During his ‘Liberation Day’ announcement, Donald Trump revealed aggressive measures that will have consequences for trade on an international scale. Any country charging tariffs on US exports will see tariffs rise for products they send in the opposite direction, while Canada and Mexico will be hit with sweeping duties.
Trump has also targeted a number of goods with increased tariffs in an effort to drive growth in the US, including cars, computer processing chips and drugs. This series of policies is already rocking global financial markets, with stock prices falling heavily in the days preceding the declaration.
Below, Ciaran Bollard, CEO and Director of the Corporate Governance Institute, outlines his advice for business leaders seeking to increase the resilience of their organisation and minimise the impacts of these tariffs, as well as any future changes to trade prices.
The Importance Of Risk-Savvy Directors
A bold approach to managing tariff changes is essential, making them both a leadership and a financial issue.
Bollard said: “One of the first ways companies will take on tariffs is to analyse the risk involved. So, if boards aren’t fluent in risk management, supply chain strategy, and global trade, then there’s a serious problem. Fast-track upskilling or bring in external advisors who can spot risks before they become crises to get ahead of the problem.”
Stay Glued To Trade News
Remaining up to date with the latest developments will bolster flexibility and allow businesses to forecast new measures to incorporate in their planning.
Bollard continued: “It goes without saying that these tariff stand-offs are part of a larger political realignment, where traditional friendships become strained and money speaks louder than political principles. Trade policies are shifting daily, and boards need real-time intelligence to keep track of them all, not just periodic updates. Why? If trade policies shift daily, the same can be said for the best strategic decisions. What made sense last week might be a bad call this week, and vice versa.
“The only way directors will be sure about all this is to stay updated with all new developments. Set up new alerts, take half an hour to monitor major news each morning and evening, whatever it takes.”
Challenge The Status Quo
Reviewing existing policies can identify potential vulnerabilities and strengthen organisations in the long run.
“Use one of your core powers – and responsibilities – as a director, and ensure you are always asking questions about your strategy because when tariffs disrupt global norms, complacency will kill your margins."
“Are you too reliant on one country for sourcing? Can you diversify your supply chain before it’s too late? Can you adjust pricing strategies to absorb new costs? Considering all of these points will help business leaders pinpoint the right approach for the future.”
Fill The Expertise Gaps
Ensuring leadership teams can call on the expertise of personnel with specific experience in similar scenarios is crucial.
Bollard added: “If no one on your board has experience navigating trade wars, fix it now. This could include bringing in an expert on global trade and economic policy, creating a trade risk committee within the board or working with external consultants to get ahead of risks. These are all viable strategies that will reduce the impacts of tariff increases.”
Get Serious About Scenario Planning
Preparing for an array of different outcomes will equip companies to manage challenging situations.
Bollard concluded: “Trump’s unpredictability may be frustrating to follow in the news, but the truth is that organisations can still plan – it just might take a little more work. Scenario planning is the answer. Boards should run drills for as many outcomes as realistically possible, mapping out potential risks and responses, so that once things settle down, the company can adapt quickly to a new norm and won’t be completely undone by tariffs."
“Just think of what a good impression it will make on shareholders when you can calmly state in a meeting that you know your business’ next move despite the current geopolitical chaos."
“The tariff war isn’t going away anytime soon, and companies that treat it as background noise will pay the price. Boards need to take charge, ask tough questions, and never allow hope to take the place of careful planning.”
