Though we’re still waiting to see how Donald Trump’s threatened tariffs might play out, there’s no doubt they’ll affect companies across a wide variety of industries. As CFO of Rimini Street, a global enterprise software support company with clients in manufacturing, energy, transportation, logistics, and various other industries, Michael Perica has seen firsthand how tariffs can impact a business. We spoke with him to learn how best to prepare for them.
Start with scenario analysis. Some of Rimini Street’s clients, Perica said, are exploring the idea of moving parts of their supply chain to different regions of the world.
“We’re working with folks in doing analysis and exploratory reviews so they can get their scenario planning” underway, he said. This can be a complex endeavor, he added, and clients need to consider such factors as the tax, legal, and regulatory requirements for different jurisdictions. The top challenge they face, he said, is finding sufficient unskilled labor.
Think long-term. Though tariffs are often “short-term policy decisions,” Perica said, “shifting a supply chain is inherently long-term.” In his experience, clients who focus on optimizing their supply chain rather than simply passing along costs to consumers, or who chose an approach combining both strategies, are in a “much better position” to cope with tariffs this time around.
Whether or not tariffs end up affecting a company, Perica said, executives can still benefit from planning for them because they can use the process as an opportunity to diversify their supply chains. His advice is to “be prepared for this likely near-term reality” of tariffs, but take steps to ensure your supply chain’s “long-term flexibility.”
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Acknowledge how disruptive tariffs could be, and don’t anticipate a bolt-on solution. Tariffs can have “tremendous impacts virtually up and down the entire organization, across all functions,” Perica said. Because they’re a “top-level P&L impact,” he said, they have “exposure from the investor/shareholder/board/executive team all the way down.” That means tariff mitigation is a “major project,” he said.
Companies shouldn’t expect to just “add on” to their existing strategies “with [their] existing resources,” Perica said. It’s a “substantial burden,” one requiring collaboration between departments and a thorough approach. “Look at every component in your organization to make sure they’re ready to be flexible.”
And don’t expect to use an off-the-shelf strategy.
“One size does not fit all,” Perica said. “Your product, your end market segment, your client base, and your supply chains and sourcing are so unique…so hearing of a particular organization or entity that had success doesn’t mean it’s going to work for you.”
Look for exemptions. Companies can also work with the Office of the United States Trade Representative (USTR) to identify any exclusions or exceptions that might apply to them, Perica said.