How to cope with tariffs: the corporate governance perspective

How to cope with tariffs, a corporate governance analysis and survival guide as threats loom large in uncertain global politics. 

Here we go again: Barely months after two of the biggest global trading blocs breathed a sigh of relief on the idea of tariffs, we seem to be back to square one. 

Once again, it’s down to US President Donald Trump. Also once again, the number of businesses that could be caught in the fallout is vast. While in some ways, it’s more of the same rhetoric as we saw when Trump took office last year, in others, it’s far more consequential, as geopolitical alliances get tested in ways we haven’t seen for the best part of a century. Tariffs will be one of the most crucial knock-on effects.

For companies looking nervously at all this, there’s little most can do in the way of solving the standoff. The real goal is to ensure they’re prepared for what may be the new normal in the weeks and months ahead. 

That’s always difficult when Trump is concerned. Rhetoric and action don’t always match. You never know what kind of deal will eventually win him over, and in the meantime, you’ve got intense media coverage with every shade of speculation from “don’t worry” to “panic mode.” It rarely helps. 

It’s the job of corporate leaders to look through all of that and get practical. Where will this come down to your company, and how can you ensure you’re ready?

The latest threat of tarrifs come from the standoff over Greenland (a Danish autonomous territory) and, to a lesser extent, disputes over Iran and Venezuela also. 

You’re probably familiar with all three already. What we’re concerned about is their on-the-ground impact if they continue to escalate. 

But first: what are tariffs?

• Tariffs are a tax on goods and services that cross international borders.
• The importing company pays the tariffs.
• When tariffs increase, they add a cost to the importing company’s supply chain. The company can either take this hit, find new suppliers to avoid tariffs or, more commonly, simply charge their customers more. 
• If tariff increases are big enough or uncertain enough, they may raise serious questions about whether a company’s strategy is still fit for purpose. 

The first and most obvious is the fact we’re seeing in real time: tariffs remain a continued threat in today’s geopolitical environment. The biggest trade deals of 2025, which were supposed end fears over tariffs, mean next to nothing after the first few weeks in 2026. That’s how fluid and chaotic a time we live in. 

Separately, here are some finer details to explain why they’re important.  

• Tariffs can fuel inflation and drive down profit margins – one of the most crucial metrics for a company’s performance, and something directors need to answer for. 
• Tariffs can change the competition landscape, as companies which rely more on international trade suddenly face bigger challenges. Finding a quick and durable solution to this is an urgent part of governance responsibility.
• Tariffs often involve reputational risk, as geopolitics forces companies to choose sides, potentially alienating stakeholders. 
• Compliance is an even bigger challenge than usual when tariffs significantly increase costs; it’s a stretch on priorities.  
• Tariffs, in today’s world, are chaotic. Sometimes, leaders don’t even know the details of what they’re paying tariffs on, even when politicians sign deals and celebrate them across the media.

Handling tariffs properly means taking a two-step, non-panicked, forward-thinking approach. First, you must decide how much tariffs will/may impact your firm, then implement measures to minimise exposure.

You can’t assess without raw data. In this case, it’s the numbers behind Trump’s tariffs and those which other jurisdictions will impose on the US in return. As soon as you know them, ensure you understand exactly how they will impact your business. 

Things to focus on include:

• What percentage of your supply chain is exposed to new tariffs?
• Can you absorb the increased costs, or do you need to adjust pricing?
• Are competitors benefiting from more favourable trade conditions?
• Are there alternative suppliers in non-tariffed regions? (Pay close attention this; global trade wars will always impact some trade routes more than others).
• How will your customers respond to price increases?

If the damage is significant or likely to be in the future, your board needs to act fast – pushing management for immediate solutions and checking every new idea to ensure it’s valid.

The problem is that finding the right solutions is subjective, depending on the company. So, ultimately, the final call is yours. However, what’s below will get you started on a game plan. 

• Supply chain diversification: If tariffs raise the prices of your imports to unsustainable levels, you could diversify your supply chain to include domestic producers. This may not always be possible, but it can be a quick fix if it is. 
• Contract renegotiations: You could work with suppliers to agree on a balanced approach to paying the new costs – one which doesn’t hit any company too hard. 
• Pricing strategy shifts: Nobody likes a price increase to cover rising costs, but there are ways it can be done with minimal damage to the stakeholders involved.
• Product re-thinks: See if there are ways you could alter the composition of your goods and services so tariffs won’t impact them as hard.

Medium term:

• Invest in training or upskilling key governance personnel. Governance has always been a high-stakes job, and frighteningly few people worldwide are trained to serve on a board. But emergencies like this, which require quick thinking and thorough expertise, are prime reasons why such training is necessary.

Longer term, these options are also on the table: 

• Strategic relocation: Could your business, or some key operations within, avoid the brunt of chaotic geopolitics by relocating across a border? It’s a daunting idea for a company with no experience in it, but calm, long-term thinking might unveil it as a possibility.
• Government engagement: Get together with industry colleagues to form a solid campaign on the tariffs issue you can bring to your government. This won’t fix anything overnight, but it might give you a longer-term voice and fuel a mandate.

Tariffs are becoming a new currency in today’s geopolitically polarised world, and companies will often have no choice but to engage with them. 

The extreme downside is that they are so unpredictable. It only takes weeks of political back-and-forth to find ourselves in a major crisis once again. In these cases, tariffs are a clear and immediate threat to corporate strategy, supply chains, and financial stability. 

Board members must proactively assess risks, strategise responses, and push for decisive action. Those who sit back and hope for the best may find themselves outmanoeuvred—by competitors, regulators, and an unpredictable global trade environment.

How to cope with tariffs: The Corporate Governance Institute