The word of the year for 2025 was uncertainty. Policy unknowns, tariff whiplash, frozen investment decisions. Distribution leaders spent most of last year watching the horizon and waiting. That posture is no longer viable.
According to economist Alex Chausovsky, speaking at Distribution Strategy Group’s February 2026 subject matter expert webinar, 2026 is defined by a different and harder word: complexity.
“We’re transitioning from that time of uncertainty — where decision-making was frozen — to recognizing that 2026 will be marked by complexity rather than uncertainty. Things will be changing, but you can no longer afford to be that deer frozen in the headlights. You’ve got to develop plans. You’ve got to act,” Chausovsky said.
What follows are the key takeaways distribution leaders need to internalize heading into the balance of this year.
Stop Making Plans And Scenarios
The most important strategic shift Chausovsky advocated was a move away from single-point planning toward scenario-based decision-making. Think less business plan, more Pentagon war game. The idea is to define in advance what triggers which response — so that when a curveball arrives (and it will), your team isn’t scrambling to figure out which lever to pull.
This matters because the geopolitical environment remains volatile in ways that directly connect to distribution operations. Iran temporarily closed the Strait of Hormuz for the first time in history just days before the webinar. Twenty percent of global oil trade moves through that strait. A sustained closure would send energy costs skyrocketing overnight. Supply chain disruptions that once felt abstract are now recurring operational realities.
The companies that thrive in this environment won’t be the ones that guessed the future correctly. They’ll be the ones that built the muscle to respond quickly to multiple futures.
The U.S.-China Decoupling is Real, Gradual, And Not Going Away
For distribution leaders trying to make sense of the tariff environment, Chausovsky offered important context. The U.S.-China trade decoupling didn’t start with Liberation Day on April 2, 2025, when the Trump administration announced broad reciprocal tariffs. It began in 2018. China’s share of U.S. imports has been declining steadily since then — and both countries have been actively building alternative trade relationships.
China, for its part, has been aggressively courting new trading partners in South America, sub-Saharan Africa, and the Middle East. U.S. companies, meanwhile, are pulling more supply from Mexico, Vietnam, India, and other countries to reduce China exposure. The critical vulnerability that remains is in rare earths and critical minerals — gallium, cobalt, and others where China dominates production and for which there are no readily available alternative sources.
On tariffs specifically, Chausovsky’s assessment is that they aren’t going anywhere. The Trump administration has been pivoting from AIIPA tariffs (challenged in the Supreme Court) toward Section 232 tariffs, which go through Congress and focus on product categories rather than countries. Investigations are underway in semiconductors, robotics, industrial machinery, and processed minerals — categories that matter directly to industrial distributors.
“A continuous process of information intake and assessment of its impact to your product line, to your profitability levels, is a constant state of vigilance right now. And that’s not going to change for the foreseeable future.”
His clients reported three to six price adjustments throughout 2025 as a normal operational baseline. Plan accordingly for 2026.
The B2B Economy is Finally Stirring
Here’s the genuinely encouraging news: After a two-year period of industrial stagnation, the data shows real acceleration in the B2B economy. Industrial production growth rates are rising, short-term growth is exceeding longer-term growth, and wholesaler sales overall are running 4.6% above year-ago levels. Low- to mid-single-digit growth for the distribution sector in 2026 is, in Chausovsky’s view, a realistic and achievable baseline.
The catch is that headline figures mask enormous sector-by-sector divergence. The K-shape is pronounced. Industries such as aerospace, natural gas, and computers and electronic products are up 7% to 17% year over year. Wood products, motor vehicles, furniture, and anything tied to residential construction are declining.
Construction itself tells the clearest K-shaped story: Data center construction is booming, while general commercial office construction is contracting sharply.
The practical implication for distributors is straightforward: Evaluate your customer base individually. Which accounts are exposed to high-performing end markets? Where are you underpenetrated with customers who are having strong years? That’s where the actionable growth lives right now.
“You’ve got to be willing to recognize these trends and pivot. It doesn’t necessarily mean that you must enter new industries, but think about your customer base. Are your customers exposed to some of these winning industries, and how can you better serve them?”
Inflation isn’t as Tame as The Headlines Suggest
The official CPI figures heading into 2026 show inflation around 2.4% to 2.5%. Chausovsky has significant reservations about those numbers. The Bureau of Labor Statistics and other agencies had to carry forward prior readings during the extended government shutdown in late 2025, which means the recent data may be artificially suppressed.
More importantly, the numbers don’t match lived experience. Gasoline is down 7% year over year and is pulling the overall index down. But housing is up 3%, health care up 4%, utilities up 7% to 8%, and insurance remains elevated.
Chausovsky’s working expectation is that true underlying inflation is closer to 3% and that it could finish 2026 in the 3% to 4% range once base effects normalize and tariff pass-through increases.
For distributors, the implication is clear: Your cost of doing business — talent, input materials, energy, and facilities — will continue to rise. Average wage growth is running at 3.7% year over year.
“You’ve got to have a laser focus on making sure that you’re not just targeting growth, but you’re targeting profitable growth. That bottom line cannot be an afterthought.”
Chausovsky pushed further, advocating for profitability analysis at the customer level. Some customers are profitable. Some are neutral. Some are costing you money to serve. In an environment of persistent cost pressure, the willingness to walk away from loss-generating relationships is a competitive advantage, not a weakness.
The Labor Market has Shifted — Quietly but Completely
For the first time in years, the number of unemployed workers — 7 million — now exceeds the number of job openings, at 6.5 million. The hiring frenzy of the post-COVID rebound is over. Companies are getting more applicants, interview processes are more competitive, and the overall hiring rate has reverted to pre-2019 norms.
That doesn’t mean all positions are easy to fill. Architecture and engineering roles sit at a 1.8% unemployment rate. Midlevel management is at 2.5%. Financial operations stand at 2.9%. If you’re trying to hire experienced people into specialized or technical roles, competition for that talent remains intense, and compensation offers need to reflect it.
For the distribution sector specifically, the January 2026 jobs report showed zero jobs added, and transportation and warehousing shed 11,000 positions. None of these signals recession, Chausovsky emphasized; layoffs remain below pre-pandemic baselines. But growth in the distribution labor market will require active talent development rather than passive hiring.
On AI’s impact on jobs, there is some evidence of displacement in white-collar categories such as marketing, customer service, and technology, but the macro numbers don’t yet reflect economywide disruption. “Prompt engineer” is now one of the fastest-growing job titles. The structural shift is underway, but gradual. Chausovsky expects the picture to look materially different by the time he speaks at the Applied AI for Distribution Conference in June.
Six Strategic Priorities for Distribution Leaders
Chausovsky closed with a clear framework for distribution leadership priorities this year. The sequence matters.
• Data-driven decision-making is nonnegotiable. You cannot wait and see. The industrial demand recovery in the data is real; you need to be positioned to capture it, not watching from the sidelines when it arrives.
• Plan for multiple scenarios, not one. Know in advance what you’ll do if tariffs escalate on industrial machinery. Know what you’ll do if oil spikes because of a geopolitical disruption. Prewiring your decision tree is faster than inventing responses on the fly.
• Geopolitical vigilance is now a continuous business function. Supply chain de-risking is not a one-time project; it’s ongoing. The risks in the near term — particularly around Iran and the Strait of Hormuz — are rising, not receding.
• Build moats around customer relationships. The less transactional your customer relationships, the more insulated you are from volatility. Invest in relationships that are genuinely strategic.
• Protect your margins with precision. Know your profitability by customer, by product category and by industry vertical. Price with discipline. Be willing to exit relationships that don’t clear the bar.
• Invest in AI and productivity. This is where competitive separation is happening. Companies that implement AI to drive operational efficiency without wholesale workforce disruption will build durable advantages. Those that wait will face a gap that compounds over time.
The Bottom Line
The distribution leaders who will look back on 2026 as a strong year aren’t the ones who waited for the environment to settle down. They’re the ones who accepted complexity as the operating condition, built scenario plans rather than single forecasts, and made deliberate moves on profitability, customer selection, and technology investment.
The data supports optimism. The macro economy continues to grow. The B2B cycle is recovering. Wholesaler sales are trending positively. But extracting value from a complex environment requires a different kind of discipline than riding a straightforward growth wave. The wave isn’t coming. The current is moving, and skilled navigation is what separates the winners.
This article is based on insights shared by economist Alex Chausovsky during Distribution Strategy Group’s SME webinar, “Economy and Geopolitics: Key Insights for Distribution Leaders in 2026,” held Feb. 19, 2026. Chausovsky is a leading industrial economist who provides analysis and forecasting for manufacturing, distribution, and technology sectors. He will present the economic outlook at the Applied AI for Distribution Conference, June 23–25, 2026, at the Chicago Marriott O’Hare. Register for Applied AI for Distribution 2026: appliedaifordistributors.com