Navigating Tariff Volatility
Working with businesses across multiple industries, I have seen firsthand how volatile tariff policies can throw even the most carefully managed operations into chaos. This insight is not only from advising others but also from my own time as CFO of a footwear company. During that role, we faced sudden, steep increases in import duties on footwear from China, changes that threatened to significantly erode our margins overnight. By working closely with our design and sourcing teams, we engineered our products in a way that shifted their tariff classifications, dramatically reducing our effective duty rates without compromising quality or market appeal. That experience reinforced for me that success in a volatile tariff environment depends less on predicting policy shifts and more on building the systems, processes, and agility to measure impacts in real time and act decisively.
Tariffs, in essence, are taxes imposed on imports or exports, and they can change abruptly due to political negotiations, trade disputes, or shifts in domestic priorities. A few examples from just the past year illustrate how rapidly these rates can shift and how impactful they can be.
In the U.S., tariffs on steel and aluminum—including semi-finished and derivative products—doubled from 25% to 50% in June 2025, significantly raising input costs for any business using metal components.
Automobiles and auto parts were hit with a 25% tariff starting in April 2025, except for those qualified under USMCA rules.
“Liberation Day” Reciprocal Tariffs - A sweeping 10% baseline tariff on nearly all imports was announced under the IEEPA, with additional country-specific rates to follow.
De Minimis Exemption Eliminated: Effective August 29, 2025, the duty-free de minimis exemption for low-value shipments (under $800) will be eliminated for all countries.
For businesses that rely on global supply chains or imported materials, tariff volatility often means rising input costs. Even when a company does not import directly, suppliers may pass those increases along, and smaller businesses typically lack the pricing power to absorb them easily. The result is often a squeeze on margins or difficult decisions about whether to raise prices and risk losing market share.
The problem extends beyond cost alone. When tariffs shift suddenly, current suppliers may no longer be viable. Supply chain managers must scramble to find alternatives, which may require new logistics arrangements and additional onboarding time. Meanwhile, tighter margins and slower sales cycles can lead to unpredictable cash flow, limiting a business’s ability to invest, hire, or expand.
Maintaining profitability in this environment demands a proactive and disciplined approach. One essential strategy is to diversify supply sources. Businesses that depend on a single country or supplier are more vulnerable to tariff shocks, whereas those that maintain multiple relationships, including domestic suppliers, can adapt more easily. Negotiating long-term agreements that cap or fix pricing on materials can also help stabilize input costs. For those willing to explore more technical approaches, tariff engineering, adjusting a product’s composition, classification, or point of origin, can legally reduce duty rates. Price increases, when unavoidable, are best introduced in smaller increments and paired with additional value or transparency to minimize customer resistance.
While these strategies address the external side of tariff volatility, the internal response is just as critical. The businesses that manage tariff risk most effectively are those that embed monitoring and analysis into their core systems and processes. This begins with integrating tariff data into ERP and accounting platforms, tagging every imported item with its Harmonized Tariff Schedule code, and automating landed cost calculations so tariffs are reflected in cost of goods sold without manual intervention. Sophisticated organizations go further by building tariff impact dashboards in tools like Power BI or Tableau, giving managers the ability to track tariff costs by product, supplier, or region, see how they compare to forecasts, and run “what if” scenarios when policy changes are announced.
Procurement processes are equally important. By requiring suppliers to update country-of-origin information and even share the cost burden of tariff increases whether via price adjustments or cost-sharing arrangements, businesses move from operating in the dark to actively managing downstream impact. Automated workflow tools such as Power Automate can be configured to monitor tariff databases and send alerts to finance and procurement teams whenever relevant rates change. Linking this data directly to financial planning and analysis functions allows rolling forecasts and margin reports to adjust immediately, making it easier to see how profitability will be affected.
Real-time visibility into tariff impacts also enables clear, proactive communication with customers. When a company can show that price adjustments are directly tied to external tariff changes and can explain this with concrete data, it builds transparency and credibility. Customers may not welcome higher prices, but they are far more likely to accept them when they see evidence that the business is managing costs responsibly, applying increases only when necessary, and working actively to protect their interests. This level of openness not only maintains trust during volatile periods, but it can also deepen long-term customer loyalty.
By embedding this level of tariff tracking and response into their operations, organizations gain real-time visibility into cost impacts and can make decisions about sourcing, pricing, and inventory with confidence. In my experience, companies that adopt this approach not only survive tariff volatility, but they also use it to sharpen their processes, strengthen their supplier relationships, and improve their agility in the face of other market shocks.
Volatile tariff environments test the adaptability of every business, but they also inspire innovation. Companies that respond with data-driven decisions, creative sourcing strategies, and proactive customer engagement emerge stronger than before. Rather than waiting for stability, these organizations use each change as an opportunity to refine their operations, improve efficiency, and position themselves for long-term success.
