Tackling complexity in pricing and supply chain management amid rising tariffs
After five years of crises and disruption, it’s hard to believe that global trade could become more volatile, but rising tariffs, shifting policies, and the unpredictability of international trade have created unprecedented new challenges for businesses, says John Moss.
SECTORS INCLUDING steel, aluminium and automotive are seeing tariffs as high as 25% on imports to the US . These shifts don’t occur in isolation; companies need to continuously adapt their pricing strategies to remain competitive while protecting margins. To successfully do this, businesses must be able to navigate cost structures between markets, understanding and keeping up with how tariffs and trade policies vary country to country.
This is further complicated by fluctuating exchange rates, which amplify the financial impact of changes in tariffs. Pricing also becomes increasingly complex as businesses contend with new and changing regional market dynamics, with local businesses gaining an advantage over importers. In this environment, businesses face the difficult challenge of finding a balance between passing on rising costs to customers to maintain margins and ensuring their prices remain competitive.
The dynamics of price sensitivity also vary from market to market, further complicating pricing decisions. As businesses adjust to these realities, one thing is clear – an agile, market-specific pricing approach is essential.
Trade policy uncertainty
The implications of trade policy changes are not theoretical, they are tangible and immediate. Historically, periods of notable trade policy changes have resulted in significant market impacts. For instance, Trade Policy Uncertainty (TPU) associated with Brexit increased the UK’s import prices by up to 10% (CEPR, Dec 2023), demonstrating how changes in trade policy can swiftly ripple through global supply chains. Such volatility highlights the need for businesses to rethink their approach to international pricing. A reactive, one-size-fits-all pricing model can no longer be relied on. Instead, organisations must embrace a more dynamic approach that responds to trade shifts in real time.
The true cost of reactive pricing models
The cost of reacting too slowly to changes in trade policy can be huge. Businesses still relying on legacy pricing processes, including spreadsheets and manual reporting are going to struggle to keep pace and risk eroding margins. Companies that can’t adapt quickly to change will risk losing market share and falling behind.
Leveraging technology for pricing agility
Compared to some industries, digital transformation has been slow in the supply chain and distribution sector, but if there was ever a time to accelerate automation, now is it. Intelligent and automated pricing solutions enable businesses to simultaneously and instantly update prices across multiple markets when tariff changes occur. This capability ensures companies maintain consistent margins across diverse markets, despite varying cost structures. Meanwhile, automated execution of price changes dramatically reduces the time from decision to implementation, maximising impact.
The right pricing technology can transform businesses’ ability to navigate trade complexities, empowering them to respond to local market conditions while maintaining central visibility and control. As global trade continues to evolve, it is evident that the days of being able to rely on outdated and static pricing models are over. Those who focus on agility in their pricing strategy across diverse markets will be best positioned to thrive in the face of uncertainty.
John Moss, CEO, Flintfox
