Source: CNBC
Date: 14th July 2025

As Trade War Pressures Mount, Companies Boost Cash Holdings and Shift Inventory Strategies

In response to escalating tariffs and ongoing uncertainty from trade policy shifts, importers across multiple sectors — including retail, automotive, and healthcare — are increasingly holding more cash and reducing inventory on their balance sheets. Many are turning to supply chain financing to stretch payment terms and ease cash flow pressures. Temporary tariff pauses have triggered front-loading of inventory, which is often financed by third-party institutions rather than being immediately recorded as assets.

Through supply chain financing programs, importers send invoices to partner banks, which then pay suppliers directly. This not only extends repayment timelines but also allows importers to temporarily shift the ownership of inventory off their books. Healthcare firms, particularly those with heavy reliance on overseas manufacturing, have become active adopters of this financing strategy as they brace for potential targeted tariffs.

The strategy is gaining traction in other sectors, such as construction and agriculture, where companies are seeking ways to unlock working capital. While trade with Asian countries has seen partial recovery during tariff pauses, volumes — especially from China — remain low. Meanwhile, sourcing shifts and cautious investment behaviours suggest that many companies are holding off on long-term supply chain changes until more stability returns to the global trade environment.