Tariffs and Procurement (Part 2): Tariff management and building an action plan

Tariff management is a strategic subset of direct materials management and sourcing that involves navigating and optimizing the complex costs and regulatory implications of importing materials and goods across borders. As we covered in part one, tariffs — essentially taxes imposed on imports and exports — directly impact product cost structures. To manage tariffs effectively, companies must align their tariff strategies with their broader business goals, including product design, pricing, supply chain resilience and sustainability objectives. Also, businesses operating globally must be able to adapt to sudden trade policy changes.

Every company aims to create the most competitive product for its target market. Achieving this requires a seamless integration of demand, supply and product requirements that begins in the design phase and continues throughout the whole product lifecycle. Within this framework, tariff management plays a key role in shaping sourcing decisions and influencing the cost and availability of direct materials. Just as sourcing aims to leverage external value to meet company goals, effective tariff management seeks to mitigate costs and streamline compliance to protect the organization’s bottom line and maintain market competitiveness.

Organizations must ensure efficient sourcing and tariff management that support their time-to-market, pricing and innovation goals to gain an advantage in the global market. By strategically selecting suppliers and optimizing the regions they source from, companies can reduce tariff-related costs and navigate trade regulations to avoid unexpected cost surges or supply chain interruptions.

This article explains how this affects Procurement.