Remember when major global trade policy changes used to unfold gradually over the course of years and sometimes even decades? Today, they’re launched overnight, putting businesses with multinational supply chains in a constant state of second-guessing what will come next, how the changes will impact their businesses, and where they should start looking for alternatives. 

The Trump administration’s chaotic, mercurial introduction of tariffs is the latest example of how quickly things can change for businesses that source goods and materials globally. While the scale of the proposed tariffs and their blanket application across major global economies is certainly enough to rattle even the most seasoned global trade and corporate finance professionals, it is important to keep in mind that this kind of overnight policy whipsaw is not new. 

We saw a similar scenario play out in the first Trump administration, and even during periods of relative calm, when tariffs and retaliatory tariffs were not making headlines in every major newspaper, incremental changes to tariff schedules and global trade requirements are always happening. Last year, for example, there were more than 100 million changes to global tariff schedules. These may not have made national news, but for the companies whose goods and raw material costs were dramatically affected by each new change, the message was clear: We cannot afford to take a wait-and-see approach to global trade. 

Accordingly, most big businesses operating global supply chains have learned a lot of lessons in the art of agility over the last few years, and many have developed more proactive approaches to global trade management. While that does not mitigate the current tariff uncertainty hanging over everyone’s heads right now, it does offer a playbook of best practices companies can follow to ensure they are nimble enough to bend and flex with the turbulent forces we’re currently facing.

Up-to-the-Minute Visibility

The first and most critical thing companies facing an uncertain situation like the current tariff turmoil need to get a handle on is an understanding of where they sit currently, and how potential tariffs and retaliatory tariffs will affect the total landed costs of their goods. That’s not always as easy as it sounds.

Most multinational corporations are sourcing materials from vast networks of hundreds of first-, second- and third-tier suppliers. They are tracking these goods across different systems, which may or may not talk to one another. And, they are constantly creating new products, onboarding new suppliers, and entering and exiting new markets. Knowing how a single policy change will affect the business’ bottom line when all of the inputs are in a constant state of flux can be difficult. The key is having technology in place that delivers a real-time view of the supply chain, across the entire organization, so global trade and finance teams can accurately assess their total risk exposure.

Real-Time Data on Policy Changes

Part of what makes tariffs so hard to navigate for businesses is the fact that they are both a financial tool and a political tool. In some cases, the mere threat of a tariff achieves the desired effect, and the actual tariff never happens, or gets implemented in a narrower scope. Either way, businesses are expected to comply with the new rules within hours after they are implemented. For the businesses in the middle of this, simply knowing what’s real and what’s hype can be a significant challenge. Compounding that are the multitude of smaller, less-publicized global trade policy and tariff schedule changes that are occurring all the time in different parts of the world. 

Ultimately, this is a data challenge. Businesses need to be able to access real-time data on actual policy changes, in addition to pending changes currently making their way through the pipeline, to be able to evaluate the material impact of these changes on their individual supply chains.

Proactive Supply Chain Management

Once businesses have all the information on their exposures, the third critical piece of the puzzle is developing a proactive approach to supply chain management that lets them quickly and opportunistically pivot to new markets. 

Achieving that kind of agility is not easy, particularly when one of the countries in the crosshairs of the burgeoning U.S. trade war is China. As the world’s largest exporter of goods, China is at the center of many global supply chains, and lots of business forecasts have been built around access to inexpensive Chinese goods. 

However, as many companies found during the first Trump administration, and later while navigating the COVID pandemic, it is possible to be strategic about sourcing materials elsewhere. 

The current environment of uncertainty around the future of global trade with key markets in Canada, China, Mexico and Europe is clearly going to create some new challenges for global trade and corporate finance professionals. The stock market volatility following each new tariff announcement has provided ample evidence of that. However, it is important to recognize that businesses have many tools at their disposal to navigate these policy swings without necessarily taking a 10%, 25%, 35%, or even higher hit to their bottom lines. The key is staying proactive and managing global trade like the contact sport it has become.

Ray Grove is head of corporate tax and trade at Thomson Reuters.