Five lessons for businesses navigating tariffs and trade turmoil

3. Rethink competitive dynamics

Today’s best deal may not be tomorrow’s. Tariffs flip competitiveness on its head. Suppliers you’ve long assumed were the cheapest may suddenly be undercut by competitors from lower-tariff markets. Conversely, suppliers in the direct line of fire may be forced to discount heavily to hold onto business. This could create opportunities to switch suppliers and lock in lower input costs.

Take electrical transformers, for example. Chart 4 shows the change in export prices for the three largest exporters of electrical transformers. Two of them – China and Mexico – are in the crosshairs for President Trump’s tariffs. As US demand dries up, manufacturers in these economies will need to cut prices to stay competitive and break into new markets. Meanwhile, German export prices are more insulated, aided by relatively lower US tariffs; still, the 15% duty on EU exports is enough to see prices effectively flatline this year. As import tariffs on Mexico come down through the second half of 2026, growth in electrical transformer export prices will outpace those from China; we expect US tariffs on imports from China to stay elevated indefinitely.

Electrical transformers are key inputs into the manufacture of battery systems, consumer electronics, computers and industrial equipment. Finding cheaper suppliers can save manufacturers of these types of goods a pretty penny.

These types of price dynamics play out across the entire trade map. But the shifts are not linear. For goods for which China has a larger market share, prices are stickier. For instance, China accounts for more than half the world’s export of elastic fabrics (think spandex and Lycra). Given China’s dominance (and the world’s lack of alternative suppliers), prices are still able to rise this year and next, despite tariffs. In contrast, China is only a minor player in the roof tile exports, meaning US buyers have more options to find cheaper suppliers. As buyers look elsewhere, prices are expected to fall more than 10% this year.

4. Leverage trade agreements

While the US raises barriers, other countries are opening doors. In July, the UK and India struck a wide-ranging trade deal. India is also negotiating with the EU and Australia on expanded deals expected to be signed later this year.

These agreements can lower supplier costs and open new markets for your products. Do the work to understand how your business can benefit. Would a new agreement make it cheaper to source from a particular country? Could it help you reach customers you couldn’t before?

5. There are certainties in uncertain times

Uncertainty can be paralysing, but some outcomes are predictable. Tariffs are inflationary for the economy that imposes them. Big spending programs like Trump’s One Big Beautiful Bill also add to price pressures. That means higher inflation and elevated interest rates in the US this year. Another certainty? Markets seek safe havens during chaos. Usually, that’s the US dollar. However, with political interference in key US institutions – from the Federal Reserve to the Bureau of Labor Statistics – investors are looking elsewhere. That will likely push the greenback lower over time. Sticky US rates and a softer US dollar can create opportunities to hedge currency exposures and take advantage of interest rate differentials. Our forecasts are rooted in economics, helping businesses identify opportunities and risks beyond just trade.

The bottom line

The global trade environment is volatile and politically charged. But businesses don’t have to be paralysed.

By knowing your exposures, scanning for opportunities, reassessing competitive dynamics, leveraging trade agreements, and acting on economic certainties, firms can move decisively – even when the world is turbulent.