How Tariffs Are Reshaping CFO Strategy: Supply Chains, M&A Markets, and the New Reality of Global Trade

About This Blog

Travis Epp and Dean Peterson from EisnerAmper bring decades of expertise in helping CFOs navigate complex international business challenges. Epp, an audit partner with nearly 30 years of experience across public practice and private industry, oversees the firm's manufacturing and distribution practice after spending time as a senior financial officer at multiple public companies. Peterson leads Eisner Amper's International Tax Services Group, delivering comprehensive tax consulting and compliance solutions to companies ranging from startups to Fortune 100 enterprises across multiple jurisdictions worldwide.

In a recent CFO IQ podcast episode, these experts addressed one of the most pressing issues facing finance leaders today: the widespread impact of new tariff policies on corporate strategy. What many initially viewed as temporary trade negotiations has evolved into a fundamental shift requiring comprehensive business transformation. The discussion centers on what industry insiders now call "Liberation Day" - a policy announcement that sent shockwaves through global supply chains and forced companies to completely reconsider their international operations.

For CFOs managing companies with global footprints, understanding the multifaceted implications of these tariff changes extends far beyond simple cost calculations. The new trade landscape affects everything from transfer pricing policies and inventory management to merger and acquisition strategies and long-term capital planning. As Epp and Peterson explain, the uncertainty surrounding these policies creates challenges that require both immediate tactical responses and strategic long-term planning.

Understanding the Tariff Landscape

The fundamental difference between tariffs and international taxation often confuses business leaders, but understanding this distinction is essential for proper financial planning. Unlike taxes administered by the Treasury Department through the IRS, tariffs fall under the Department of Homeland Security's jurisdiction and are collected by US Customs. This administrative difference affects how companies must approach compliance, reporting, and strategic planning around these additional costs.

The scope and scale of recent tariff implementations caught most business leaders unprepared. What many initially interpreted as negotiating tactics or temporary measures has proven to be a sustained policy approach with wide-ranging implications. The speed and breadth of these changes exceeded industry expectations, creating immediate operational challenges for companies across multiple sectors.

The uncertainty surrounding these policies continues to create planning difficulties for finance teams. Unlike traditional business risks that can be modeled and predicted, the current tariff environment changes rapidly based on policy announcements that can happen without advanced notice. This dynamic requires CFOs to develop new approaches to risk management and scenario planning that account for sudden shifts in cost structures and competitive landscapes.

Supply Chain Transformation

Companies across industries are discovering that adapting to the new tariff environment requires fundamental changes to supply chain strategies developed over decades. The complexity of modern global supply chains means that even seemingly simple adjustments can have cascading effects throughout entire manufacturing and distribution networks. Organizations are investing substantial resources in comprehensive supply chain audits to understand their exposure and identify potential alternatives.

The timeline for meaningful supply chain transformation extends far beyond what most executives initially anticipated. Reshoring manufacturing operations to the United States requires years of planning, capital investment, and relationship building. Companies cannot simply abandon established supplier relationships and manufacturing infrastructure without creating significant operational disruptions and quality risks.

The practical challenges of supply chain transformation go beyond simply finding domestic alternatives. Companies must consider factors including:

1. Supplier Capacity and Quality Standards: Ensuring domestic suppliers can meet volume requirements and quality specifications

2. Capital Investment Requirements: Funding new equipment, facilities, and training programs

3. Regulatory Compliance: Navigating different regulatory environments and certification requirements

4. Risk Management: Avoiding over-concentration in single geographic regions or supplier relationships

5. Timeline Coordination: Managing transitions without disrupting customer deliveries or service levels

These considerations require CFOs to balance immediate cost pressures against long-term strategic positioning, often without clear visibility into future policy directions or competitive responses.

Impact on Transfer Pricing and International Tax Strategy  

The changing tariff landscape forces companies to completely reconsider their transfer pricing policies and intercompany agreements. Transfer pricing, which governs how related entities in different countries price transactions between themselves, becomes significantly more complex when tariff costs are layered on top of existing international tax considerations. Companies must examine every aspect of their cross-border transactions to understand how new costs affect their overall tax efficiency and compliance obligations.

Critical questions emerge around the timing and allocation of tariff costs within international corporate structures. Issues such as who serves as the importer of record, when title transfers occur, and how intercompany agreements address unexpected cost changes become central to financial planning. These operational details, often overlooked in stable trade environments, can have material impacts on overall profitability and tax exposure.

The rapid pace of tariff changes creates additional compliance challenges for international tax teams. Traditional transfer pricing documentation and policies assume relatively stable operating environments, but current conditions require more frequent reviews and updates. Companies must develop systems to track and document how changing tariff costs affect their transfer pricing positions while maintaining compliance with complex international tax regulations.

M&A Market Disruption

The current tariff environment has created significant disruption in merger and acquisition markets, with uncertainty affecting both buyers and sellers across multiple industries. Companies that had been considering acquisitions are pausing their processes to better understand how tariff impacts might affect target company valuations and future profitability. This hesitation reflects the broader challenge of conducting due diligence when fundamental cost structures remain in flux.

Investment bankers and M&A advisors report that tariff-related due diligence has become a standard component of transaction processes. Buyers must now evaluate not only current tariff exposure but also potential future impacts based on various policy scenarios. This additional complexity extends transaction timelines and creates new areas of negotiation around risk allocation and price adjustments.

The debt markets supporting M&A activity have also experienced volatility related to trade policy uncertainty. Lenders are increasingly cautious about financing acquisitions where tariff impacts remain unclear, particularly for companies with significant international operations or supply chain exposure. This financing uncertainty compounds the challenges facing companies attempting to complete transactions in the current environment.

Service-based businesses have thus far experienced less direct impact from current tariff policies, but experts anticipate this may change as trade disputes evolve. The potential for retaliatory measures targeting digital services or other service sectors creates additional uncertainty for companies operating in these areas.

Strategic Recommendations for CFOs  

Finance leaders navigating the current environment must develop comprehensive strategies that address both immediate operational challenges and longer-term strategic positioning. The key lies in building flexibility into planning processes while maintaining the financial discipline necessary to preserve profitability and competitive positioning. Companies need systems for tracking rapidly changing costs and their impacts on pricing, inventory valuation, and customer relationships.

Successful navigation of the current environment requires strong collaboration between finance teams and other functional areas including procurement, operations, and legal. CFOs must ensure that tariff impacts are properly reflected in inventory costing systems, pricing decisions, and customer communications. Some companies are adding separate line items for tariff adjustments rather than simply increasing base prices, providing transparency while preserving pricing flexibility.

The importance of maintaining strong relationships with both suppliers and customers becomes amplified in uncertain environments. Companies that can work collaboratively with their supply chain partners to address cost pressures and timing challenges will be better positioned to weather disruptions. Similarly, transparent communication with customers about cost impacts and pricing changes helps preserve long-term relationships during periods of adjustment.

Given the rapidly evolving nature of trade policies, companies should invest in systems and expertise to track changes and assess their impacts. Whether through internal resources or external advisors, having access to current information and expert analysis becomes essential for making informed decisions. The development of tariff tracking systems, while resource-intensive, provides the foundation for strategic planning and operational decision-making.

The current trade environment represents a fundamental shift requiring a comprehensive strategic response rather than tactical adjustments. For CFOs whose companies operate in global markets, understanding the multifaceted implications of tariff policies is essential for preserving profitability and competitive positioning. The expertise and insights shared by professionals like Travis Epp and Dean Peterson provide valuable guidance for navigating these complex challenges while positioning organizations for long-term success in an evolving global economy.

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