Five Checks For … Preparing Manufacturers for Tariff Volatility
Please find our latest “Five Compliance Best Practices” article, which provides quick-hit compliance best practices multinational companies can implement to enhance their compliance programs and internal controls. Additional “Five Things” articles, as well as our What Every Multinational Should Know and Tariff-ied! articles, can be found in the drop-down menu on our Tariff & International Trade Resources page. Click Here to Register for our email list to receive future practical international regulatory compliance tips.
Manufacturers are often among the businesses most directly affected by tariff volatility. Changes in tariffs can increase input costs, disrupt production planning, undermine pricing assumptions, and put pressure on supplier relationships. This is especially true where manufacturers rely on globally sourced components, long lead times, or concentrated production in higher-risk jurisdictions.
Manufacturers accordingly should ensure that tariff risk is integrated into sourcing, production, finance, and customer-planning decisions rather than handled only as a customs issue. Here are five best practices companies should consider when preparing for tariff volatility:
- Map Which Inputs and Product Lines Are Most Exposed. Manufacturers should identify the raw materials, components, and finished goods most vulnerable to tariff changes and assess the effect of those changes on margins, pricing, and production continuity. This review should be grounded in real sourcing and bill-of-materials data rather than high-level assumptions.
- Evaluate Alternative Sourcing and Production Options. Companies should determine whether alternative suppliers, substitute materials, secondary production sites, or regional manufacturing options are realistically available if tariff costs rise or sourcing becomes restricted. Even where alternatives are not immediately deployable, understanding what options exist is an important part of tariff preparedness.
- Review Customer and Supplier Contracts for Tariff Risk Allocation. Manufacturing businesses often operate under contracts negotiated before current tariff volatility emerged. Companies should assess whether those agreements address tariff-related cost increases, price adjustment rights, delivery obligations, and termination or renegotiation mechanisms. Contract terms often shape whether tariff pressure becomes manageable or acute, and who bears the risk of changes.
- Coordinate Trade Compliance With Operations and Finance. Tariff exposure is not only a legal issue. Manufacturers should ensure that trade compliance personnel are communicating with operations, procurement, finance, and sales teams so that sourcing and pricing decisions reflect current tariff realities. Cross-functional coordination is especially important when companies are considering changes to origin, further manufacturing locations, or import structures.
- Prepare Contingency Plans Before Costs Escalate Further. Companies should develop practical response plans in advance for different tariff scenarios, including cost increases, country-specific duties, or sudden product-specific measures. The more a manufacturer depends on uninterrupted cross-border flows, the more important it is to decide in advance how the business will respond if trade conditions shift quickly.
Manufacturers that assess their tariff-sensitive inputs, review their contractual exposure, and build operational flexibility in advance will be better positioned to withstand future trade disruption. In the current environment, tariff preparedness is increasingly part of basic business resilience.
Would you like more practical compliance tips like these? The Foley International Trade & National Security Team is monitoring all international trade developments, including new tariff pronouncements, which we post as they occur on our Tariff & International Trade Resources blog. Click Here to Register for our email list to receive future emails and practical international regulatory compliance tips.
Our white paper on Managing Import and Tariff Risks During a Trade War outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on Managing Supply Chain Integrity Risks provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.
