As business leaders, we know that economic shocks are nothing new. From the 2008 financial crisis to the COVID-19 pandemic, we have weathered turbulence that tested our resilience many times. However, the current tariff landscape presents unique challenges.

The announcement on April 2, 2025, significantly raised the average U.S. tariff rate from 2.5% to 27%. Tariffs of 10% to 50% imposed on all major U.S. trading partners shook global markets and quickly triggered retaliatory measures from China, the EU, Canada, and others.

Tariffs have raised costs across numerous industries and throughout supply chains. But for CFOs, the impact goes far beyond rising costs—the added complexity of regulatory compliance adds to the burden. Although tariffs are not a new phenomenon, the speed, scale, and unpredictability of today's trade policy changes are placing unprecedented pressure on many financial leaders.

This topic comes up in almost every conversation I have with customers. In our upcoming eBook, The Financial Impact of Tariffs, we analyze how finance teams can navigate these challenges and turn them into opportunities.

The Modern CFO Dilemma

Unlike previous economic shocks—where companies could eventually readjust their forecasts—today's trade policy is in constant flux. This is especially true for public companies, where it has become exceptionally difficult for CFOs to provide forward-looking guidance. The pressure exerted by this sustained uncertainty exceeds that of any previous crisis.

For many CFOs, the challenge is twofold: managing the immediate operational impact while also laying the groundwork for long-term resilience.

Internally, CFOs face immense pressure to deliver accurate forecasts, manage liquidity, and control costs. Finance teams are expected to run complex "what-if" scenario analyses on pricing, sourcing, and production strategies while coordinating competing priorities across departments.

Externally, CFOs must navigate rising shareholder expectations and frequent regulatory changes. Investors, rating agencies, and financial institutions are closely monitoring profitability and liquidity. Despite ongoing external shocks, loan covenants remain strict, forcing CFOs to preserve cash even as tariffs drive up costs.

The resulting ripple effect is growing working capital pressure. To guard against supply chain disruptions, many companies are stockpiling inventory, which ties up significant cash but also brings layered challenges.

Moreover, these dynamics are not just operational—they affect internal decision-making. Supply chain and manufacturing departments want higher inventory levels to ensure supply, while treasury and finance departments want to protect free cash flow. This creates a healthy tension within the organization that requires integrated, data-driven planning to reconcile.

To address this situation, companies must recalibrate their working capital strategies, balancing short-term resilience with long-term financial health in a volatile environment.

Turning Pressure into a Catalyst for Change

If tariff pressures have produced one unexpected benefit, it is the acceleration of AI adoption. Companies need more advanced planning mechanisms to manage cost control, cash flow visibility, and strategic agility, and nearly every company I speak with now has a generative AI agenda. AI has become a catalyst for greater productivity and smarter planning.

According to SAP's 2024 AI Adoption Insights survey, only 32% of companies currently use AI in their finance functions. This clearly indicates that planning and working capital management are areas ripe for transformation.

Our data from the SAP network confirms the impact of tariffs on procurement costs. Comparing accelerated spending from 2024 to 2025, 18 companies across consumer goods, information technology, energy, communication services, and industrials all showed increases exceeding 100%.

It should be noted that while we believe most of the growth can be attributed to price increases, and the direction is correct, these figures also include increases in purchasing volume.

However, these increases do indicate that these industries are absorbing the highest tariff-related costs or are actively expanding procurement, possibly due to supply chain shifts, inflationary pressures, or strategic stockpiling.

The shift in the trade landscape has triggered a global realignment. McKinsey's 2025 Global Trade Update found that between 2017 and 2024, the average geopolitical distance of trade decreased by 7%, indicating that economies are increasingly trading with partners that are politically aligned.

While all industries are affected, those heavily reliant on Asian supply chains are hit hardest. Industries related to manufacturing, electronics, and imported materials face greater cost pressures and inventory risks.

Many of these companies have immature operating models and weaker technology infrastructure. As a result, they are, to some extent, busy playing catch-up.

From my vantage point in Stuttgart, Germany, the impact is tangible. We have a strong export-oriented automotive industry, and the pain from tariffs is particularly acute, leading to supply chain issues. As a direct consequence of the tariffs, Porsche and Mercedes have both recently announced layoffs.

But the uncertainty extends far beyond one industry or one country. The impact is global because supply chains are global, and no industry is completely insulated.

A Blueprint for Action

To navigate volatility effectively, companies should adopt a two-track strategy that addresses both short-term and long-term goals.

In the short term:

  • Enhance agility through data-driven strategies and real-time financial forecasting
  • Adopt AI-driven scenario planning to respond quickly to changing conditions
  • Leverage working capital solutions to sustain liquidity during supply chain transformation
  • Strengthen supplier relationships to secure priority supply and pricing advantages

In the long term:

  • Digitize core processes across finance, supply chain, and compliance
  • Integrate planning across functions to ensure a single source of truth
  • Maintain flexible financing tools to adjust as needed
  • Upskill finance teams to focus on strategic analysis, scenario planning, and digital tools

The ability to plan for multiple scenarios, prepare for shocks, and maintain supplier liquidity will be the differentiator between successful companies and the rest. Scenario planning requires a unified data layer that connects finance, production, and supply chain.

SAP's Business Suite provides this foundation, enabling companies to run fully connected, end-to-end analyses across functions, breaking down silos and accelerating decision-making. When combined with working capital solutions from SAP Taulia, companies gain even greater flexibility and control.

CFOs need to address these challenges in the short term while leveraging experience to prepare for future challenges. Our comprehensive suite of working capital management solutions helps customers remain compliant, adaptable, and competitive amid uncertainty.

For more details, see our upcoming eBookThe Financial Impact of Tariffs。