Deal or no deal, proactive scenario planning remains a must in the face of tariff uncertainty

As businesses face ongoing tariff uncertainty, the importance of scenario planning has never been greater. Although accurately predicting the timing, locations, and specific impacts of future tariffs remains difficult, strategic scenario planning enables companies to better navigate these complexities and position themselves for growth in an unpredictable environment.

Why tariffs on hold should not mean strategies are paused

Following the April 2025 announcement of US tariffs on 56 trading partners and the subsequent pledge of “90 deals in 90 days,” only three trade frameworks have been agreed. This has led Washington to extend a reciprocal tariff reprieve until August 1. Rising global trade uncertainty is affecting global supply chains and market performance: some European vehicle makers report fewer sales due to tariff-related disruptions; US container services face delays and increased costs from import duties; and revenue and credit quality pressures are mounting across sectors.

While businesses and countries wait for clarity on tariffs, scenario planning can be used to guide “what” might happen and support discussions on “when” and “how” an organization should act. Preparing in advance can save time, potentially reduce costs, and help you remain competitive when there are unexpected shifts.

Deal or no deal

As of July 10, three preliminary US trade frameworks — with the UK, Vietnam, and China — have been announced. Many other countries and businesses remain in a state of uncertainty.

A risk management framework can help businesses navigate complex risk landscapes while establishing a process to address risks. As part of this, companies may consider the intended objective of a given US trade policy, generally:

Country-by-country tariffs designed to encourage agreements on trade and non-trade issues.
Near-universal tariffs intended to protect specific industries, like autos or steel.

So far, analysis suggests that while negotiations have seen some progress, sectoral tariffs (including 50% on aluminum and steel, as well as copper) are more likely to remain in place, compared to country-by-country tariffs.

This approach poses a significant challenge for many of the US's largest trading partners, as these sectors often constitute a substantial portion of their US exports. For instance, nearly 40% of Japan's US exports are vehicles, making a 25% auto tariff particularly impactful for its economy. Similarly, for the EU the primary concern lies in sectoral tariffs targeting industries such as semiconductors, autos, and pharmaceuticals, although the bloc may face a 30% levy on all US-bound exports by August if they cannot negotiate better terms.

Despite these challenges, solutions exist that can mitigate potential impacts. Those solutions may include offsets for goods produced or investments made in the US, partial quota carve-outs, or phased exemptions. Trade deals could also focus on securing concessions, such as the elimination or reform of digital services taxes currently imposed by the UK and the EU.

However, the presence of possible solutions does not guarantee that agreements will be reached. Therefore, companies would be wise to contemplate multiple scenarios that may account for potential future tariff changes.

Potential tariff scenarios

Several future tariff scenarios include adjustments to reciprocal tariffs; delays or phased implementation based on negotiation; and/or establishment of new trade frameworks.

No matter which of these scenarios play out, US tariffs remain elevated — averaging four times higher than January levels and at their highest levels since the 1930s. Some nations may still face tariffs significantly higher than the 10% levy, for example Brazil at 50%, Canada at 35%, and the EU at 30%. Even countries that reach agreements may still face future tariffs on critical sectors like electronics and pharmaceuticals.

Practical steps to navigate supply chain uncertainty

Once the “what if” of tariffs is mapped out, the next question is “when” to act. The risk of being too late to reconfigure supply chains or acting only to meet with policy changes further down the line are concerns. However, disruption and uncertainty are not new issues. Beyond tariffs, today’s supply chains face unprecedented vulnerabilities, from wars, climate change, and cybersecurity that could impact operations and profit.

In the face of compounding risks, businesses need supply chains that are increasingly agile, diversified, and visible. This could mean following a three-step process to adapt:

Map upstream suppliers: Identify both direct and indirect suppliers, components, and trade flows.
Quantify potential tariff impacts: Model various tariff scenarios to assess financial implications.
Implement mitigation strategies: Consider adjusting trade routes, rewiring supply chains, renegotiating contracts, pursuing additional insurance solutions, and updating business continuity plans.

Platforms such as Marsh McLennan’s Sentrisk leverage AI to provide comprehensive value chain insights, turning potential blind spots into actionable intelligence.

Pressing ahead: Staying vigilant and adaptive

As the global trade policy landscape continues to evolve, businesses must remain vigilant and adaptable. Adjusting supply chains, embracing disruption as an opportunity, and continuously reviewing strategies can position organizations for success amid ongoing uncertainties. The outcomes of ongoing negotiations will be closely watched, and those who prepare today will be better equipped to navigate the complexities of future trade dynamics.