of Trade War Logic

One of the great ironies of the current tariff regime is that it claims to support sustainability—yet may well increase global emissions. Tariffs on Chinese solar panels don’t reduce global production—they simply shift it. But alternative manufacturing centres often lack the efficiency and renewable energy mix of top-tier Chinese plants. A solar panel produced in Southeast Asia with coal-fired electricity, shipped across longer distances, and installed under last-minute procurement strain may carry a higher embedded carbon footprint than one sourced from the Chinese supplier it replaced. Similarly, sourcing steel from regions with less stringent emissions controls—or countries with no credible plan for decarbonising industry—can increase the lifecycle impact of public infrastructure projects. In short, unilateral tariffs can cause what sustainability professionals call “carbon leakage”—where emissions are simply relocated, not reduced.

Procurement Disruption at the Portfolio Level

This isn't just a supply chain problem. It's a strategic planning problem. Projects are not built in isolation—they are part of long-term investment portfolios designed to align with broader sustainability targets. Portfolio-level disruptions now include:

• Scope reduction: Projects are being scaled back due to material inflation.
• Pauses or deferrals: Where costs now exceed originally approved budgets, business cases are being reworked or suspended.
• Reprioritisation: Governments and private investors are quietly pulling back from ambitious green initiatives, citing cost instability and supply risks.

The result is a chilling effect on sustainability portfolios—at a time when momentum is critical. And worse, some decision-makers are reverting to familiar, fossil-intensive alternatives simply because they appear more “predictable.”

What Project and Portfolio Managers Can—and Must—Do

We cannot wait for trade policy to fix itself. This is a moment for adaptive leadership, and it starts with five critical actions:

1. Elevate Supply Chain Intelligence: Review project risk registers and portfolio dashboards to map exposure to tariff-impacted goods. Engage deeply with procurement teams to monitor market movements—not just for pricing, but for ESG and sustainability risk.
2. Reassess Impact Accounting: When project inputs change, so do their impacts. Update carbon accounting models to reflect shifting embodied emissions and environmental trade-offs. Don’t assume that "green-labelled" inputs still perform as expected.
3. Strengthen Sustainable Procurement Criteria: Make your procurement strategy resilient to price shocks. Embed minimum sustainability standards that can’t be bypassed when low-cost alternatives become attractive. Use frameworks like the GPM P5 Standard to maintain integrity.
4. Design for Flexibility: Build contingency and optionality into project scopes. Plan for alternative sourcing routes, tier-2 suppliers, or modular component substitutions.
5. Speak Up: The PMI-GPM joint venture underscores the importance of project professionals as sustainability change agents. Use your voice. Feed insights back into industry associations, policy forums, and procurement reform efforts.

Final Thought: We Need More than Intent—We Need Alignment

The idea of “green tariffs” may sound like progress, but without international coordination, transparent implementation, and systemic thinking, they can cause more harm than good. This isn’t about politics and whether you lean ‘left’ or ‘right’. It is also not which political party you support. Sustainability cannot be pursued in silos. A policy that undermines the supply of clean energy infrastructure, destabilises global markets, and incentivises lower-standard manufacturing is not green. It’s a barrier—one that project professionals must be prepared to navigate. If our projects are meant to build a better future, our portfolios must be managed in full awareness of how global events shape that future’s possibility. In this moment, project and portfolio managers are not just executors of strategy. We are stewards of sustainability—operating at the critical edge where policy, practice, and ethics converge. Let’s lead with clarity, not just compliance. Let’s fund progress, not protectionism.