Surviving Tariff Pressures: How to Build Pricing Resilience and Protect Profitability

Article written by Jason Covitz , Russ Mills and Hayley Green

Proposed U.S. tariffs of up to 60% on Chinese goods and 10–20% on global imports pose a serious threat to profitability, disrupting costs and supply chains across industries. In this evolving landscape, building pricing resilience is no longer optional—businesses must adapt or risk being left behind.

However, with inflationary pressures already straining consumer spending, companies may need to reconsider price increases,?seeking ways to manage or offset costs?without compromising customer loyalty or profitability. Focusing on pricing resilience is essential for companies aiming to protect margins while staying competitive.?

To address tariff-driven challenges, companies should: monitor competitors and respond transparently; optimize supply chains for cost efficiency; adopt a "fast follower" approach with clear communication; and carefully evaluate the risks of price increases. Together, these strategies enable companies to safeguard profitability and loyalty in a shifting trade landscape.?

1) Monitor Competitors and Respond Swiftly with Transparency?

Market intelligence and competitor monitoring are essential for staying ahead and remaining competitive. This requires leveraging external data sources - many companies rely too heavily on internal data. External analytics tools and services offer actionable insights into evolving competitor strategies and market conditions, helping businesses stay proactive.?

Keys to Monitoring and Responding Swiftly?

Real-Time Data and Monitoring Systems: Leverage real-time data and analytics to maintain an up-to-date view of pricing sensitivity, competitor actions, and market dynamics. These insights enable precise predictions of how pricing changes will affect profitability and market share, ensuring informed decisions.?

Agility and Flexibility: Build flexibility into operations and foster agile teams that can quickly pivot when needed. Adaptable structures allow companies to respond effectively without disrupting core functions.?

Proactive Planning and Response Protocols: Engage in scenario planning to anticipate possible tariff impacts, competitor moves and define clear, pre-established response protocols.??

2) Optimize Supply Chain Operations to Reduce Costs and Mitigate Risks?

In the evolving landscape, focusing on cost reduction and operational efficiency is becoming critical for companies navigating the upcoming trade environment. A strong, well-optimized supply chain not only reduces exposure to tariff-related risks but also contributes directly to cost savings and profitability.?

Take Steve Madden, a leading footwear brand, as an example. To cut its reliance on China and reduce costs, the company is lowering its imports from the country by 45% next year. To achieve this, the company has developed a network of factories in Cambodia, Vietnam, Mexico, and Brazil, enabling the brand to reduce its cost of goods sold (COGS) while improving supply chain resiliency and efficiency.?

Reducing production in high-risk countries requires strategic planning and time. The Steve Madden example highlights how shifting operations to regions like Southeast Asia and Latin America can help businesses reduce exposure, lower costs, and build more resilient supply chains.

3) Adopt a "Fast Follower" Approach with Clear, Consistent Communication?

This approach involves closely monitoring competitors’ pricing and swiftly adapting proven tactics, allowing others to absorb the risks of being first movers. If a competitor leads with a price increase, following suit ensures the change is more likely to stick. Otherwise, the leader may retract the increase, making them hesitant to lead in the future. ?

By combining this strategy with transparent communication, companies can effectively inform customers about key changes—such as product improvements, pricing adjustments, or new offerings—reinforcing customer confidence and demonstrating responsiveness to market demands.?

Taking the lead involves implementing price increases before competitors. While this strategy can address immediate margin concerns, it carries the risk of driving customers toward competitors who may choose to maintain existing prices or who have a more local supply chain.?

Conclusion?

In an evolving U.S. trade landscape, building pricing resilience is no longer just about managing prices—it requires a holistic approach that includes cost optimization, supply chain efficiency, and strategic customer engagement. By closely monitoring competitors, streamlining supply chain operations, adopting a "fast follower" strategy, and carefully managing price increases, companies can protect margins and maintain customer trust. These integrated strategies not only help navigate tariff-driven pressures but also set the foundation for long-term stability and competitiveness.?

Need Support Navigating Tariff Pressures?

With proposed tariffs threatening margins, understanding the impact of your pricing strategies has never been more critical. Profit Drivers can help you build pricing resilience and protect long-term profitability. Our team brings decades of practitioner expertise in pricing and margin optimization to help businesses succeed in challenging landscapes.

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