How to navigate trade volatility

In a period of trade volatility, how can you help to shape an optimistic future?

In brief

• Unprecedented tariff and trade changes create many challenges but can also reveal new approaches.
• Decisions made in the next business planning cycle can help companies shape a stronger future rather than merely reacting to disruption.
• Companies can benefit by leveraging new business information, making use of new relationships and reassessing previous ideas from different viewpoints.

When your company drafted its last business plan, reviving a factory in the US or separating out brands likely wasn’t a priority. But after a period of trade and supply chain upheaval mixed with new legislation, maybe that plan requires a second look. Changing product tariffs, new country-specific tariffs, investigations, pauses and trade deals can upend even the best-laid plans. Yet the same volatility that complicates procurement, pricing and planning also presents opportunities for companies that are nimble, flexible and willing to challenge their assumptions. If your teams have already taken steps to manage immediate tariff exposure, the next move is to transform that defensive posture into a durable approach that can help increase your company’s competitive edge.

Many companies implemented a “first response” playbook, collaborating across business functions, mapping impacts, assessing options and taking steps to contain costs and risk. Now it is time to move into the next phase of trade management by considering the following three actions.

1. Increase the value of your existing work

After analyzing supply chains and procurement processes, don’t stop at risk reduction. Use those insights to help improve margin and increase flexibility.

Shift models to unlock value

• Leverage direct-to-consumer channels. If tariffs altered landed costs or disrupted distributors, a direct-to-consumer pivot can recapture margin and open new sales avenues.
• Consider decoupling hardware and software. For products with embedded software, consider post-importation software downloads if regulations allow. Importing hardware first and activating software domestically can help lower customs value and duty impact while allowing for feature-tier pricing and rapid updates.

Rebalance the manufacturing footprint

• As it aligns with the broader business approach, consider using existing capacity in more trade-favorable jurisdictions. You might not need to build new plants; often, it is faster to increase contracted or internal capacity in alternative locations. Use total landed cost models that include duties, logistics variability, exchange rate risk and working capital in the calculation.
• Modularize for flexibility. Standardize sub-assemblies and packaging so production can be switched among plants with minimal changeover. This operational flexibility allows for faster adaptation when policy or logistics conditions shift.

Monetize the compliance work

• Revisit your portfolio approach. If you calculated the stand-alone value of a brand or IP to evaluate duty impact or transfer pricing, that data can be used to revisit your portfolio approach. Brand viability analysis should already be part of broader business considerations, along with exploring spin-offs, licensing and partnership opportunities.  

2. Leverage new relationships — inside and out

Change is building new connections; now potentially turn them into lasting value.

Inside the company

• Continue the collaboration between different functions by encouraging communication and data sharing among procurement, logistics, tax, treasury, legal and sales. These groups are collaborating more than ever; explore what more they can do together.

Outside the company

• If you secured alternative suppliers to navigate a disruption, consider how you can continue to build those bonds. Could you use them for other items? Can you renegotiate existing deals on more favorable terms by consolidating purchases or increasing volume?
• Consider co-manufacturing and joint innovation. Invite key suppliers into your design process to reduce tariff-sensitive materials, increase local content and improve reparability. This collaboration can often unlock cost and sustainability benefits.

3. Reopen the “no-go” folder: plans that might work now

Ideas previously shelved as “not feasible” under prior assumptions may now be viable options in today’s conditions.

Revisit domestic or nearshore options

• What former plans were shelved because they were not viable at the time? With new incentives, tighter supply risk thresholds and customers seeking reliability, reshoring or nearshoring deserves another look. Compare risk-adjusted total landed cost over a three-to-five-year period and consider the potential for premium pricing, service-level gains and inventory reductions.
• Do more in one location. If a site now sits within a trade-favorable jurisdiction, consolidating more steps of the value chain (final assembly, packaging or configuration) there can increase local content percentages and reduce classification risk.

Build a scenario library

• As ideas are developed, consider when they might become preferred options. Instead of treating ideas as static, frame them within a few plausible futures and use modeling to analyze their performance under different conditions. This approach helps you understand when an idea becomes viable and allows you to act quickly if the environment shifts.

Final thoughts

Trade volatility isn’t a storm to wait out; it’s the new climate. Companies that use this moment to revisit how they design products, choose partners, structure brands and serve customers will emerge stronger. By extracting more value from the analyses you’ve already funded, doubling down on the relationships you’ve formed and reopening ideas that once seemed out of reach, you can help convert trade turbulence into a sustained competitive edge and shape a future that is resilient and full of potential.