Beyond the Bottom Line: Navigating the Complex GRC Challenges of Trump’s Tariffs

Navigating Tariff Challenges: More Than Just Price Hikes

It’s a common misconception to view tariffs solely through the lens of increased prices for imported goods. The ripple effects of tariff policies extend far beyond simple cost increases, creating complex compliance challenges. Organizations must grapple with a cascade of interconnected issues:

1. Product Classification & Origin Rules: Determining the correct classification and origin of goods becomes significantly more complex and crucial under new tariff regimes. Errors can lead to substantial penalties and delays.   
2. Supply Chain Reconfiguration: Tariffs often necessitate a re-evaluation and potential restructuring of supply chains. This involves identifying alternative suppliers, assessing their reliability and compliance standards, and managing the logistical complexities of shifting production or sourcing.   
3. Contractual Obligations: Existing contracts with suppliers and customers may need renegotiation to account for tariff impacts, leading to potential disputes and legal challenges.
4. Customs Compliance: Navigating the intricacies of customs documentation, valuation methods, and clearance procedures becomes more burdensome and prone to error.

The Expanding Risk Landscape:

These operational complexities translate directly into heightened risks across multiple domains:

• Compliance Violations: The intricate nature of new tariff rules increases the likelihood of unintentional non-compliance. Organizations face risks related to incorrect duty payments, improper documentation, and failure to adhere to specific origin requirements, potentially leading to significant fines, audits, and reputational damage.
• Supply Chain Disruption: Tariffs can destabilize existing supplier relationships, force rapid searches for new partners (often with less vetting), increase lead times, and disrupt inventory management. Sudden policy shifts or retaliatory tariffs can halt the flow of critical goods, jeopardizing production and fulfillment.   
• Business Continuity: Severe supply chain disruptions caused by tariffs pose a direct threat to business continuity. Organizations must reassess their contingency plans to ensure they can maintain operations if key suppliers or trade routes are affected.
• Credit Risk: Tariffs can impact the financial health of both suppliers and customers. Businesses need to re-evaluate creditworthiness, anticipate potential payment delays or defaults from customers struggling with increased costs, and manage their own potential cash flow issues.
• Financial Risk: Beyond credit risk, tariffs introduce volatility into financial forecasting. Budgeting becomes more difficult, currency fluctuations related to trade tensions add complexity, and overall profitability can be significantly impacted.
• Reputational Risk: Companies caught violating tariff regulations or those seen as profiting excessively from tariff loopholes can face significant public backlash and damage to their brand reputation.

The Imperative for Cross-Functional Collaboration:

Successfully navigating tariff challenges requires breaking down traditional organizational silos. Coordination between risk management, legal, compliance, procurement, finance, and logistics is essential to manage and mitigate risks from the impact of tariffs. A fragmented approach, where departments operate independently, will inevitably lead to blind spots and increase the likelihood of costly errors or disruptions. A robust, integrated GRC framework is crucial for developing a holistic understanding of tariff-related risks and implementing effective mitigation strategies.

The Peril of Inaction:

Failing to address the impact of these tariffs can expose businesses to significant financial, operational, and regulatory risks. Ignoring the complexities, hoping for policy reversals, or relying on outdated processes is a recipe for potentially severe consequences, including lost revenue, supply chain breakdowns, hefty penalties, and lasting damage to stakeholder trust.

#RISK New York: Addressing the New World Order

As Trump’s tariffs move from a threat to reality, the #RISK series will address the new world order. The upcoming #RISK New York conference, taking place July 9-10, 2025, at Fordham Law School, is specifically designed to equip leaders with the knowledge and strategies needed to navigate this challenging environment.

This premier event brings together leading experts and senior executives across GRC, AI, Cybersecurity, Privacy, Compliance, and Legal fields. Attendees will engage in critical discussions and gain practical insights on topics directly relevant to the current trade landscape, including:

• The Future of US Regulations: Understanding the impact of deregulation and new trade policies.
• Navigating Third-Party Risks: Building resilient supply chains amidst geopolitical uncertainty.
• Shaping GRC Strategy: Adapting governance frameworks to a new political and economic reality.
• Financial Risk Management: Addressing credit and market risks influenced by trade policies.

Get Involved:

Don’t let your organization be caught unprepared. Join the conversation at #RISK New York to connect with peers, learn from experts, and develop the strategies needed to thrive in this new era of global trade risk.