Business leaders confront tariff uncertainty as costs mount
Trade policy since the start of the Trump administration has been inconsistent, creating an unprecedented operational crisis for American businesses. Many feel that tariff policy has evolved from sector-specific trade measures into tools for advancing broader political initiatives, including border security and international alliance reshaping.
Manufacturing executives report they cannot effectively plan operations when policies change frequently or face indefinite delays, a sentiment echoing across boardrooms nationwide as companies struggle to maintain strategic direction amid regulatory volatility.
Current tariff rates have reached levels not seen in nearly a century. The U.S. average effective tariff rate now stands at 20.6%, the highest since 1910, with additional sectoral tariffs creating compound effects. Combined measures on Chinese goods can reach total effective rates of 55% depending on transshipment classification and product origin.
Financial impact extends beyond headlines
All 2025 tariffs together raise consumer prices by 2.3% in the short run, equivalent to an average per-household consumer loss of $3,800. Companies report revenue declines of 10%-40%, depending on the market they operate in, while quoting activity has surged dramatically as businesses scramble to assess new price points. Yet many quotes represent market testing driven by uncertainty rather than genuine demand.
For manufacturers, the challenges compound across supply chains. Steel, aluminum and copper tariffs impact not only direct material costs but also building products used in construction projects.
A new 50% copper tariff takes effect August 1, 2025, adding to existing pressures. Transportation costs rise as tariffs hit medium and heavy trucks, affecting logistics for every company moving goods. Semiconductor restrictions impact electronics manufacturers while creating ripple effects for medical device companies, automotive suppliers and appliance makers who rely on these components.
Uncertainty is a primary business challenge
Over 30% of firms now identify trade and tariffs as their most pressing business concern, up sharply from just 8.3% in the previous quarter. New guidance around transshipment means Vietnamese goods with Chinese inputs now face 40% tariffs. Metal smelting origin requirements create additional exposure, with companies marking sources as “unknown” automatically triggering 200% tariffs under presumed Russian origin classifications.
Even companies receiving domestic tax benefits find those advantages eliminated by tariff costs. Capital equipment purchases may qualify for bonus depreciation, but those savings disappear when the same machinery faces substantial tariffs upon arrival at ports.
Revenue pressures compound operational challenges
Manufacturing companies face the most direct impact as material costs surge while customer demand remains constrained. Current manufacturing performance data shows utilization at 54% in Q2 2025, down from 66% in Q4 2024, while revenue is projected to be down 4.8% in 2025. Profitability has declined to 4.2% in 2024 from 5% in 2023. Raw material tariffs now rank as manufacturers’ top concern alongside higher costs and recession fears.
Post-pandemic market conditions have already created headwinds through inflation and cautious consumer spending. Tariff uncertainty adds another layer of complexity to sales and operations planning, forcing companies to reassess both immediate operations and long-term investment strategies.
Construction and real estate sectors encounter similar pressures through building materials costs. Projects planned months ago now face unexpected expense increases as copper, steel and aluminum products become more expensive. Contractors struggle to honor fixed-price bids while material costs shift unpredictably.
Nine in 10 supply chain leaders encountered challenges in 2024, with major disruptions often starting deep in the supply chain. Many mid-sized companies lack comprehensive supply chain mapping, making it difficult to assess total tariff exposure. A company might not know where every component originates or how it reaches their facilities, creating blind spots that trigger unexpected cost increases.
Even sectors seemingly removed from international trade find themselves affected. Nonprofit associations report membership decline as their business constituents struggle under economic pressure. Healthcare organizations face potential cost increases on medical devices and pharmaceuticals containing imported components.
How to prepare for tariffs: 5 actions manufacturers can take right now
While tariff timing continues to be unpredictable, successful companies are taking concrete steps to regain operational control. The most effective approaches focus on areas within company control rather than trying to predict policy outcomes. Below are five ways manufacturers can respond to uncertainty:
1. Data accuracy has become critical.
Companies must understand their Harmonized Tariff Schedule codes and verify the sourcing and smelting origin of every material. Incomplete information can default to punitive classifications, with unknown metal sources automatically receiving the highest tariff designations.
2. Supply chain mapping provides the foundation for informed decision-making.
Organizations need visibility into component origins, shipping routes and alternative sources. This transparency enables scenario planning for different tariff outcomes rather than reactive responses to policy changes.
3. Financial planning must account for both tax benefits and tariff costs.
Bonus depreciation and Section 179 expansions offer real relief — but only if tariff exposure doesn’t eliminate the advantages. Companies are learning to evaluate capital investments through both tax and trade policy perspectives.
4. Sales and pricing strategies require updates for volatile cost environments.
Traditional cost-plus pricing models struggle when input costs shift unpredictably. Leading companies are moving toward market-based pricing that accounts for volatility while training sales teams to emphasize value over price.
5. Operational efficiency becomes more valuable when margins face pressure.
Companies that can reduce production costs, improve quality or accelerate delivery times gain competitive advantages that help offset tariff impacts. This focus on controllable improvements provides stability amid external uncertainty.
Market opportunities within challenges
Despite widespread concern, some companies report positive outcomes from the current trade policy. Domestic manufacturers with foreign competition benefit from tariffs that level pricing. Reshoring initiatives create new business opportunities, particularly in automotive manufacturing where companies are making investments in U.S. facilities.
USMCA compliance offers strategic advantages for companies that can document qualifying supply chains. Products meeting North American content requirements receive preferential treatment that reduces tariff exposure compared to competitors using non-qualifying sources.
The forced focus on supply chain transparency means companies that complete comprehensive mapping often discover cost-saving opportunities, risk reduction possibilities and supplier diversification options they hadn’t previously identified.
And as markets become more competitive and pricing pressure intensifies, companies invest in formal sales methodologies that improve conversion rates and customer relationships. What begins as tariff response often evolves into sustainable competitive advantage.
Planning for continued volatility
Several critical dates loom through year-end with potential for additional policy changes. EU retaliatory tariffs may activate on August 6, Chinese goods tariffs could escalate on August 12 and USMCA renegotiation discussions may begin this fall. With executive action driving most policy modifications, timing is difficult to predict. Companies cannot wait for certainty that may never arrive.
Instead, successful organizations are building capabilities that perform well across multiple scenarios. They’re developing data systems that provide real-time supply chain visibility, pricing models that adapt to cost volatility and operational processes that maintain efficiency under pressure.
Range planning has replaced point forecasting. Rather than trying to predict exact tariff rates, companies model best-case and worst-case scenarios to establish operational guardrails. If a key import’s tariff could range from 10% to 50%, that becomes the planning assumption rather than hoping for a specific outcome.
The key insight from companies weathering this environment successfully: Focus on building business resilience rather than predicting policy outcomes. Organizations cannot let uncertainty paralyze decision-making. Instead, they must decide to lead through volatility by strengthening capabilities that deliver value regardless of external conditions.
How Wipfli can help
We help companies stay informed, react to risks and plan for opportunities. Our perspective spans tax, compliance, workforce and strategic planning — so your whole organization is covered. To learn more, visit our manufacturing tariffs, trade and tax shifts page as well as our policy and tax updates page.
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