The Trump administration’s tariffs on imported materials and goods are having real, immediate effects on U.S. companies, forcing them into an assortment of mitigating strategies.
Almost two-thirds (65%) of the 678 executives who participated in the latest monthly pulse survey by PricewaterhouseCoopers said they’re renegotiating prices with suppliers as a direct response to margins squeezed by the tariffs.
The research, conducted in early May, also revealed that 60% of the respondents’ companies are passing tariff-related costs on to customers or have plans to do so. Future prospects for that strategy are unclear, however. As PwC observed in its survey report, many companies are already close to hitting a wall in terms of how much they can raise prices without alienating inflation-weary customers.
Many companies are responding to the tariffs with moves that align with some of the federal government’s goals, survey results suggest. Indeed, the No. 1 driver of strategic change over the next 12-24 months is U.S. economic policy, with 48% of those polled ranking it in the top three factors.
More than half (62%) of the respondents said they have already increased sourcing from the U.S. or plan to. Almost half (48%) are exploring or implementing onshoring strategies.
Three-quarters (76%) of the executives agreed or strongly agreed that they are reconsidering their long-term presence in China. (The report noted, however, that the survey was conducted before the U.S. and China agreed to suspend tariffs for 90 days.)
A more U.S.-focused business strategy, favored by 83% of the executives, “underscores an effort to de-risk and rebalance supply chains and market presence,” the report said.
PwC wrote that, in the existing tariff environment, companies should segment their customers to understand their price sensitivity. A detailed view of how different customer groups perceive the value of a company’s offerings, as well as those of its competitors, helps identify customers that are likely to cut back their purchases or switch to a different provider.
Also, PwC advised, “a strong tariff and customs duties strategy can help reduce costs” by improving product classifications, sourcing decisions and packaging. And techniques like tariff engineering and transfer pricing can work together to lower both duty and tax exposure across global operations.
Meanwhile, the survey portrayed a disparity in opinions as to when economic conditions will stabilize. Almost half (48%) of the executives predicted the current volatility would last less than a year, about the same percentage who said it wouldn’t take that long.
