Trade experts at PwC say business executives must "avoid a failure of imagination" and be prepared for unintended consequences from tariff policies.

U.S. President Donald Trump's aggressive tariff stance and hisApril 2 tariff storm— which imposed a 10% tariff on imports from nearly all countries except China before being paused — have disrupted markets and upended global economic expectations.

PwC estimates that the total annual value of U.S. tariffs imposed and potential could surge 13-fold from pre-election levels to $989 billion. Meanwhile, according toPwC's latest analysis modeled on April 15, the average tariff rate on U.S. imports under the proposed measures could jump from 2.5% to 32%.

"These projections are quite striking," said Chris Desmond, PwC's customs and international trade leader, during a tariff webinar hosted by the Big Four accounting firm on Tuesday. "Think about it — our previous 2.5% rate will jump to 32%, and certain industries... will be hit harder than others."

'No-regret' protective measures recommended

Despite ongoing uncertainty, executives at the session said businesses need to take proactive steps to mitigate potential impacts, including scenario planning and adopting "no-regret" measures — protective actions companies can take regardless of how tariffs or other policies evolve.

Desmond said these steps include reducing tariffs through the so-called "first sale for export" strategy, where importers pay duties based on the first sale between the foreign manufacturer and an intermediary, rather than the typically higher price the importer pays to the intermediary.

Companies should also consider whether they qualify for U.S. Customs and Border Protection's "drawback" program, which provides refunds on certain duties, taxes, and fees paid on imported goods that are subsequently exported or destroyed. Additionally, finance leaders can consider transfer pricing adjustments, which may allow them to lower declared values when sourcing from related entities.

On broader scenario planning, Desmond noted that companies should consider deploying dynamic models that are flexible, data-driven, and adaptable to a variety of different situations. Michelle Horton, PwC's cyber risk and regulatory leader, said organizations need to coordinate disparate data sources when developing any model.

Horton said the goal is to integrate different data from ERP systems, commercial information, or even industry information or third-party datasets, and be able to simulate different initiatives. "Whether it's tariff rates rising, supply chain shifts, or reshoring, [the key is] being able to show the impact and see it across multiple variables," she said.

'Gray rhino' reappears

In risk planning, companies should sort through key risks, including the "gray rhino" — ahighly likely yet overlooked threat. This business risk metaphor originates from Michele Wucker's 2016 book"The Gray Rhino". In a CFA Institute blog, Wucker asserts that gray rhinos are the triggers behind so-called "black swan" crisis events like the 2008 financial crisis.

Such risks could include U.S. government bans on sourcing from specific countries or prohibitions on investing in certain regions. Craig Stromberg, senior director of PwC's intelligence team, said companies should also be alert to and prepared for the consequences of escalating tensions between the U.S. and trading partners.

"Avoid a failure of imagination — we live in an era where CEOs can no longer say 'that can't happen' or 'they would never do that,'" he said. "We are constantly pushing the boundaries of the map."