Strategic Approaches to Mitigating the Effects of US Tariffs

By Mark Archer, Stephanie Roberts, Monica Stevenson

A conversation with Consumer CFOs at FLG Partners

One thing is certain: increased tariffs are here.

But much remains uncertain. Where, at what cost, and with what impact on US consumers, employees, and small and large companies? Perhaps the more definitive certainty is that markets dislike uncertainty, as do CEOs and businesses with multi-year supply strategies.

We need clarity. So, we connected with three Chief Financial Officers from FLG Partners who specialize in the consumer space. Mark Archer (Jamba Juice, Wine.com, Footlocker/WSS), Stephanie Roberts (Old Navy, Specialized Bicycle Components, Rad Power Bikes), and Monica Stevenson (ThirdLove, Tourneau, Versace, Yves Saint Laurent, and Dolce & Gabbana) bring a combined 70+ years of experience to their craft, growing revenue through expertise in scaling, pricing, investor relations, and economic volatility.

These are the questions we asked: (1) What is your overall take on the impact of tariffs on US companies? (2) Should companies consider changing their supply chain strategy based on tariffs? (3) Should companies consider raising consumer prices in anticipation of tariffs? (4) How are tariffs impacting company budgets, forecasting, and long-range planning? 

#1 Administration’s Tariff Policy Changes:  What is your overall take on the impact on US companies?  

Stephanie Roberts

Taking the broadest view, these actions were not strategic and will harm the US economy. Small and medium-sized companies will be hurt the most.

First, to give some context, tariffs are not paid by the country that the US has imposed the tariff on. They are paid by the US company that is importing either a component or a finished product. An important aspect of tariffs is that the money is due immediately upon delivery to a US port, or you can’t take possession of the goods. Many companies rely on payment terms from vendors that supply components or finished products. Small and medium-sized companies generally do not have the cash to pay these tariffs up front.

Secondly, the current administration’s proposed objective is to bring manufacturing jobs back to the US to improve the overall economy. I disagree with the thesis that bringing back manufacturing will be a net positive.

Most US consumer products companies employ most of their workforce in the US.  These functions include the Executive team, R&D, Design, Merchandising, Marketing, Supply Chain, Finance, HR, Legal, etc, varying from entry level to C-Suite positions. The manufacturing of their goods is indeed in low-cost countries with built-up manufacturing capabilities that don’t exist in the US. If they did, the manufacturing cost would be much higher, leading to higher prices for US consumers.

The increase in tariffs will lead US companies to raise prices, slowing demand for their goods. With slower demand, sales will drop, and companies will be forced to shrink their workforce, leading to a vicious cycle of layoffs. Additionally,  small and medium-sized companies that do not have the scale to have a diverse supply chain and are reliant on China will fold.  They can’t sustain tariffs of 145%. They would have difficulty sustaining even the lower end of the range (20%-30%, on top of the 25% put into place during the first Trump Administration). These tariffs will accelerate bankruptcies in the US at an unprecedented rate.

I want to make two final points about influence and whether the tariff policies hold. Large companies like Apple or automotive companies (Ford, GM) can influence the administration to get exemptions from these tariffs. Small and medium-sized companies will feel the brunt of the tariffs. They aren’t getting any exemptions.

I believe that the tariffs will not hold. The administration will reverse course when they see the continued volatility in the stock and bond market, and the downward trends in consumer confidence, unemployment, and bankruptcies.

The impact on larger companies will be seen in the back half of 2025 when they report on sales and earnings. However, the impact on smaller companies will be immediate. They won’t have the cash to import products produced in China. These products will remain in China unless they can sell them to another country.

#2. Supply Chain: Should a company consider changing its supply chain strategy based on tariffs?

Monica Stevenson

The simple answer is Yes—brands should rethink their supply chain strategy when tariffs come into play. But here’s the thing: it shouldn’t only be about tariffs. The real question is, have you built a supply chain that’s resilient, agile, and diversified—while still protecting your margins?

Tariffs might be the wake-up call, but smart supply chain strategy should always be evolving. A sudden tariff spike in one region might push you to explore reshoring to another region or nearshoring in the US—but those moves take time and planning. That’s why it’s risky to have all your production tied to one country. You don’t want to be caught flat-footed due to macroeconomic pressures.

We’ve seen this before and not very long ago during the post-COVID supply chain chaos of 2020–2022. Ports were backed up, container rates went through the roof, and brands with concentrated sourcing in China were hit the hardest. That period forced many companies to take a long, hard look at their supplier footprint. Several companies I worked with started shifting production to places like Vietnam, Cambodia, and India. These transitions weren’t instant, but they created much more breathing room down the line.

Today, many brands are leaning into a “China+Plus” strategy to hedge risk and keep options open. Tariffs are unpredictable and can change with every administration, so diversification isn’t just smart—it’s necessary. The more flexibility you build in now, the less disruption you’ll feel later.

Stephanie Roberts

Monica is spot on here. The only thing I would add is that it is expensive to have a diverse supply chain strategy. Larger companies can afford this. Smaller companies have trouble meeting minimum order quantities (MOQ’s) in a single country. It would be cost prohibitive if they sourced from more than one country.

Mark Archer

What strategic shifts should companies be contemplating in the face of this tariff minefield? Here are several key considerations:

1. Diversify
   The adage “don’t put all your eggs in one basket” rings particularly true for supply chains in the tariff era. Diversifying the supplier base across multiple geographic locations can significantly reduce reliance on tariff-affected regions. Exploring alternative sourcing options in countries with more favorable trade agreements or domestic suppliers becomes a critical strategy.
   
   
2. Reshore
   While potentially involving higher labor costs, reshoring (bringing production back to the home country) can eliminate tariff exposure. This strategy can offer shorter lead times, improved quality control, and enhanced responsiveness to local market demands.
   
   
3. Manage Inventory
   Companies must carefully balance inventory levels in the face of potential tariff changes. Building up inventory of tariff-threatened goods before implementation can provide a short-term buffer, but carries holding costs. Conversely, reducing orders might be necessary if price increases are anticipated to dampen demand.
   

#3. Price Increase: Should brands consider raising consumer prices in anticipation of tariffs?

Monica Stevenson

It would be expected to hear a “yes,” especially with the current expected tariff rate hikes—but the key is to be intentional, not reactive. Raising prices just because tariffs are looming isn’t always the right move. Tariffs might increase costs, but your pricing decisions should always be grounded in brand strategy, customer perception, and margin goals.

When tariffs suddenly spike—as we’re seeing now with certain categories facing duties over 100% on goods from China—brands may feel they have no choice. If you can’t shift production quickly enough and your landed cost more than doubles overnight, you’re likely compelled to take pricing action just to stay afloat.

The brands that navigate this best don’t just think in terms of “Should we raise prices?”—they think about how to do it in a way that protects both value perception and profitability. Sometimes, that means smaller increases across multiple SKUs instead of a dramatic jump on a hero product. Other times, it’s about reengineering pack sizes, introducing new product tiers, or bundling to shift focus from price to value.

I’ve also seen brands use moments like this to test pricing power or even reposition a category—especially when competitors are in the same boat.

As to how to execute a price hike, some brands choose to explain price shifts to customers, especially when a clear external factor like tariffs is involved. Others prefer a quieter approach. Either way, consistency and clarity are key—because frequent or erratic pricing changes can erode trust quickly.

Tariffs are out of our control—but how you respond is not. These moments challenge your pricing strategy, brand story, and operational agility—and how you navigate them can define your brand.

Stephanie Roberts

Small and medium-sized companies won’t have a choice and will need to raise prices. They don’t have the purchasing power with the vendor to aggressively negotiate offsets to these tariff costs.

Mark Archer

Increase prices too early, and you risk alienating customers. Wait too long, and shrinking margins threaten your bottom line.

For companies deeply integrated into global supply chains, goods may become more expensive before reaching the consumer. If tariffs are imminent, businesses must decide how to absorb or pass along these additional costs.

Raising prices is the most direct way to offset these expenses, but it’s not the only option, nor is it always the best.

Reasons to Consider Price Increases

1. Protect Profit Margins
   Tariffs can quickly erode margins, especially for companies with thin profit windows. Adjusting prices preemptively helps maintain financial stability and ensures the company can continue to invest in quality, innovation, and customer service.
2. Avoid Sudden Price Shocks Later
   Gradual price increases ahead of tariff impacts can soften the blow for consumers compared to abrupt hikes once costs spike. Transparency about the reasons behind the adjustment can help maintain trust.
3. Signal Market Realities
   Raising prices in anticipation of tariffs can also serve as a signal to the market and competitors, reflecting the new cost landscape and encouraging industry-wide adjustments.

Risks of Raising Prices Too Soon

However, raising prices prematurely is not without consequences:

1. Customer Backlash
   Consumers are sensitive to price changes, especially in competitive markets. Without clear communication, price increases may appear opportunistic rather than necessary.
2. Competitive Disadvantage
   If rivals choose to absorb the costs, at least temporarily, your early price hikes could result in lost market share.
3. Tariff Uncertainty
   Trade negotiations can be volatile. A tariff that seems imminent could be reduced, delayed, or even canceled. Premature price increases based on uncertain policy changes could harm your reputation and customer relationships.

Alternatives to Immediate Price Increases

Before raising prices, companies should also explore other strategies:

1. Cost Absorption
   If feasible, temporarily absorbing the cost of tariffs can preserve customer loyalty and competitive positioning.
2. Operational Efficiencies
   Streamlining processes, renegotiating supplier contracts, or improving logistics can help offset tariff-related costs.
3. Product Adjustments
   Lower-cost alternatives or bundling products can provide perceived value without direct price increases.

Ultimately, the decision to raise consumer prices in anticipation of tariffs should be part of a broader strategic approach, not a knee-jerk reaction. Tariffs may be unpredictable, but how a company responds to them can define its resilience, reputation, and market standing.

#4. Budget & Forecasting: How are tariffs impacting brand budgets, forecasting, and LRP?

Monica Stevenson

Tariffs are reshaping how brands approach planning. What used to be a once-a-year budget cycle now requires dynamic forecasting and more rigorous scenario modeling.

When duties can spike overnight—as we’re seeing now with some categories exceeding 100%—you can’t rely on a single number. Brands need high/low scenarios that reflect different sourcing geographies, freight assumptions, FX exposure, and tariff outcomes. Finance teams are partnering more closely with supply chain and merchandising to ask: What happens if costs rise, but we can’t raise prices? What if we move production, but it takes 9 months?

These questions are now critical to short- and long-term planning. Tariffs aren’t just a line item—they affect gross margin, inventory flow, and product strategy. Some brands are even baking in contingency buffers in COGS or OPEX, treating tariffs like an inflation risk.

Ultimately, the brands that plan best aren’t just reacting—they’re staying close to their numbers, updating models frequently, and building in flexibility wherever possible.

Stephanie Roberts

I agree with Monica.  I would add that the most critical part of planning is cash flow. Since tariffs require upfront cash before you even take ownership of the product, small and medium-sized companies are put in a risky position. They must solve this cash flow crunch through financing with their bank or extended payment terms with their vendors. Again, this is all much easier for larger companies with strong balance sheets.

***

The news on tariffs changes daily as the US Administration updates its messaging. There will continue to be unknowns and volatility as we navigate this new territory.

If you have questions about tariffs and their impact on your business, drop FLG Partners a line, and we will connect you with a CFO expert who will guide you through this uncertain time.

Additional Tariff-Related Resources from FLG Partners

Tariff Turbulence: Six Strategic Moves CFOs Must Make Now by Bill Beyer

Will Capital Markets Reopen in 2025? by William Atkins