Pricing in Times of Tariffs, Economic Uncertainty, and Political Tensions

Now more than ever, businesses face a complex environment, marked by increasing tariff volatility and constant geopolitical uncertainty. Although many of these tariffs are currently on pause, the instability remains. Most companies can’t count on major investments or favorable conditions—caution is dominating the economic landscape. And right now it seems like we may have avoided the worst… but the risk is still there. Everything suggests that this uncertainty is here to stay for several more years.

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What could happen? Understanding the risk

While we’ve never seen long-term tariffs on this scale, we’ve already experienced the blow to economic confidence: markets trembled, many trade deals got suspended and many countries responded with retaliatory policies. Although it’s hard to predict the full reach of these measures, if they were to stay active for a prolonged time, we must try to project the most likely effects to build a coherent business plan.

Let’s look at a more contained case: the tariffs imposed on washing machines in 2018. Here’s what happened:

• The tax impact was passed directly to the consumer.
• Over time, the rest of the market followed the price hikes—even domestic producers who weren’t affected.
• In just one year, prices rose more than necessary to cover the added costs.
• Not only did washer prices go up, but so did dryers—often sold together—even more sharply.

We also know that across the supply chain, the price increase can multiply given each member of the chain gets a margin, that frequently is a percentage, for example: a $20 tariff can lead to a $48 increase for the end customer. (Explained in LegalEagle’s video: “How Tariffs Actually Work”—highly recommended.)

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So, what can companies do?

Overreacting often backfires. While some short-term actions may help, the real goal is long-term endurance. This is a resilience game, in no time the main differences between your price and non-tariffed goods could disappear again.

Even if tariffs return, they likely won’t be as broad as before. If Trump tries again, he’ll probably target specific products—steel being the most likely. That’s why we’ve compiled a list of recommendations across two fronts: pricing strategies and supply chain adaptations.

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Pricing Strategies

1. Prioritize agility and anticipation

Design scenarios and responses before events occur. This gives you the upper hand in crisis moments.

2. Respond with leadership, not passivity

Adopt a “respond and lead” mindset instead of “wait and see.” Pricing agility is a requirement—not a luxury.

3. Acknowledge this is not a local problem

Disruption affects global supply chains, consumer perceptions, competition, and the economy at large. Solutions must be structural. And should consider retaliatory tariffs on go-to-market strategies.

4. Consider differentiated impacts

Large corporations dominate the narrative, but small businesses are the most exposed because they usually don’t have the brand recognition or capabilities of the major ones. Small and medium companies need strategy composed of clear, simple frameworks to act quickly.

5. Build a Pricing Playbook

As suggested in Iris Pricing Solutions’ 2025 Pricing Playbook:

• Assess product exposure to tariffs.
• Categorize risk by probability of impact.
• Define whether you’ll absorb, share, or pass on the cost.
• Set communication protocols for different markets, segments and contract cycles.
• Decide how to measure margin retention (in dollars or percentages?) and when to apply price changes (order date or shipment date?).

6. Surgical increases, not across-the-board

Price fatigue is real, ever since the pandemic hit there have been price surges in most industries, and people and businesses over scrutinize every penny. Identify products or segments where you can justify increases based on value—and communicate clearly.

7. Rely on data and technology

Model scenarios, anticipate customer reactions, and monitor margins in real time by region, customer, and product. Business intelligence is non-negotiable.

8. Balance short- and long-term focus

Survival this month isn’t enough. Revisit tariff impacts regularly, keep data updated, and maintain transparency.

9. Consider Value-Based Pricing

Shifting from cost-plus to value-based pricing can help align prices with perceived customer value. Segment wisely and understand what your customers truly care about.

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Supply Chain Adaptations

1. Diversify global Supply Chains

For products or materials that need to go from China to U.S. many companies are exploring other regions like Vietnam or Malaysia to reduce dependence on China, but new hubs come with new risks—evaluate their economic and political stability. For companies that export to U.S. now may seem like a great moment to explore new markets, but evaluate clearly your capabilities and the benefits it would provide.

2. Moving operations to the U.S.? Only with clear math

Moving production to America or changing suppliers can reduce risk, but it often comes with higher costs. It only makes sense if tariffs last long enough to justify the investment.

3. Deep collaboration with suppliers

Align expectations and scenarios with suppliers. Don’t leave them out of your plan.

4. Use tech and forecasting to avoid overstocking

Stockpiling inventory may seem logical, but it’s risky. Use demand planning and real-time tracking tools to optimize inventory levels.

5. Create an internal task force

Build a cross-functional team with the capacity to respond quickly to policy changes. Ideally, support them with intelligence tools and decision-making dashboards.

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Conclusion: Play the long game

No one can control the political landscape, but companies can prepare for unpredictability. By adapting pricing models, building more resilient supply chains, and staying agile and proactive, organizations will be better positioned to navigate this era of uncertainty.

This is not about reacting. It’s about building a system that can handle the pressure. In Datalyk we can help you every step of the way, from building the scenarios and tools required, to determining changes on demand and commercial strategies, lets talk!