How to navigate tariffs and unlock global opportunities

The past five years have created an ideal training ground for managing uncertainty and change. Finance chiefs across the globe have helped steer their organisations through a pandemic, inflation-induced economic upheaval and game-changing technological advancements like generative AI.

But when the well-established rules of global trade were upended in April, CFOs faced even more complexity.

The scale of the “reciprocal tariffs” announced by the US President on 2 April sent a shiver through markets worldwide. Within two days, the stock market value for S&P 500 companies plummeted by US$5 trillion.

The initial program included a 10 per cent baseline tariff on almost all countries, which was supplemented in certain cases by additional tariffs that varied by nation. Trading partners like China and Canada responded with countermeasures, and the US increased rates for some nations before declaring a 90-day pause on reciprocal tariffs for most countries.

In mid-May, China and the US also struck a deal to slash reciprocal tariffs for 90 days, but changes are ongoing.

While some industries will feel the direct impact of trade tensions more than others, the speed and severity of tariff policy change have created shocks that may reverberate across global markets for some time. How will CFOs navigate the new terrain?

A tax by another name

A feature of the world economy for centuries, tariffs are essentially taxes designed to protect local industry by increasing the prices of goods from other countries.

The rise of globalisation following World War II saw many of these trade barriers dismantled with the establishment of the General Agreement on Tariffs and Trade — a precursor to the World Trade Organisation (WTO) — in 1947. And, while there have been some ruptures along the way, world trade has grown at a remarkable rate.

Data from the WTO shows that over the past 75 years, global merchandise exports rose by an annual average of 6 per cent. Total exports in 2023 were 250 times the level of 1948 — but that may be set to change.

“Whatever growth countries like Australia and New Zealand thought we were going to get this year now looks much weaker,” says Kiwibank chief economist Jarrod Kerr. “There are also direct impacts for countries like Thailand, Vietnam and Cambodia, which have quite hefty tariffs imposed. The indirect impact of the tariffs is hard to calculate, but China is one of the biggest buyers of Asian goods and services, so if China slows down, Asia slows down.”

While Singapore is subject to the 10 per cent baseline tariff, there are exceptions for products such as pharmaceuticals, semiconductors and certain chemicals and minerals.

Yen Nee Lee, senior country risk analyst at BMI, the research arm of Fitch Group, estimates that close to 60 per cent of Singapore’s exports to the US are currently exempt from the tariffs. She adds that the indirect impact will be felt through the export of intermediate goods to countries like China, such as products required for the assembly of smartphones.

“These kinds of products are currently exempt from tariffs, but if that changes, we will see a lower demand for intermediate goods,” she says. “The other big risk for Singapore is a slowdown in the global economy.

Nearly 21 per cent of Singapore’s GDP is tied to final demand in the US and China, so if there’s a slowdown in both of these major economies we could see demand for goods and services from Singapore fall — and that’s quite a big hit for the economy.

“Hong Kong is quite similar in that it’s an open economy that is very much plugged into the global supply chain,” adds Lee. “So, the risk for Hong Kong is a sharp reduction in global trade.”

Risk and disruption

CFOs are keeping a closer eye on pricing and growth, with trade tensions presenting a test to cash-flow resilience, working capital agility and forecast accuracy.

Vaughan Archer, senior director, analyst in Gartner’s finance practice, says his team is currently working with CFOs on a range of risk-mitigation strategies.

“Among some industries there has been a potential frontloading of demand as consumers have anticipated tariffs and the potential for higher ticket prices down the track,” he says. “So, there’s a big risk that demand may look robust, but that could fall off very quickly.”

Higher prices are not only disruptive for consumers. Archer says CFOs are also considering the costs of charging higher prices and coaching their sales teams to clearly communicate the value proposition to customers.

“Our research shows that 41 per cent of [global] CFOs expect to absorb 49 per cent of the tariff increase within their own cost base,” says Archer.

“So, the risk for most organisations when it comes to thinking about their US customer is less about a 10 per cent tariff as it relates to their product, but the entire impact on the US consumer.

There are knock-on effects in terms of higher price sensitivity, as they’re potentially paying 10 per cent more on products from one region and potentially much higher tariffs from other parts of the world.”

Supply chain disruptions, such as delays in supplier shipments, acquiring essential materials and the delivery of necessary supplies, present another challenge.

“I’m having conversations with CFOs and CEOs about these kinds of direct impacts every day,” says Luke Branson, partner, global trade advisory at EY Australia. “And when I say direct impacts, I mean things like, ‘What are the tariff rates? How do they impact my business? Who pays? Is it my customer? Is it my business? Do we share the cost?’

“While all these considerations are significant, the concern among CFOs is now moving to the indirect impact such as the effect on growth, consumption, inflation and consumer markets,” adds Branson.

“But this also comes with a productivity impact on the C-suite. There’s ‘brain drain’ from this issue, because it has taken attention away from other core strategy and business execution activities in a pretty substantial way.”

How CFOs are responding

Some CFOs in markets like Australia are familiar with the impact of higher tariffs. In 2020, for example, China placed higher tariffs on some Australian products like wine and barley. The last remaining tariff was lifted in 2024.

For companies like Treasury Wine Estates, the response was multifaceted. Its plan, which was outlined in an announcement to the ASX in November 2020, included reducing global costs of doing business such as supply and overhead costs, and reallocating certain ranges to other luxury growth markets where there was unsatisfied demand.

It also included accelerating investment in sales and marketing resources and capability across these markets to drive incremental demand and to expand their distribution footprint.

“I think that the recent experience of higher tariffs was an instructive experience for Australia in terms of how we deal with trade tensions,” says Branson.

“Now that all of those tariffs have been wound back, I would suggest that many of those businesses that established broader relationships with customers in different markets are therefore more resilient.”

As the new tariff order reshapes the global business landscape, finance chiefs are preparing for fundamental shifts in demand, financial conditions and global trade.

In the Thomson Reuters Institute’s 2025 Tariffs Report, 72 per cent of respondents said their companies are already changing, or are considering changing, sourcing patterns to better manage US-imposed tariffs. More than half were either considering or are currently renegotiating contracts with suppliers, and 49 per cent were frontloading inventory prior to effective tariff dates.

 

"Accountants need to be able to advise clients on increasingly divergent regulations, while also anticipating the impact of geopolitical tensions on tax policy and outcomes like transfer pricing."

 

“CFOs are certainly looking at their contracts to understand who is responsible for the payment of the duties in a legal sense,” says Branson.

They are also considering how this cost is shared throughout their supply chain.

“CFOs can look at restructuring the supply chain and changing the origin of the goods, but we haven’t seen a lot of action in that regard due to the significant uncertainty — tariffs have been rolled on, rolled off, paused and negotiated with many different countries, so it’s hard to make a decision about where to go if you’re going to move your production,” says Branson.

He adds that CFOs are exploring ways to optimise transactional structures to lower the duty value of imports.

“There are permitted adjustments that can be made to those values that businesses haven’t had to focus on until recently,” he says. “Sometimes there are multiple tiers in an international supply chain and multiple transactions that occur.

For example, with the sale of goods between a manufacturer, a trading company and an importer into the US, under US trade laws, you can use the first sale structure in that multiple-transaction flow as the value of the imported goods.

“Many businesses have never had to use that before, but it can bring down that customs value. And, as tariffs are an ad valorem duty, the tariff rate is multiplied by the value of the goods. If you reduce the value, you reduce the tax payable.”

Daniel Rae, director of international trade, customs and excise at KPMG Australia, expects CFOs to be revisiting the Harmonized Tariff Schedule classifications, which set out the tariff rates and statistical categories for all merchandise imported into the US.

“It’s quite a resource-intensive process, trying to understand how you’re impacted and what your options are,” he says. “But I think supply chains in general became more of a strategic pillar for businesses when things were hit by COVID-19 and there were additional geopolitical factors.

If you consider trade to be a portion of that, then it also becomes elevated to a more strategic level. While products previously crossed borders comfortably, that can’t be taken for granted anymore.”

Opportunity on the horizon

Disruption can present new opportunities through operational efficiencies and market diversification.

“I’m seeing a lot of CFOs looking at parts of the world that are likely to be more impacted by tariffs and starting to anticipate some of the fiscal and monetary support that governments could provide to those regions,” says Archer.

“That could provide a huge tailwind for organisations in countries like Australia to diversify their exports and drive an uptick in demand from different parts of the world.”

Digital transformation in finance functions may also enhance the capacity of forward-looking finance teams.

“We’ve seen significant investments in technology like robotics over the past decade to make the back office and middle office components of finance more streamlined,” says Archer.

“We’re seeing a more integrated approach to business planning, with finance leaders collaborating with their counterparts across areas like supply chain, pricing and legal. We’ve also seen a big uptick in analytics techniques like scenario planning over the past few months.”

As uncertainty continues to cloud the economic outlook, CFOs are expected to blend financial foresight and agile decision-making to steer the course.

“There’s a perception that artificial intelligence and machine learning are going to replace finance processes like forecasting — but the algorithms are only as good as the datasets they receive,” says Archer. “We’re moving into a world that’s largely unknown, and we don’t have existing data points about the impact of these new regulations.

“There’s no doubt that the impact of the tariffs on the global economy will present challenges, but there’s a great opportunity for finance teams to move up the value curve in terms of applying judgement, thinking about scenarios and ultimately bringing greater value through the application of critical thinking.”

The information in this article was accurate at the time of publication but may be subject to change without notice.

How will tariffs impact accountants?

The indirect impact of tariffs may be felt across all industries due to slower economic growth. However, industries reliant on international trade, and especially those selling to the US, will be impacted most. 

For accountants, the impact of new tariffs is likely to drive demand for professional advice on issues such as tariff compliance, transfer pricing adjustments and mitigation strategies like tariff classification reviews.

Jenny Wong, tax lead, policy and advocacy at CPA Australia, notes that the current global tax landscape is shaped by geopolitical developments, resulting in a “complex and fragmented regulatory environment”.

“While some jurisdictions advance with global minimum tax/OECD G20 BEPS Pillar 2 frameworks, others are stepping back from multilateralism, leading to a resurgence in tax competition,” she says.

“Accountants need to be able to advise clients on increasingly divergent regulations, while also anticipating the impact of geopolitical tensions on tax policy and outcomes like transfer pricing.”

Wong believes this positions the accounting profession as a critical strategic partner in helping businesses adapt their operations and investment strategies to mitigate risk, and therefore recommends that accountants “develop geopolitical awareness and scenario planning skills”.

Action points for CFOs

Here are three actions CFOs can take to help them ride the tariff rollercoaster.

1. Draw on skills learnt from recent economic upheavals by assessing exposure and strengthening cash flow, forecasting sophistication and working capital agility.
2. Reduce market concentration while developing and promoting a unique selling proposition to ensure and increase demand.
3. Collaborate across areas like supply chain and legal, draw on data analytics to hone scenario planning, and prioritise the use of critical judgement.

_{The information in this article was accurate at the time of publication but may be subject to change without notice.}