Tariffs introduce uncertainty. They disrupt supply chains, inflate costs, and force businesses into difficult pricing decisions. Many of my clients on both sides of the USA-Canada border—especially in the restaurant and direct-to-consumer (DTC) sectors—have asked for guidance on navigating this volatility.

This short playbook doesn’t claim to provide definitive answers—because, frankly, no one has them. Anyone who says otherwise is either delusional or dishonest. These are uncharted waters for most businesses. In times like these, clarity, calm, and intellectual humility are more valuable than ever. The key question isn’t what will happen, but rather how exposed is your business? Understanding exposure—both direct and indirect—is the first step in crafting a strategy.

Assessing Exposure: A Structured Approach

The impact of tariffs isn’t just about the goods you import. It ripples across your entire cost structure, customer base, and competitive landscape. Here’s how to analyze your exposure systematically.

1. The Supply Side: Your Inputs

Your costs don’t all move in tandem. Some are locked in, while others are at the mercy of market fluctuations. Start by assessing:

• Contract Pricing: What percentage of your inputs are secured under fixed contracts (annual or semi-annual)? These are stable—at least for now—unless suppliers invoke force majeure clauses or renegotiate.
• Direct Tariffs Impact: Identify all imported products (or those sourced from suppliers affected by tariffs) and calculate their share of your total cost of goods sold (COGS).
• Currency Exchange (FX) Risk: Tariffs disrupt exchange rates, which can affect costs even if you don’t import directly. A weakening local currency means higher prices for internationally sourced goods.
• Commodity Price Volatility: Commodities face a triple impact—tariffs, FX fluctuations, and their own market volatility. If your inputs include metals, grains, or energy, expect heightened instability.

2. The Demand Side: Your Products

Understanding supply-side exposure is only half the equation. The other half is demand—how your customers react to price changes. Key questions:

• Are your customers directly exposed to tariffs? If they are, expect increased price sensitivity and demand fluctuations.
• What percentage of your costs are “local” (e.g., labor, rent)? These costs won’t be affected by tariffs but may shift due to broader economic conditions.
• How dependent is your business on tariff-exposed industries? Even if your product isn’t directly impacted, your customers might be. For example, if you sell premium goods and your target customers experience cost pressures from tariffs, you may see demand soften.

Creating Your Tariffs Exposure Scorecard

Data in uncertain times is never perfect. That’s fine. The goal isn’t precision—it’s clarity. Use a Low/Medium/High ranking to assess your business across key dimensions. Here’s an example of how your exposure scorecard might look:

This simple structure provides an at-a-glance risk assessment, helping you prioritize decisions.

What’s Next?

Once you’ve mapped your exposure, the next step is scenario planning. Ask yourself:

• How long will this last? Are you planning for a temporary disruption (weeks/months) or a prolonged shift (years)?
• What pricing strategies can you deploy? Can you pass costs through to customers, or do you need to absorb them and optimize elsewhere? Can you introduce a (temporary) tariff surcharge on some of your highly exposed products?
• How agile is your supply chain? Are alternative suppliers available? How quickly can you pivot?

There are no perfect answers, only informed decisions. The key is to maintain a structured, data-driven approach while staying adaptable.

Final Thoughts

Tariffs create uncertainty, but uncertainty doesn’t have to mean chaos. The businesses that navigate this environment best will be those that embrace clarity, structure, and strategic adaptability.

If this playbook helps you think through your pricing challenges, I’d love to hear your thoughts. Let’s keep the conversation going.

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