“I would rather have certain bad news than uncertainty. It is killing our decision-making.”
— CFO, Global Manufacturing Company
Tariffs have become the wildcard no industrial player can ignore. And uncertainty is the new constant. Whether driven by shifting trade alliances, retaliatory tariffs, or geopolitical unrest, economic conflict is destabilizing even the most robust supply chains and margin structures. And while executives may be well-versed in pricing theory or cost control, few are prepared for the pace and complexity of decisions needed when uncertainty hits the bottom line.
This is especially true when the uncertainty is accompanied by volatility in trade policy, like the sudden imposition or removal of tariffs. The natural instinct is often to wait for clarity. But waiting can erode profitability and damage market position. Instead, organizations must embrace readiness and agility as core commercial capabilities.
Why uncertainty is more troublesome than bad news
Uncertainty stalls action. Teams don’t know whether to absorb, pass through, or hedge. Supply chain shifts are delayed. Pricing conversations with customers become vague or reactive. Worst of all, strategic focus drifts. As one CFO put it plainly, bad news with certainty is manageable but on-and-off bad news is paralyzing.
Recent years have offered a masterclass in tariff-related uncertainty. Many companies found themselves adjusting pricing or sourcing strategies, only to reverse course months later.
The US-China tariff waves, for example, involved multiple rounds of escalation, temporary exemptions, and delayed implementation timelines. In some cases, tariffs were imposed with 30 days’ notice, paused under diplomatic negotiations, then reimposed shortly after. This on-again, off-again pattern made it nearly impossible for businesses to plan with confidence, undermining both supplier agreements and customer commitments.
To combat this paralysis, companies must build systems that allow them to act intentionally even when visibility is low. Preparation, simulation, and cross-functional governance are more critical than ever.
Best practices for a rapid response
While tariffs are just one form of economic disruption, they provide a useful lens through which to examine broader volatility-readiness. We see five common competencies necessary to prepare structurally for agility, and act decisively when disruption hits.
1. Progress over perfection
Too many businesses are turning tariffs impact analyses into a costing science project: getting the last 20% of precision is consuming an additional 80% of analytical time. As one pricing director recently told us “I’ve spent countless hours modeling impacts to the cent only to throw away my work based off the latest assumptions.” At Simon-Kucher, we advise companies not get wrapped around the axle in precision – rather focus on getting to a reasonable impact assumption that achieves your top line objective and spend the rest of your time focused on execution and messaging. There will be several opportunities and round of pricing actions to fine tune.
2. Strategically leverage surcharges
A frequent dilemma: “Is a market-wide price change the right move, or should we apply a surcharge instead?” Surcharges are ideal in circumstances where rationale is transparent and easily justified as well as in scenarios that require agility such as percentage adjustment or removal. This strategy requires accepting the fact that surcharges will not be fully precise, however they will enable you to act quicker.
3. Mind your incentive structure
Be mindful of how price actions will impact overall seller earnings via simulations through your current incentive plans and anticipate how structures such as accelerators and caps may impact sales teams. This requires a thoughtful balance of incentivizing sellers to executive your pricing strategy while not giving away profit gains. A distributor recently failed to account for inflation in their compensation plants and ended up giving away nearly all profit gains from serial price increases in the form of higher commission payouts.
4. Build an agile process
Your first price response will likely not be your last. After a period of frequent price adjustments driven by inflation, many companies reverted to the old default: annual price increases.” In 2024, we saw most companies turning to cost take out and a reversion back to annual price increases. In the last 30 days alone, volatility has proven you need to have processes defined to act quickly. Wargame and simulate you pricing action process. Actively identify and mitigate common bottlenecks such as executive review/sign off and technology bottlenecks.
5. Build multiple scenarios
All models are wrong, some are useful. Focus on how your market and competitors are going to be impacted. A recent manufacturer claimed they were not directly impacted by tariffs as their steel supply was fully domestic. However, near-shoring in adjacent industries caused their suppliers’ backlog to grow, putting upward pricing pressure on both spot and formula prices. Develop an understanding for not only how you will be impacted, but your market and competitors. Anticipate how they will behave and develop appropriate response plans.
Lessons for the next conflict
Tariffs aren’t going away. Neither are other sources of economic friction, from regional wars to raw material scarcities to regulatory shifts. The companies that protect and grow profit during uncertainty will be those that treat agility as a strategy, not a reaction.
Building a resilient pricing organization is no longer optional: it’s a prerequisite for sustainable success in an unpredictable world.
At Simon-Kucher, our industrials experts help companies turn pricing into a competitive advantage, whether you're navigating trade turbulence, redesigning your surcharge strategy, or preparing for the next global shock.
Let’s make volatility work for you.
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