Tariffs and Business Strategy: Navigating More Than Just Costs

In Spring 2025, costs were relatively stable. Then tariffs returned to the headlines. Within days, companies were recalculating sourcing options, revisiting customer agreements, and rethinking pricing structures. But tariffs aren't just a single pressure point — they hit from multiple angles, and understanding that complexity is essential for strategic decision-making.

Three Key Ways Tariffs Impact Business

1. Cost of Raw Materials and Supplies

When tariffs are imposed on raw materials or components, businesses feel the squeeze immediately. Price increases ripple through the supply chain, forcing adjustments in sourcing, pricing, or margin expectations. In some cases, suppliers pass on more than the actual tariff cost, creating inflated expenses that cut into profitability. Negotiating these increases, managing supplier relationships, and recalculating landed costs become part of daily operations.

2. Capital Expenditure (CapEx): Building and Expanding Facilities

The impact of tariffs isn't limited to raw materials. Companies expanding production capacity—whether building new plants or upgrading existing ones—face higher costs on imported construction materials and capital equipment. Unlike raw materials that turn over quickly, capital investments are long-term, making the increased costs harder to absorb. Some companies are adjusting depreciation schedules to spread out the impact over time, but that only delays the hit—it doesn’t remove it. This is company-driven and your finance team will contribute their voice.

3. Market Position & Competitive Strategy: Pricing Transparency and Supplier Tactics

An often-overlooked impact is how tariffs affect competitive positioning. At one end of the spectrum, some suppliers apply the tariff rate to the full item price, even if the tariff only applies to a portion of the materials. For example, a 10% tariff on imported components should not justify a 10% price hike on the entire finished product—but some suppliers make this move. At the other end, some suppliers choose to absorb the cost completely, which can both please customers and raise eyebrows. After all, if the supplier can absorb the tariff without issue, it signals that margins may have been padded to begin with.

In the middle, there are those who choose precision—adjusting prices only by the exact tariff amount. But this level of transparency carries a risk: it allows customers—or even competitors—to reverse-engineer your cost structure. If the price increase aligns too neatly with the tariff, it can unintentionally expose your margins, sourcing costs, and even your supplier relationships.

Across the board, tariffs create pricing pressure and can expose vulnerabilities when customers begin asking questions. It’s not just about margins; it’s about trust, competitive edge, and protecting strategic information.

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What We Teach in IO | Global Trade & Tariffs

At Income|Outcome, we take these real-world challenges and turn them into immersive learning experiences. In our IO | Global Trade & Tariffs simulation, participants take charge of a business and navigate these exact pressures in real time:

• Facing unexpected tariffs on raw materials and capital equipment
• Deciding when and how to pass costs through to customers
• Managing supplier price hikes and defending margins
• Responding to customer demands for pricing transparency
  

This isn’t theory—it’s practice. Every decision matters, and participants see the consequences unfold before their eyes.

Who Should Attend?

This experience is designed for cross-functional teams who need to understand the ripple effects of tariffs:

• Sales and Account Managers – who negotiate with customers and manage relationships
• Operations and Supply Chain – who handle sourcing, logistics, and landed costs
• Finance and Pricing Analysts – who manage margins, track profitability, and guide pricing
• Customer Service and Order Management – who process orders and resolve billing issues
  

The Real Impact

Tariffs are more than just a cost increase—they change the entire decision landscape. Understanding how to manage those changes, communicate effectively with customers, and protect margins can be the difference between thriving and merely surviving in a tariff-driven market.

Want your team to practice these tough decisions before they face them in real life?

[Request a Demo] [Talk to Us]

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