Today's organizations face a list of geopolitical headwinds, with the latest and perhaps the most powerful tariffs. Once the global trade framework is reworked, key economic relations are being redefined in a fluid and unpredictable way. Whether high tariffs with key trading partners are long-term supplies or temporary pressure points, one thing is clear. They influence business cost structure, consumer behavior and competitive positioning.
CEOs are already dealing with supply chain and balance sheet disruptions, and face substantial uncertainty. There is also great concern about the long-term implications of the evolving trade framework. In these unsettling times, the board must intervene not only as a governance steward, but also as a strategic partner that diagrams the company's path.
How can the board provide effective monitoring and guidance as businesses navigate the changing trade framework? Here are some winning strategies to consider:
1. Strengthen leadership and strategic governance
The duration of volatility requires more than operational management. They seek veteran leadership with global trade expertise and risk management experience. The board of directors should assess whether current management has the expertise needed to effectively navigate the current landscape. If there is a gap, the board should attract external advisors with expertise in global trade and supply chain strategies.
Additionally, the board should consider increasing the key points of its involvement with management. Quarterly meetings may be too far apart to manage the rapidly changing trade environment in a timely manner. A more frequent convened and more focused agenda will allow the board to go ahead of new risks. Some companies benefit from the creation of trade risk committees to drive short- and long-term strategies on tariffs and geopolitical exposure.
2. Establishing a “Customs War Room”
Many major global companies have also created internal “war rooms” to monitor the development of trade policy in real time. Beyond their capabilities, teams will assess tariff exposure, analyze tariff overlap, explore supply chain alternatives, and develop risk mitigation strategies. Perhaps most importantly, they are engaged in scenario planning.
The board should be actively involved in overseeing this process. This includes reviewing the planned output of the scenario, verifying risk assumptions, and ensuring that response playbooks are introduced for the most likely trade policy outcomes. Having a well-developed contingency allows businesses to respond quickly and instill confidence in their shareholders and stakeholders.
3. Perform an end-to-end supply chain risk assessment
Understanding the full scope of tariff exposure begins with a comprehensive supply chain assessment. Companies must exceed first-tier suppliers to identify vulnerabilities across their sourcing networks. You need to identify key nodes and chokepoints and identify which components or suppliers are most exposed.
The board should ensure that management can respond to these questions with data-driven rigor and act quickly to manage the most important risks first. Risk mapping, supplier diversification, and scenario testing should become repeated agenda items in board discussions.
4. Reduce risk through smart readjustment, not panic
Absorbing or reassessing production in close proximity may seem like a logical response to tariffs, but such movements are often expensive, complicated and time-consuming. The board must challenge management to balance long-term strategic change with practical short-term alternatives.
For most companies, restructuring supplier contracts, negotiating shared risks, and adjusting local sourcing strategies are more effective initial steps. The board's role is to ensure that management evaluates and pressure tests all options. The board should check whether the company is looking for a viable alternative to the current procurement model to reduce its dependence on one country or region, and whether it is a proximity scenario in light of the cost and regulatory landscape.
5. Reforming policy
Tariff navigation is not only risk mitigation, but also influence and opportunity. Companies with strong policy involvement can play a role in shaping trade regulations that affect industries. Boards should encourage active government relations strategies, including collaboration with trade associations and direct advocacy where necessary.
Tariffs may control today's headlines, but they are part of a wider and continuing change in the global economic landscape. Therefore, the board must not only guide a tactical response to tariffs, but also perform its long-term mission. It needs to ensure that businesses are building resilience to rapid macroeconomic and geopolitical changes. The most resilient organizations are those that embrace uncertainty and use it as a catalyst for innovation. The board can play an important role in this process by guiding strategic thinking, promoting innovation, and helping businesses pivot in the face of disruption.
