AI, Trade Shocks, and Ethical Supply Chains

May 15, 2025

Article

Supply chain AI company Exiger presented with Hope for Justice | Slave Free Alliance at the Gartner Supply Chain Symposium/Xpo™ 2025 Orlando to discuss the intersection of ethical supply chains, trade restrictions, and where businesses can invest their time and technology now to save money—and lives—later.

The Challenges Facing Supply Chain Leaders

Be cost-effective, agile, ethical, and resilient—all at once.

Today’s supply chain leaders must be agile, vigilant, and adaptable to rapidly changing conditions. They navigate a landscape where trade restrictions like tariffs and human rights compliance are converging into one complex challenge.

There’s also a looming underlying issue for many organizations: a lack of sufficient visibility into their supply chains. Without a detailed map showing where and how their suppliers operate, businesses cannot proactively detect tariff liabilities or modern slavery risk within deeper supplier tiers.

Frequent policy changes leave little room for long-term planning. So how can procurement and supply chain leaders develop multi-year strategies when policies shift quickly, and regulations are also expanding?

Tariffs and Trade Disruption

Tariffs change overnight. Your cost base and lead times are exposed.

Tariffs are now sudden shock events and not mere fiscal policy tools, regularly disrupting multinational corporations’ procurement operations in several ways:

Geopolitical tensions change, escalate, and de-escalate every week
Nearly all commodities and industry verticals are impacted
Sourcing must be quickly rerouted without violating ethical or legal standards
Static supply chains can’t survive this dynamic trade policy

Industries like semiconductors, pharmaceuticals, and critical minerals—essential to modern economies—are heavily affected. The Trump administration’s tariff approach on strategic materials persists, keeping supply chains in constant flux and complicating sourcing decisions.

Tariff exposure multiplies as products cross national borders multiple times. For example, a car part that moves through six or seven countries before arriving in the U.S. could be hit with multiple tariff layers. Companies lacking detailed visibility into their sub-tier suppliers and trade routes face unpredictable costs and risks. While new tariffs draw headlines, many underlying policies—like forced labor legislation—remain constant and enforceable. This two-fold challenge forces leaders to balance mitigating the impacts of new trade restrictions while continuing to meet preexisting legal obligations.

In these times, supply chain mapping is not a luxury—it’s a necessity. “If you don’t have a map of your supply chain, if you don’t understand what your tier two is doing with their tier one, so your tier three, how are you ever going to solve that?” asks Kit Conklin, Exiger global head of risk and compliance and a former senior advisor with the China Select Committee, U.S. House of Representatives. “How will you present a resilience map to your CEO or your CPO to say, how am I solving this problem? It’s a hundreds of billions of dollars a year question, and it’s only getting worse.”

“In these times, supply chain mapping is not a luxury—it’s a necessity.”

Kit Conklin

Global Head of Risk and Compliance, Exiger

Company Supply Chains: The Blight of Forced Labor

Parallel to the trade landscape is a human crisis: modern slavery. “The International Labour Organization estimates nearly 50 million people across the world held in some form of modern day slavery. And a key part of that is where we see forced labor,” explains Tim Nelson, CEO of global nonprofit Hope for Justice, which operates a division called Slave-Free Alliance. Slave-Free Alliance works with major multinational companies across the world to help them remove slavery from their businesses and supply chains. For the past two years, Exiger and Slave-Free Alliance have partnered together to stamp out modern slavery.

Forced labor is not just a moral failing; it is a multibillion-dollar enterprise. Organized criminal networks create an estimated $236 billion annually from forced labor, second only to drug trafficking. While many still associate this risk with far-off regions, cases are increasingly found within the U.S.

The defining question for leaders today is not whether forced labor exists somewhere within their network—but what they will do to find it and eradicate it. “In our work that we do across the world, we see that 70 to 80% of all companies have some form of modern-day slavery [in their supply chains],” says Nelson. “The key question is what will you do when you find it? And are you prepared to look?”

Rapidly Changing Supply Chain Forced Labor Laws

Regulations and enforcement actions are escalating. Compliance isn’t optional.

The answer begins with acknowledging that some regulatory fixtures are here to stay. The Uyghur Forced Labor Prevention Act (UFLPA), which took effect in June 2022, flipped the burden of proof. Under this law’s “rebuttable presumption”, goods originating from China’s Xinjiang region are automatically assumed to be made with forced labor unless the importer provides clear evidence otherwise. Since enforcement began, the U.S. Customs and Border Protection (CBP) has detained nearly $4 billion in goods.

Tariffs may fluctuate, but the UFLPA is a cornerstone of this new compliance era and will continue to shape expectations and enforcement activity. Other jurisdictions are following suit: the European Union has introduced the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD).

Compliance with U.S. regulations alone does not guarantee meeting international standards, as requirements in the EU, UK, and other regions often differ.

“From a corporate governance perspective, if you’re thinking through and building out your own supply chain or procurement risk management capability within your company, you’ve got to be thinking about all these disparate pieces of legislation,” advises Conklin. “And certainly, there are others that are coming down the track that will require you to do things that are even different beyond that.”

Exiger tools for modern slavery transparency and compliance help companies identify and manage supply chain risks across multiple regulations —including UFLPA, CSDDD, and evolving rules in many regions—to ensure consistent compliance.

Case Studies – Fishing & Pharma Supply Chain Risk

Major Concerns Include Exploitation and Overreliance on Political Adversaries

The human cost of modern slavery is vividly illustrated in a case presented by Hope for Justice. Two women were recruited to work in a fish farming facility under the promise of good wages and fair treatment. Instead, they endured months without pay and long working hours in a factory.

“The more the survivors mentioned their difficult working conditions, the more their perpetrator applied psychological pressure on them to work harder. This ‘conflict’ culminated with the perpetrator telling them they were to leave their jobs. They still had not received any pay at this time,” according to a Hope for Justice outreach worker.

The women finally reached out to their embassy. From there, they were connected to Hope for Justice, which provided legal support and translators to secure the backpay they were owed. This case is not an anomaly. It underscores how seasonal and migrant workers—especially those unfamiliar with local laws and language—are vulnerable to exploitation. These forms of abuse thrive in the shadows of poorly mapped, loosely governed supply chains.

The pharmaceutical industry provides a striking example of how tariff exposure and forced labor risks intersect. According to data from the Exiger analysis A Bitter Pill: America’s Dangerous Dependence on China-Made Pharmaceuticals, the U.S. imports 75% of its essential medicines. 95% of ibuprofen consumed in the United States is sourced from China and most antibiotics and pain relievers originate either in China or from Indian manufacturers that rely on Chinese ingredients.

The result is a fragile, high-risk system. Any geopolitical disruption involving China or India could trigger massive supply interruptions, which prompted the U.S. Department of Commerce in April 2025 to launch Section 232 investigations into pharmaceutical sourcing, which means new tariffs are likely.

These tariffs are more than economic maneuvers—they are tools intended to push companies to diversify their supply chains. But as companies shift production from China to other countries like Vietnam or Laos, they must also ensure that they are not simply trading one form of risk for another. Forced labor is present across many developing economies, and as mentioned previously, modern slavery regulatory expectations are rising.

Making Change in Supply Chains

Awareness to Action

Awareness alone is not enough. As Nelson says, it must lead to action and be coupled with visibility and a clear roadmap for ethical sourcing. An investment in planning and technology in the present saves time and money later. “If you can understand almost prophetically where things are going, you could help your company make decisions where the costs are going to be much smaller now than potential fines will be in the future,” counsels Nelson.

“The defining question for leaders today is not whether forced labor exists somewhere within their network—but what they will do to find it and eradicate it.”

Tim Nelson

CEO, Hope for Justice | Slave-Free Alliance

After an extensive evaluation process, Hope for Justice | Slave-Free Alliance selected Exiger as its Strategic Technology Partner in 2023. “We would fully get behind the Exiger system and want you to understand that independently we’ve looked at this, we’ve said ‘these guys are the leaders in this space’, and we wanted to try and address what we could to partner with them to help major multinational companies,” says Nelson.

Ready to take action?

Gain Supply Chain Visibility and Eliminate Modern Slavery Risks: The Exiger platform uses proprietary and open-source data to create a detailed map of supplier networks, extending visibility from finished goods down to raw materials. This advanced approach provides clear insights into supply chain risks, improves due diligence accuracy, and helps companies proactively meet evolving regulatory requirements.

Strategies for Managing Tariff Risks: Tariff Intelligence from Exiger maps tariff exposure down to raw materials and components, allowing businesses to accurately forecast, manage costs, and minimize disruptions. It leverages advanced AI and dynamic scenario modeling to identify alternative suppliers and accelerates onboarding. The bottom line: resilience against geopolitical volatility and supply chain vulnerabilities.