Supply Chain Analytics Pulse

Why Manufacturers Kept Stockpiling After Their Tariffs Got Struck Down

September 2026 | Supply Chain Analytics Pulse

In February 2026, the Supreme Court struck down the legal authority behind most of the tariffs that had pushed U.S. manufacturers into their biggest inventory buildup in a decade. The tariffs were gone within days. The stockpiling was not.

Four months later, GEP’s Global Supply Chain Volatility Index, which tracks tens of thousands of businesses each month, found manufacturers building safety stock at the highest level since January 2023. Shortages of critical inputs hit their highest level since late 2022.

Meanwhile, U.S. factories just posted their strongest month of production since 2021, and the index tracking how “too low” customers’ inventories are sits near a multi-year extreme. A replenishment cycle is forming at exactly the moment safety stock strategy needs to get smarter, not just bigger.

01 Eighteen Months of Tariff Whiplash

The 2025 Buildup

Through 2025, U.S. manufacturers front-loaded raw materials and components like never before. Durable-goods “materials and supplies” inventories hit roughly $221 billion by April, up 3.9% year over year, and total durable-goods inventories climbed for ten straight months, to about $591 billion by July.

Trade uncertainty drove it. NAM’s Outlook Survey found it was manufacturers’ top business challenge all year, cited by 76.2% in Q1 and 73.1% in Q4. By year’s end, 80.3% had paid tariffs on imported inputs, and the Hackett Group put a price on the caution: $1.7 trillion trapped in excess working capital across the 1,000 largest U.S. public companies.

Through 2025, U.S. manufacturers front-loaded raw materials and components like never before. Durable-goods “materials and supplies” inventories hit roughly $221 billion by April, up 3.9% year over year, and total durable-goods inventories climbed for ten straight months, to about $591 billion by July.

NAM respondents expected the buildup to ease slightly, about 0.2%, over the next year. The stockpiling wave, it seemed, had peaked.

The reversal nobody de-stocked for

On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the president to impose tariffs, striking down the “Liberation Day” and reciprocal tariffs behind most of 2025’s front-loading. Collection stopped four days later. Refunds are still working through the Court of International Trade.

What replaced IEEPA moved just as fast:

Section 232 tariffs on steel, aluminum, and copper run on separate legal footing and were untouched by the ruling; they remain at 50% on covered articles. What changed, effective April 6, 2026, was scope: many derivative products, parts and components made from those metals, moved to a flat 25% duty on full import value instead of just the metal content, quietly widening exposure for metal-intensive manufacturers.

The data did not cooperate with the “hangover” prediction

Here’s what the original 2025 forecast expected: demand cools, shelves stay full, and 2026 becomes a quiet year of working through last year’s buying. That’s not what happened.

Materials-and-supplies inventories reached $225.5 billion in January 2026, still above where they stood in April 2025. Total durable-goods inventories kept climbing too, up nine straight months to $602.0 billion by June. GEP’s June figures told the same story from the buying side: safety stockpiling back at its highest level since January 2023.

Demand didn’t cooperate either. The ISM Manufacturing PMI hit 55.6% in July, the best reading in four years, while the index tracking customers’ inventories sank to 40.7, deep in “too low” territory.

Put those two trends together and the picture isn’t a hangover. It’s a restocking cycle arriving on top of a warehouse that never actually emptied.

02 What “Segment and Go Dynamic” Actually Delivers: A $9.3M Proof Point

Segment inventory first and make safety stock dynamic rather than static, is not a theoretical improvement. MIT’s Center for Transportation and Logistics ran the numbers on a real network, and they are large enough to change how a safety stock budget gets built.

The sponsor was a U.S. grocery retailer running a hub-and-spoke distribution network that was, by its own admission, missing the mark despite carrying plenty of stock: 57 days of supply for dry food, low inventory turnover, and service levels that still varied widely from node to node. As the business had expanded and SKU counts multiplied, a traditional inventory policy, one set of rules applied network-wide, had stopped working.

Researchers Vi Duong and Nic Holwerda, supervised by Dr. Eva Ponce, modeled 61 SKUs across 31 nodes using a commercial multi-echelon inventory-optimization platform, running 18 scenarios that combined six update frequencies with three service-level targets. Published through Supply Chain Management Review in March 2026, it’s one of the more concrete proof points available for what dynamic, segmented safety stock actually returns:

High-variability products benefited the most from frequent updates. Stable, low-variability SKUs saw little additional gain from updating more often than biannually: the highest-value move wasn’t updating everything weekly, it was segmenting products by variability and matching update frequency to each segment.

That last point maps directly onto how tariff-exposed inventory should be triaged. The SKUs and inputs worth a dynamic, frequently recalculated safety stock policy are not the highest-volume ones by default. They are the ones with genuine demand or supply volatility, which, in 2026, increasingly means anything touched by a tariff schedule with a defined expiration date, a single-sourced input, or a lane running through a contested shipping corridor.

03 Two Sectors, Two Strategies: Automotive’s Live Split Test

Detroit’s three largest automakers spent the first half of 2026 absorbing the same tariff and input-cost environment and arrived at two different buffer strategies, in real time, one of the clearest live comparisons available for how the same volatility produces different inventory decisions depending on where a company’s actual exposure sits.

04 Safety Stock Readiness Check

Before adding a single unit of buffer inventory, it’s worth an honest look at whether the organization can actually target that buffer, or whether it’s about to repeat the blanket-stockpiling pattern that trapped $1.7 trillion in working capital industrywide. 

05 Key Implementation Steps: Choose Your Perspective

Click on the perspective you want to analyze – executives or analysts.

06 Conclusion

The last eighteen months did not validate or discredit the manufacturers who built safety stock through 2025. It discredited the idea that safety stock built to hedge one specific policy risk will still make sense once that policy changes, because in 2026, policy changed faster than most inventory plans do.

What held up across that whiplash was not a bigger buffer. It was a better-targeted one. Buffer inventory earns its cost when it’s aimed at something genuinely concentrated, volatile, and hard to substitute. It’s just tied-up cash everywhere else.

The restocking cycle now forming, with customer inventories near multi-year lows and factory output at a four-year high, is the next test of that discipline. It will reward the organizations that already know which SKUs deserve the buffer, and it will quietly cost the ones still deciding that with a blanket policy and a calendar reminder.