Since I joined KPMG, the business world has faced crisis after crisis after crisis. The financial crash, Brexit, the COVID-19 pandemic, the Russian invasion of Ukraine, the return of inflation. As a business leader now, you're undoubtedly asking yourself, how can you navigate yet another upheaval, one that could strike at the foundations of your business model? Let's start by looking at what's on the table right now. We've seen massive new tariffs on almost every type of product traded into the US and threats of more. Of course, this has triggered retaliations by China in particular, the EU paused for now, and Canada. Plus, there's a big risk that the US will introduce retaliatory measures against digital services taxes and aspects of the Pillar Two rules, which could significantly increase the cost of doing business in the US for foreign corporations, even if they're not trading in goods. So faced with all this disruption and uncertainty, what action should you take now? As with all upheavals, it makes sense to proceed step by step. First, assess the actual impact on your operations. Are these tariffs directly increasing your cost of sales? Are your supply chains being physically disrupted? Are your budgets and 2025 forecasts now completely out of date? In other words, what's the damage? We're already helping many of our clients model exactly that. Not just the impact of tariffs, but also the effect of the retaliatory tax measures that I mentioned. Secondly, armed with this understanding, you can triage your decisions. Some decisions might be tactical, switching to domestic suppliers where possible, adjusting your transfer pricing to share the burden, or even taking advantage of low equity valuations to secure some bargains. Others are low risk moves. There may be customs reliefs available that you haven't previously used, such as first sale for export. Many companies have already built-up stock in the US ahead of these announcements, for example. But the hardest ones are those big, no-return strategic decisions. Where do the US or China sit in your long-term plans? Is now the time to restructure your IP ownership and trading model? And what are the triggers for a long-term change in your manufacturing footprint? We're helping clients right now to assess the potential impact of US tariffs on their business and prioritise the key actions to take across our ‘impact framework’. If you'd like help to work through the implications for your business, get in touch.
