Strategic Action in the Face of Tariff Uncertainty
In today's volatile trade environment, companies face a critical challenge: how to protect earnings per share (EPS) and multiple on invested capital (MOIC) amid unpredictable tariff policies. As reported in a recent Wall Street Journal article, "The unpredictability of President Trump's stop-start trade offensive is paralyzing companies on just about every front except one—taking an ax to costs." This paralysis is forcing executives to make difficult decisions with limited information, often resulting in reactive rather than strategic responses.
While many organizations are implementing stopgap measures, the most successful companies are taking proactive, systematic approaches to mitigate tariff impacts, moving beyond basic cost-cutting to implement comprehensive strategies that protect financial performance while maintaining operational excellence.
The Current Landscape: Uncertainty Drives Cost Focus
The Wall Street Journal reports that companies across industries are implementing cost-cutting measures in response to tariff uncertainty. From Dow delaying construction of a new plant to Boston Scientific accelerating discretionary spending cuts, executives are focused on what Norfolk Southern CEO Mark George describes as "control[ling] the controllables and try[ing] to help mitigate some of the things we can't control."
Rather than wait for policy clarity that may never come, take decisive action now. As Procter & Gamble CFO Andre Schulten emphasized, "We will have to pull every lever we have in our arsenal to mitigate the impact of tariffs within our cost structure."
Why Immediate Action is Critical
The temptation to wait until trade policies stabilize before making significant changes is understandable but potentially costly. Acting now is essential.
- Competitive Advantage: Companies that develop effective mitigation strategies faster than competitors will maintain stronger margins and cash flow.
- Investor Confidence: Proactive management of tariff impacts demonstrates leadership capability and helps maintain investor confidence.
- Operational Resilience: Organizations that adapt quickly build more resilient operating models that can withstand future policy shifts.
- Strategic Flexibility: Implementing targeted cost initiatives now creates financial flexibility to fund strategic initiatives later.
- Improved Operating Results: Regardless of whether policies are known and stable or not, aggressive cost actions will yield financial and operating benefits.
As former Aetna CEO Ron Williams noted in the WSJ article, this environment presents "a good opportunity to say: Are we as efficient and effective as we could be?" This perspective reframes tariff challenges as catalysts for needed operational improvements.
Beyond Simple Cost-Cutting: A Strategic Framework
While many companies are implementing basic expense reductions, truly effective tariff mitigation requires a more strategic approach.
Strategic Tariff Mitigation Framework
| Dimension | Focus Areas | Strategic Objectives |
| Financial Optimization | • Cash flow management • Working capital optimization • Capital expenditure prioritization • Tax structure alignment | • Preserve liquidity • Maintain investment capacity • Optimize financial structure • Protect EPS and MOIC |
| Operational Excellence | • Supply chain reconfiguration •Supply chain resiliency •Product engineering •Sourcing strategy •Process redesign | • Reduce tariff exposure • Improve operational efficiency • Create flexibility and redundancy to respond to both physical supply chain disruptions and changes in trade policy • Enhance supply chain resilience • Maintain quality and service levels |
| Strategic Positioning | • Pricing strategy • Customer segmentation • Product portfolio & assortment optimization • Market positioning | • Selectively pass through costs • Enhance value proposition • Reposition for competitive advantage • Strengthen market leadership •Eliminate underperforming SKUs and unprofitable customers |
Diagnostic Approach: Assess Your Tariff Vulnerability
Before implementing mitigation strategies, companies must understand their specific vulnerabilities. Our comprehensive diagnostic approach helps organizations identify their exposure and prioritize response initiatives.
Tariff Impact Diagnostic Framework
| Assessment Area | Key Questions | Diagnostic Tools |
| Financial Exposure | • What is the direct P&L impact of current and potential tariffs? • How will tariffs affect cash flow and working capital? • What is the potential impact on financial covenants and credit ratings? • How will EPS and MOIC be affected? | • Tariff Impact Analyzer • Financial Scenario Modeler • Covenant Stress Tester • Investor Sentiment Tracker |
| Supply Chain Vulnerability | • Which products and components face highest tariff exposure? • What alternative sourcing options exist? • How quickly can the supply chain be reconfigured? • What contractual obligations limit flexibility? | • Product Tariff Exposure Matrix • Supplier Alternative Analysis • Supply Chain Reconfiguration Simulator • Contract Flexibility Assessment |
| Operational Agility | • How quickly can processes be adapted to new trade realities? • What operational inefficiencies exist that could be addressed? • How would tariff-driven changes affect quality and customer experience? • What technology investments could enhance adaptability? | • Process Flexibility Index • Operational Efficiency Analyzer • Customer Impact Assessment • Technology Enablement Roadmap |
Strategic Response: The Selective Cost Optimization Approach
Unlike traditional cost-cutting programs that often use across-the-board reductions, effective tariff mitigation requires a more nuanced approach. As the WSJ article notes, "Many companies are trying to be mindful not to make drastic cuts that could hamstring businesses should trade tensions ease or the economy fare better than expected later this year."
Our Selective Cost Optimization approach helps companies identify and implement targeted initiatives with three critical characteristics:
- Rapid Implementation: Delivers immediate Product and Loss (P&L) impact
- Low Operational Risk: Minimizes disruption to core business activities
- Strategic Alignment: Supports long-term competitive positioning
Prioritized Tariff Mitigation Tactics
| Time Horizon | Financial Tactics | Operational Tactics | Strategic Tactics |
| Immediate (0-90 days) | • Discretionary spending reduction • Working capital optimization • Payment term restructuring • Inventory level optimization | • Travel policy enforcement • Consultant usage reduction • Hiring freeze for non-critical roles • Energy usage optimization | • Selective price increases • Customer mix optimization • Non-core product rationalization • Marketing spend reallocation |
| Near-Term (3-9 months) | • Capital expenditure reprioritization • Asset utilization improvement • Tax planning enhancement • Insurance program optimization | • Alternative supplier development • Product specification modification • Process standardization • Automation of manual activities | • Customer contract renegotiation • Product portfolio rebalancing • Channel strategy adjustment • Market repositioning |
| Medium-Term (9-18 months) | • Business unit portfolio optimization • Debt structure refinement • Financial hedging strategies • Joint venture consideration | • Manufacturing footprint redesign • Make vs. buy analysis • Product platform consolidation • Technology modernization | • Global expansion strategy • M&A opportunity assessment • Business model innovation • Value proposition enhancement |
Learning from Industry Leaders
Companies across industries are implementing innovative approaches to tariff mitigation. The WSJ article highlights several examples worth noting:
- Hasbro is accelerating a multi-year cost reduction plan, now targeting $175 million to $225 million in savings this year. Their approach includes design changes to make products cheaper to build, such as Jenga blocks that now use a single type of wood.
- GE Aerospace is focusing on cutting administrative expenses and back-office costs while protecting Research and Development (R&D) and supply chain stability. As CEO, Larry Culp noted, "There's always more opportunity" to cut costs.
- Principal Financial Group is watching expenses more closely, specifically targeting consultant spending and employee travel, while also delaying hiring.
These examples demonstrate that tariff mitigation is not just about cutting costs but making strategic choices about where to invest and where to scale back.
Taking Action: Where to Start
Based on our experience working with companies navigating tariff challenges, we recommend focusing initial efforts on these five areas:
- Understand Your True Exposure: Conduct a comprehensive assessment of direct and indirect tariff impacts across your value chain.
- Identify Quick Wins: Target non-strategic spending that can be reduced without operational impact.
- Develop Supply Chain Alternatives: Accelerate qualifying alternative suppliers and redesign processes to reduce tariff exposure. Model all-in supply chain costs for new countries of origin and suppliers.
- Optimize Working Capital: Implement initiatives to improve cash flow and create financial flexibility.
- Build Scenario-Based Contingency Plans: Develop detailed response plans for various potential tariff outcomes.
As Ron Williams notes in the WSJ article, without making "dramatic levers," companies are examining expenditures and choosing to "defer until we get more clarity." This balanced approach – taking meaningful action while maintaining strategic flexibility – is the hallmark of effective tariff management.
Turning Challenge into Opportunity
While tariff uncertainty creates significant challenges, it also presents opportunities for organizations to strengthen their operational models and competitive positioning. Companies that act decisively now will not only weather the current storm but also emerge stronger when trade conditions eventually stabilize.
The most successful organizations will be those that move beyond simple cost-cutting to implement comprehensive strategies that address financial, operational, and strategic dimensions of tariff impact. By taking this approach, companies can protect their Earnings Per Share (EPS) and Multiple on Invested Capital (MOIC) while positioning themselves for long-term success.
Ankura Office of the CFO®
Our integrated Ankura Office of the CFO® and Performance Improvement teams offer specialized expertise to help organizations navigate tariff challenges. Contact us today to schedule an initial consultation on protecting your financial performance amid trade uncertainty.
1 Cutter, Chip. America Inc. Slashes Spending as Tariff Uncertainty Swirls, Wall Street Journal
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© Copyright 2025. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
