The Business Continuity and Cybersecurity Risks of US Trade Tariffs: A Wake-Up Call

The Business Continuity and Cybersecurity Risks of US Trade Tariffs: A Wake-Up Call for Organisations

The recent introduction of US trade tariffs on its major trading partners—Canada, Mexico, and China—has created significant uncertainty for businesses worldwide. Canada and Mexico have announced retaliatory tariffs on key US exports, mirroring the scale of the imposed tariffs, and the Trump administration has yet to make its position clear with regards to the EU; likely, this relationship will also be impacted, with the EU closely monitoring the situation and considering potential countermeasures. While much of the discussion focuses on economic implications, the impact on business continuity and cybersecurity should not be overlooked. Organisations that rely on global supply chains, at best, face uncertainty concerning increased trade friction and raised costs and, at worst, may encounter unforeseen disruptions.

Supply Chain Disruptions and Business Continuity Risks

1. Increased Costs and Procurement Delays
   • Higher tariffs mean increased IT and cybersecurity hardware costs, including networking equipment, servers, and semiconductors.
   • Supply chain disruptions may lead to delays in hardware procurement, software licensing, and cloud service operations, affecting business continuity.
2. Regulatory and Compliance Challenges
   • Organisations operating in highly regulated industries (e.g., finance, healthcare, and critical infrastructure) may need to reassess their compliance strategies as data flows and technology dependencies shift.
   • Tariff-driven policy changes, such as increased export restrictions, new supplier due diligence requirements, and data sovereignty regulations, could impact cross-border cybersecurity regulations and data-sharing agreements, affecting compliance with GDPR, ISO 27001, and other frameworks.
   • Governments may introduce stricter data localisation laws, requiring organisations to store and process sensitive data within specific jurisdictions. This could potentially impact cloud computing and cross-border IT operations.
3. Geopolitical Retaliation Affecting Service Availability
   • If countries affected by tariffs introduce countermeasures, businesses relying on Chinese-manufactured cybersecurity products or software may face restrictions.
   • While tariffs primarily affect physical goods, there could be indirect consequences for software and SaaS services, particularly if regulatory retaliation leads to new compliance barriers, data localisation requirements, or export restrictions.
   • Regulative shifts, rather than direct tariffs, could also affect cloud services, AI-driven compliance tools, and cybersecurity frameworks that depend on US technology.

Cybersecurity Risks: The Hidden Threat of Trade Tariffs

Beyond business continuity, trade tensions can escalate cybersecurity threats in several ways:

1. Cyber Retaliation and State-Sponsored Threats

   • Geopolitical tensions increase the risk of cyberattacks targeting critical infrastructure, financial institutions, and corporate networks.
   • State-backed threat actors may exploit vulnerabilities in supply chains, launching supply chain attacks and data breaches.

2. Data Sovereignty and Security Concerns

   • Data localisation laws could tighten, requiring businesses to store sensitive information within specific jurisdictions.
   • Restrictions on encryption technologies and cybersecurity solutions may emerge, potentially affecting the ability to secure data effectively.
   • Organisations reliant on international cloud providers may face increased regulatory burdens, which could disrupt data access and raise compliance issues.

3. Rise of Shadow IT and Unauthorised Workarounds

   • Increased costs for enterprise cybersecurity solutions could push businesses towards less secure alternatives or shadow IT solutions.
   • Employees and IT teams may resort to unvetted software or hardware, introducing new vulnerabilities into corporate networks.

How Businesses Can Mitigate These Risks

In light of these challenges, organisations must take proactive measures to strengthen business continuity and cybersecurity resilience:

• Diversify Supply Chains: Reduce dependence on a single country for critical IT and cybersecurity hardware.
• Enhance Cyber Threat Monitoring: Increase vigilance against state-sponsored cyber threats and supply chain attacks.
• Reassess Compliance Frameworks: Ensure data protection, cloud security, and vendor risk management strategies align with evolving trade regulations.
• Strengthen Incident Response and Resilience: Develop comprehensive incident response plans to mitigate risks from cyber retaliation or supply chain disruptions.
• Implement Alternative Supplier Strategies: Identify and establish relationships with alternative technology providers to mitigate risks of supply chain disruptions due to regulatory or tariff restrictions.

The Bottom Line: A Strategic Approach to Business Continuity

Trade tariffs may seem like an economic issue, but their consequences ripple through business continuity, cybersecurity, and regulatory compliance. While direct tariffs primarily target physical goods, regulatory shifts and retaliatory measures may create challenges for software, SaaS, and cloud service providers. Organisations must take a proactive stance to remain resilient, secure, and compliant amid geopolitical uncertainty.

Is your organisation prepared for the business continuity and cybersecurity risks of global trade tensions? Secure Step Forward can help you navigate these challenges with expert GRC solutions. Contact us today to assess your risk exposure and fortify your resilience.

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