“According to recent analysis, some companies could face a major drop in EBIT [earnings before interest and taxes] margins if no action is taken,” warned Patrick Lepperhoff, co-managing director of Inverto.
Tariffs are no longer a theoretical threat.
Patrick Lepperhoff, co-managing director Inverto
According to Inverto, the first step to managing the tariff crisis is to understand your risk profile.
This can be achieved using the following:
- Establish a Tariff Impact Command Centre to monitor developments and coordinate action across procurement, logistics, finance and legal.
- Engage in creating visibility of second and third tier suppliers to identify the hidden risks you may have to tariff increases
- Deploy a Trade Tariff Simulator – to visualise exposure across suppliers, categories, and countries. This helps identify sources of profit margin destruction and high-risk trade routes.
- Join forces with your suppliers to understand their exposure and mitigation strategies.
- Gain transparency on second-source options for critical materials and components that will allow you to reduce tariff risks
- Explore tariff engineering levers—such as reclassification or the First Sale Rule to reduce immediate cost exposure.
- Begin scenario modelling to test the resilience of your current footprint against different tariff regimes.
“It is crucial now to buy time without bleeding too much margin as well as understanding where to start tariff mitigation activities for maximum impact,” added Lepperhoff.
Once you have identified critical vulnerabilities, the next step is to strengthen your supply chain.
Inverto recommends diversifying suppliers of critical commodities across geographies, re- or nearshoring production to more stable tariff environments, certifying alternative suppliers and evaluating the cost-benefit trades-offs for switching, and adjusting product specifications or packaging to avoid classification-based duties.
They also point out the advantage of being a ‘first mover’, noting that companies which are quick to adapt their supply chains to take advantage of lower tariffs for certain countries are likely to secure scarce capacity.
Stéphane Crosnier, co-managing director added: “The challenge now is not simply to react, but to adapt. The companies that will emerge stronger are those that take a deliberate approach to building tariff-resilient supply chains.”
