When it comes to managing for uncertainty, chief financial officers are expected to nimbly handle both a sea of change and changing seas.
Those skills are being put to the test as the President Donald Trump administration makes trade actions an immediate priority for the first 100 days. The proposed and already-enacted tariff policies have put corporate compliance and financial strategy back in the spotlight.
Tariffs introduce complex compliance requirements, particularly for businesses navigating international trade, and the Trump administration’s policy shift comes at a time when global supply chains are still recalibrating from pandemic-related disruptions.
The increased steel and aluminum duties, for example, are projected to directly impact industries such as automotive, aerospace and construction, where these materials form the backbone of production. As a result, CFOs and their risk teams must closely monitor customs classifications, tariff codes and exemptions. Failure to comply with these requirements could result in fines, supply chain bottlenecks or reputational risks.
The pause on tariffs for Canada and Mexico — contingent upon enhanced border security measures — provides temporary relief, but the longer-term implications remain open-ended and challenging to plan for.
For CFOs, tomorrow’s reality is not just about managing costs but about dedicating resources to tracking tariff rule changes, filing accurate import documentation, and ensuring suppliers meet regulations in the United States.
Read also: Tariff Turmoil Puts Supplier Risk, Supply Chain Management Under Microscope
Trump’s proposals signal a stark departure from the free-trade policies that have underpinned global commerce for decades.
For CFOs, compliance is no longer just a regulatory box to check; it is a strategic imperative. Proactively addressing cost management, supply chain resilience, regulatory adherence and strategic planning will be critical in navigating the complexities of the evolving trade environment and safeguarding financial health.
Navigating these tariff-driven disruptions requires an advanced approach to compliance and cost savings — one that increasingly uses automation, data analytics and artificial intelligence-driven financial modeling to ensure regulatory adherence, cost efficiency and supply chain resilience.
The added uncertainty around customs enforcement, trade compliance and geopolitical risks makes technology-driven compliance automation and predictive analytics essential for financial planning. Ultimately, companies that treat trade regulations as a strategic function rather than an administrative burden may be best positioned among their peers to manage and mitigate its risks.
The marketplace is already responding with digital innovations. Freight Technologies last week launched a transportation management system (TMS) designed for brokers, shippers and other logistics operators working across the U.S.-Mexico-Canada Agreement (USMCA) region. The system includes compliance, customs documentation and shipment visibility for cross-border logistics.
See also: What Treasurers Can Learn From How Central Banks Approach Risk
PYMNTS Intelligence’s “The 2024 Certainty Project Report” found that more than a third of middle-market company leaders said business uncertainty led to missed opportunities.
Against that backdrop, for today’s CFOs, compliance is no longer just about adhering to regulations but about using technology to minimize risks and create efficiencies. A data-driven approach to compliance can reduce manual efforts, increase accuracy and proactively manage risks.
Manual compliance processes can be slow, error-prone and costly compared to cutting-edge solutions, especially when dealing with rapidly shifting trade policies. Automation and AI-powered regulatory monitoring can help CFOs stay ahead by, for example, automating tariff classification to ensure correct duty calculations; tracking real-time changes in trade policies and updating compliance protocols; and reducing paperwork and human error in customs declarations and supply chain documentation.
According to the PYMNTS Intelligence report “Most CFOs See Limited ROI From GenAI, but Boost Its Investment,” 75% of CFOs plan to increase their AI investment.
Advanced data analytics and AI-driven forecasting tools can help CFOs model tariff impact scenarios across different supply chain configurations, as well as analyze cost fluctuations based on supplier locations, raw material prices and currency movements.
Coupa unveiled more than 100 new features Thursday (Feb. 13) for its spend management platform, including many AI solutions for its supply chain design and planning solution aimed at helping customers analyze scenarios and make faster and better business decisions.
It isn’t just U.S.-based businesses and CFOs that are feeling the impact. Trade tariffs impact every trading partner, and news broke Friday (Feb. 14) that, amid uncertainty around U.S. tariffs, Shein and Temu are reportedly working with their suppliers to move production out of China.
