How CFOs Can Take Action to Mitigate the New Tariffs

59% of CFOs plan to absorb less than 10% of the tariff impact within their cost base. That means the majority are shifting the burden elsewhere—either to customers, suppliers, or alternative cost-cutting measures.

The latest tariffs aren’t just another bump in the road—they’re a direct hit to pricing strategies, supply chains, and financial forecasts. And while some companies scramble to react, the most strategic CFOs are already taking calculated steps to protect their margins. Want to know how?

What Is a Tariff?

A tariff is a tax that a government places on goods or services that are brought into or sent out of a country. The main reasons for tariffs are to protect local businesses from foreign competition, raise money for the government, and sometimes influence trade policies.

There are two main types of tariffs:

Import Tariffs – Taxes on goods brought into a country. The U.S. tariffs on Canada and Mexico are examples of import tariffs. These taxes make foreign products more expensive, encouraging people to buy from local businesses. They also help the government collect money.
Export Tariffs – Taxes on goods sent out of a country. These are less common and usually used to protect important resources or generate government revenue.

Tariffs can be applied in different ways:

Specific Tariffs – A set tax on each unit of a product.
Ad Valorem Tariffs – A percentage of the product’s value (like the U.S. tariffs on Canadian and Mexican imports).
Compound Tariffs – A combination of both.

Latest U.S. Tariffs (2025)

Understanding the latest tariff changes helps assess their economic and trade impact.

Tariffs on Canada and Mexico

On February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, citing national security concerns. However, goods qualifying under the USMCA agreement are exempt.

Affected Imports from Canada

Crude Petroleum – Tariffs drive up transportation and fuel costs, impacting multiple industries.
Vehicles – Includes finished automobiles and auto parts, raising manufacturing expenses.
Electrical Machinery – This covers computers, telecommunications equipment, and industrial components.
Timber and Lumber – Increased costs for construction materials affect building projects.

Affected Imports from Mexico

Vehicles – Higher costs for automotive production and supply chains.
Machinery and Electronics – Includes computers, telecom equipment, and industrial machines.
Agricultural Products – Includes tomatoes, avocados, and beer, leading to potential price increases.
Mineral Fuels – Increased energy costs from higher tariffs on oil and gas.

Tariffs on China

On February 4, 2025, the U.S. imposed an additional 10% tariff on Chinese imports due to concerns over fentanyl trafficking.

Affected Imports from China

Consumer Electronics – Increased costs for smartphones, laptops, and telecom devices.
Industrial Equipment – Higher expenses for machinery and manufacturing components.
Textiles and Apparel – Rising costs for clothing and footwear affect retailers and consumers.

Global Steel and Aluminum Tariffs

On March 12, 2025, a 25% tariff was placed on all steel and aluminum imports to protect U.S. industries.

Affected Sectors

Automotive – Increased production and repair costs.
Construction – Higher prices for infrastructure and building materials.
Manufacturing – Rising costs for machinery and equipment production.

Tariffs on Venezuelan Oil and Gas

On March 24, 2025, a 25% tariff was imposed on countries purchasing Venezuelan oil and gas to pressure its government.

Global Impact

Energy Prices – Increased fuel costs worldwide.
Trade Relations – Heightened tensions with countries reliant on Venezuelan exports.

These tariffs have escalated global trade disputes, with potential retaliatory actions from affected nations.

The CFO Role in Managing Tariffs

When tariffs take effect, businesses face challenges that impact finances, operations, and production. A CFO plays a critical role in guiding the company through these changes, helping to minimize financial strain and maintain stability.

Cost Management

Higher tariffs increase costs, making it essential to adjust pricing strategies and find ways to cut expenses. A CFO can assess where costs can be reduced without harming quality or efficiency.

This might involve negotiating better terms with suppliers, optimizing production processes, or finding alternative sourcing options. They also help determine if tariff-related costs should be passed on to customers or absorbed within the business.

Cash Flow Optimization

Tariffs can create unexpected financial pressure, making strong cash flow management essential. A CFO ensures the business has enough liquidity to handle rising costs while continuing to invest in growth.

This includes refining cash flow forecasting, adjusting budgets, and securing financing options if needed. By keeping a close eye on working capital, they help maintain financial flexibility.

Strategic Planning

Tariffs can disrupt supply chains, increase costs, and shift market dynamics. A CFO works on long-term strategies to protect the business from these risks. This includes diversifying revenue streams, evaluating alternative suppliers or production locations, and renegotiating contracts to account for tariff fluctuations.

They also help businesses prepare for potential future tariffs by building contingency plans that ensure stability in an unpredictable trade environment.

How Tariffs Affect Business Decisions

Tariffs force businesses to rethink their strategies, from sourcing materials to setting prices. Higher costs and supply chain disruptions can lead to major adjustments in operations and financial planning.

Sourcing Production Materials

Rising costs and supply chain disruptions may push businesses to find new suppliers or materials. For some, the impact will be small, but others may need to make big changes, requiring research and new processes to keep production running smoothly.

Cash Flow Management

Higher prices affect both day-to-day expenses and production costs, making cash flow management more challenging. Businesses may need to cut costs, adjust budgets, or delay investments to maintain financial stability. Profit margins could shrink, impacting payroll, reinvestment, and owner payouts.

Profit vs. Revenue

With rising costs, businesses must decide either to accept lower profits or raise prices, which could affect sales. Some may focus on cutting expenses and improving efficiency to stay profitable without losing customers.

Small vs. Large Businesses

Smaller businesses often feel the impact of tariffs more than larger ones because they have less cash on hand and fewer ways to negotiate better prices. Larger businesses can use bulk pricing and alternative suppliers to reduce the financial hit.

How FP&A Software Helps Forecast and Plan for the Future

FP&A (Financial Planning & Analysis) software gives businesses the tools to make smarter financial decisions, especially in uncertain times. Here’s how it helps:

Better Forecasting – Uses real-time data and predictive analytics to create accurate financial forecasts, helping businesses anticipate cash flow, expenses, and revenue changes.
Scenario Planning – Models different financial scenarios to prepare for potential risks, such as tariff changes, supply chain disruptions, or market fluctuations.
Data-Driven Decisions – Provides clear financial insights, helping CFOs and business leaders make informed choices about budgeting, investments, and cost-cutting.
Improved Budgeting – Automates budget planning, reducing errors and making the process faster and more efficient.
Enhanced Agility – Allows businesses to quickly adjust strategies when market conditions change, ensuring long-term stability and growth.

Tariffs Are Here—Will You Sink or Sail?

Tariffs aren’t just numbers on a spreadsheet—they’re a storm rolling in, and CFOs must decide either to sink or sail. Passing costs to customers risks loyalty, but absorbing them can bleed profits dry. The real winners?

Those who pivot fast, find new suppliers, and rethink pricing without losing ground. Every delay is a dollar lost. It’s time to sharpen strategies, embrace smarter financial tools, and turn uncertainty into opportunity.

You can weather this storm—or harness its wind to move ahead. The choice is yours. What’s your next move?