In a surprising move, the US announced a suspension on the implementation of new tariffs for most businesses. Still, the fundamental threat remains. If enacted, the proposed tariff hike could push the effective tariff rate (ETR) to about 20% for EU goods and about 20% for Chinese imports to 104%, according to Fitch ratings. Other Asian economies, including Vietnam, remain exposed.
According to Fitch, the result is “up consumer prices and reducing US corporate profits.” “Higher prices squeeze consumer spending and narrow down actual wages, whereas lower profit and policy uncertainty serve as a resistance to corporate investment.”
Prof. Aswath Damodaran, a well-known corporate valuation expert and professor of NYU, said in a blog post:
Even if the pause is in place, the moment calls for strategic action. Companies now have narrow windows to assess exposure, strengthen plans and relocate. Those with diversified strategies and real-time planning capabilities are becoming more adaptable. Others must act fast.
“We're looking forward to seeing you in the future,” said Jack McCullough, president and founder of the CFO Leadership Council. “Scenario planning is very simple these days. Technology does that.”
So, what should companies do now? Experts point to five immediate strategic priorities:
1. Strengthen the trust of investors.
Fast response and transparency are more important than the perfect answer. The board must ensure that it avoids vacuums of information that could undermine market reliability. “Companies don't have all the answers at once like this when things are unfolding right away,” says Moira Conlon, founder and CEO of Financial Profiles.
However, the more information you can share about you [company’s] The situation and response, the more lucrative investors will see you as a trustworthy management team,” says Conlon. She recommends developing bulls, bears and base case models based on current facts. The revenue season is approaching. [their] Thinking about models and investments,” she adds. CFOs should be conservative in their guidance and should explain their assumptions.
2. Reevaluate supply chains and sourcing models.
Tariff volatility reveals weaknesses in global sourcing. “Now is the time to have candid conversations with key suppliers, renegotiate terms, and explore local alternatives to avoid potential confusion,” says Joseph Estevez, CEO of Main Point.
In addition, businesses need to assess their financial resilience. “Please make sure your cash flow is strong and consider ensuring that you have a line of credit wherever possible and being responsible for diversifying risks,” Estevez says. “Two extended approaches to setting up a supply chain and increasing financial flexibility are better equipped for what comes next, whether it's trade shifts, tariffs, or other unexpected challenges.”
3. Keep real-time visibility fluid.
Economic flexibility is a high priority, so the key question for every company, whether it has financial capabilities or not, is “How much cash is it?” [on hand] Is it enough? “Managing Partners of the Financial Executive Consulting Group require constant comparisons with other parts of the company's financial situation, such as those at that level of responsibility and long-term debt.
4. Use technology.
Companies that can model and respond quickly to a variety of market scenarios are better at navigating volatility.
“The CFO came to us and said, “What is my position on working capital? How can I look up the DPO to look up the DPO? says Melissa di Donato, chairman and CEO of Kiriba.
The demand for better forecasts is widespread. In the latest Financial Professionals Association survey, over 60% of Treasury experts cited cash or liquidity forecasts as the most challenging task they face. Predictive analytics can clarify capital allocations and help change model rates or policies, Donato said.
5. Manage long-term risks.
Crisis leadership is more about vision than mitigation. The board should look at how today's disruption can shape risks and opportunities for tomorrow.
“It's essential to understand probability and planning accordingly,” wrote Brian Olson, chief coaching chief executive coach, in a column Monday.
Obviously, short-term firefighting is not enough. The more powerful companies are those who identify and act on long-term opportunities amid today's turmoil.
Managing simply through adversity should not be the only focus. These disruptions could potentially provide a pathway for strategic growth, Olson points out.
Companies cannot control tariffs, interest rates, or macroeconomic shocks, but they can control internal responses. And with the weight of trade-offs, companies need to keep long-term value creation at the forefront and center. “If we reduce the value tomorrow, we resist the urge to cut costs today,” warns McCullough.
