Tariffs don’t just raise costs – they reshape supply chains, margins, working capital, and collateral.
Tariffs have existed as long as international trade itself. The first recorded tariffs were imposed between city-states in Mesopotamia around 2000 BC. In the United States, the first tariffs were enacted by George Washington in 1789 to raise federal revenue and protect emerging American industries.
The Trump Administration began imposing new tariffs on goods imported into the United States as part of the so-called “Liberation Day” tariffs on April 2, 2025. Since then, the landscape has shifted repeatedly—with modifications, rescissions, and additional levies creating ongoing uncertainty. Tariff volatility has evolved from a headline risk into a day-to-day operating reality.
Borrowers are adapting—some proactively, others reactively—and these choices have tangible consequences: compressed earnings, reduced debt service capacity, elevated working capital requirements, and diminished borrowing bases.
This article explores how companies are responding to tariff pressures, what those responses mean for financial performance and creditworthiness, and what practical steps management teams can take to mitigate risk and strengthen operations.
How U.S. Import Companies Are Adapting
Tariffs demand an end-to-end response, not a single fix. The strongest operators don’t just raise prices — they strengthen supply bases, renegotiate contracts, redesign products, boost productivity, refocus distribution channels, and adjust hedging strategies based on the specific challenges they face.
Here’s how that translates into action:
Supply Chain Restructuring – Over 50% of manufacturing CFOs are actively diversifying supply chains away from heavily-tariffed countries. Companies are pursuing “China +1” strategies—maintaining some Chinese production while expanding capacity in Southeast Asia, Vietnam, or India. Others are leveraging USMCA frameworks to shift sourcing from China to Mexico and Canada.
Domestic Manufacturing Investment – Major automakers are significantly expanding U.S. production: Honda is moving Civic Hybrid production from Japan to Indiana, while Hyundai committed $21 billion to domestic manufacturing from 2025-2028. Toy manufacturer Cra-Z-Art expanded U.S. production capacity by 50%.
Preemptive Inventory Builds – Nearly 40% of firms accelerated purchases in anticipation of tariffs, stockpiling critical materials despite the working capital impact l.
Pricing & Customer Strategies – Companies are implementing transparent tariff surcharges rather than permanent price increases, and some are emphasizing that cost increases stem from government policy rather than internal factors. Others are negotiating better terms with suppliers and exploring bundled pricing or premium positioning.
Product Redesign – Businesses are engineering their way out of tariff exposure by redesigning products to incorporate more locally-available materials or fewer imported components.
Operational Cost Management – Companies are implementing workforce reductions, automation investments, and operational efficiencies to offset tariff costs while maintaining margins.
The effectiveness varies significantly by industry—retailers with thin margins face greater challenges than manufacturers with pricing power or domestic production capabilities.
Conclusion
Tariff pressure isn’t a temporary disruption—it’s a structural force reshaping cost structures, supply chains, and working capital requirements. Companies that treat tariffs solely as a pricing problem will fall behind. Those that adapt holistically—strengthening operations, diversifying sources, renegotiating contracts, and maintaining financial flexibility—will emerge more resilient.
The implications for lenders are equally significant. Tariffs directly impact borrowers’ debt service capacity, working capital needs, and asset valuations that underpin borrowing bases. A borrower’s response to tariff pressure—whether proactive or reactive—becomes a leading indicator of credit quality and operational strength.
Harney Partners plays a critical role in this environment. Through rigorous scenario planning, cash flow modeling, supply chain financial analysis, and strategic guidance, Harney helps companies transform tariff challenges into competitive advantages. Through rigorous exposure quantification, comprehensive scenario modeling, and decisive execution support, we help clients not just survive tariff volatility—but gain market share during it.
The difference between resilience and vulnerability often comes down to preparation and expertise. Stay vigilant, monitor policy changes closely, and act decisively to protect both operational performance and credit quality.
Contact Harney to discuss how we can help navigate tariff exposure, strengthen your financial position, and turn trade policy uncertainty into strategic opportunity.
