On April 2, 2025, President Trump unveiled a reciprocal tariff plan for his second term, signaling a major shift in American trade policy. However, just days later, Trump implemented a 90-day pause on some tariff increases to give certain countries time to negotiate trade agreements. In the meantime, several multinational manufacturers — such as Apple, Nvidia, Hyundai and Eli Lilly — have announced plans to invest billions in U.S. production facilities.
Tariffs climbed sharply to the most pressing concern among CFOs in the first quarter of 2025, according to The CFO Survey. The survey is a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. While roughly a third of survey respondents expressed concerns over looming tariffs, many are adopting a wait-and-see approach to hiring, capital spending and operational changes.
Can your organization afford to sit on the sidelines? Probably not. Even if you operate domestically, tariff hikes could significantly impact your business’s top and bottom lines. A proactive response, guided by supply-chain mapping and market-based financial modeling, can help position your business to thrive in today’s marketplace.
What’s happening?
Tariffs are nothing new. All countries, including the United States and its trading partners, impose them as a tax on imported goods. Key reasons countries charge tariffs include:
- Generating government revenue,
- Protecting domestic businesses by making imported goods more expensive than domestically produced ones,
- Narrowing the trade deficit (the difference between imports and exports), and
- Counteracting unfair practices by trading partners, such as forced or compulsory labor, subsidized loans, and intellectual property violations.
Over the last 50 years, the United States shifted towards trade liberalization, reducing tariffs to promote global commerce. According to the U.S. Bureau of Economic Analysis, in 2024, the United States imported roughly $4.11 trillion and exported about $3.19 trillion, generating a $920 billion trade deficit. This represents a 17% increase from the $784.9 billion deficit in 2023.
What makes the current administration’s proposed policy different? The 2025 tariff agenda is sweeping in scope and uncertain in detail. The Trump administration has indicated broad coverage across many goods and countries, but many aspects of the specifics — including rates, products, and exemptions — are still under negotiation. This uncertainty complicates financial planning and strategic forecasting today.
How should your business respond?
The final terms of new trade deals will likely differ across sectors and countries. Likewise, the effects of the new global trade regime will vary from company to company. Your response should depend on how exposed your operations are to global sourcing and international sales. Evaluate your situation, then develop tariff mitigation strategies that address the following possible side effects:
Increased costs. Tariffs directly raise the cost of imported goods and indirectly impact domestic buyers if upstream suppliers rely on foreign inputs. Even businesses that believe they’re fully domestic can be affected if their vendors source internationally.
Before passing along cost increases through price hikes, carefully evaluate the price sensitivity of your customer base. Modest increases may be feasible for high-demand or niche products without significant revenue loss. However, excessive price hikes could lower sales if customers shift to competitors or substitute goods — or they decide to forgo discretionary or luxury items. Where appropriate, communicate price adjustments transparently and emphasize value-added features or services to justify price increases and enhance perceived value.
Another possible solution to offset tariff-related cost increases is finding alternative low-cost suppliers. This might include domestic vendors and those located in countries that negotiate favorable trade agreements with the United States. For example, if you rely on imports from a high-tariff country (such as China), you might switch to a low-cost supplier in a country that’s agreed to lower its current tariffs on U.S. imports. In many cases, alternative foreign suppliers have lower labor costs than domestic suppliers.
Supply chain disruptions. Tariffs can cause ripple effects throughout your supply chain, including delays, shortages, cost overruns and logistics challenges. Companies with lean operating models may be especially vulnerable. It’s essential to create a detailed supply chain map that includes second and third-tier suppliers and assess where tariff exposure exists.
To minimize disruptions, consider increasing your buffer stock and diversifying your supply chain to avoid concentration risks (where you’re overly reliant on a few key suppliers), especially if your existing suppliers operate in high-tariff countries. Shifting to domestic producers can also help stabilize supply chains and costs, though it might involve higher labor costs.
As countries negotiate trade deals with the United States, building solid supply chain relationships and regularly communicating with vendors is critical. Incorporating supply chain automation and data analytics can enhance visibility and responsiveness. Tools like real-time shipment tracking, supplier risk scores and predictive modeling can help you anticipate and respond to disruptions more effectively.
Increased revenue for domestic producers. Tariffs may provide a tailwind for U.S.-based producers that compete with soon-to-be-pricier foreign rivals. As reshoring becomes more appealing, explore whether your business might benefit from shifting some operations to the United States. To mitigate concerns about high domestic labor costs and potential workforce issues, consider leveraging automation, robotics and AI-driven solutions that enhance productivity and make your company less reliant on human capital.
Global growth opportunities. Many countries have historically imposed high tariffs and nontrade barriers, making U.S. products less competitive overseas. To the extent that reciprocal tariffs lower existing foreign trade barriers, U.S. companies may have more global opportunities.
For instance, exporters previously subject to high tariffs overseas may find their products more competitive as certain countries lower trade barriers. And domestic companies that haven’t previously exported might consider exploring revenue-building opportunities in countries that negotiate more favorable tariff agreements.
Increased currency risk. Currency volatility often accompanies trade policy shifts. If your business has exposure to foreign currencies, work with your finance team or advisors to explore hedging strategies, such as forward contracts, options or swaps.
Additionally, the federal government offers various tax relief programs, subsidies and trade policy benefits that may offset tariff impacts. For instance, you might be able to take advantage of Foreign Trade Zones (FTZs). Although Trump recently scaled back FTZs, they can defer or reduce duties on imported materials. Another possible option is the Interest Charge Domestic International Sales Corporation (IC-DISC) structure for qualified exporters. The upcoming tax package being negotiated in Congress may provide additional tax relief. Contact your tax advisor for more details and recent developments.
Position your business for resilience
You can’t afford to rely on gut instinct when responding to the evolving global trade landscape. Preserving profit margins in the face of tariffs isn’t just about cutting costs or raising prices. It involves strategic foresight, deep analysis, and constant communication with internal and external stakeholders.
Work with your CPA to help develop robust financial models to forecast the expected effects tariffs will have on your business. Modeling, or scenario planning, can guide strategic decisions in procurement, pricing, hiring and investment in the brave new trade landscape.
© 2025