The landscape of global trade is constantly shifting, and next week marks another significant change with the introduction of new tariffs. According to the White House, the latest round of tariffs imposed by President Donald J. Trump affects imports from Canada, Mexico, and China, with significant implications for businesses across industries (White House Fact Sheet, 2025). However, recent updates indicate that tariffs on Canadian and Mexican imports have been temporarily paused for 30 days, adding another layer of uncertainty to pricing strategies.

At Pricefx, we have experience helping companies to navigate regulations that have impact on how they price. Our expertise in pricing software, including automation and AI-driven optimization, allows us unique insights into addressing the challenges of tariff pass-through.

For companies operating in distribution, manufacturing, and resale, these new tariffs represent not just an increase in cost but a pricing challenge that demands immediate attention. How quickly and effectively can businesses pass through these costs to maintain margins without disrupting market competitiveness?

The Challenge: Tariff as a Function of Cost

Tariffs are fundamentally a cost function, determined by the country of origin (COO) and Harmonized Tariff Schedule (HTS) codes. While pricing software does not typically manage cost calculations based on those attributes, it plays a pivotal role once those costs are updated. The real challenge is ensuring that tariff-influenced cost changes are reflected efficiently in resale prices, mitigating margin erosion, and maintaining strategic pricing discipline.

Speed and Automation: The Key to Effective Pass-Through

A manual approach to tariff pass-through is unsustainable in today’s fast-paced business environment. Companies need the ability to:

• Rapid identification: Identify affected products and pricing agreements immediately upon cost updates.

• Automate price updates: Trigger automatic price recalculations to integrate tariffs into the final selling price seamlessly.

• Targeted customer prices: Segment customer impact to apply targeted strategies—such as exemptions for strategic accounts or tiered adjustments based on contract terms.

Modern pricing software provides automation to rapidly integrate new cost elements and adjust pricing across thousands of SKUs, ensuring accuracy and consistency.

AI Optimization: Mitigating Tariff Risk

Product Enhancements and Innovation

Artificial intelligence (AI) is playing an increasingly critical role in helping businesses navigate tariff volatility. AI-driven pricing software can:

• Forecast tariff impact: Predict cost fluctuations based on tariff policies and global trade trends.

• Strategic price optimization: Optimize price pass-through strategies by analyzing customer behavior and competitive dynamics.

• Scenario-based pricing: Model various scenarios to prepare businesses for potential tariff shifts and develop contingency pricing strategies.

By leveraging AI-powered optimization, companies can mitigate risk and ensure more precise, data-driven pricing strategies that align with market conditions.

Strategic Pass-Through: Beyond a Simple Cost-Plus Approach

While the most straightforward approach may be a direct cost-plus markup, sophisticated businesses recognize the need for a more strategic approach:

• Competitive Positioning: Blindly increasing prices could put businesses at a disadvantage against competitors who absorb some of the costs.

• Customer-Specific Adjustments: Long-term contracts or key accounts may require a phased or negotiated pass-through.

• Market Elasticity Considerations: Pricing software can help analyze price elasticity, ensuring that pass-through adjustments are optimal for demand retention.

The Role of Pricing Software in Tariff Management

A pricing platform should act as the bridge between raw cost updates and market execution. The right capabilities include:

• Real-time price adjustments: Dynamic pricing rules that adjust in real-time when tariff-influenced costs change.

• Pre-emptive pricing simulations: Scenario modeling to test different pass-through strategies before implementation.

• Controlled price changes: Approval workflows to ensure changes align with business objectives before being pushed live.

• Transparent pricing: Clear reporting and audit trails to track the impact of tariff changes on profitability and compliance.

Communicating Price Changes to Customers

Effective communication is essential when implementing tariff-driven price changes to maintain customer trust and loyalty. Businesses should consider the following approaches:

• Transparency: Clearly explain the reason for price changes, providing details on how tariffs impact costs and pricing.

• Proactive Engagement: Reach out to customers in advance through personalized communication channels, such as email or account manager discussions.

• Value Reinforcement: Emphasize the continued value and service quality offered despite cost increases.

By maintaining open communication and demonstrating a commitment to fairness, businesses can foster stronger customer relationships even in the face of necessary price adjustments.

Adapting to a Dynamic Tariff Environment

As tariffs continue to evolve, with some policies being implemented and others temporarily delayed, businesses that lack an agile, technology-driven approach will struggle to keep up. The ability to rapidly and strategically adjust pricing in response to cost fluctuations is not just a competitive advantage—it’s a necessity. The White House’s recent fact sheet underscores the wide-reaching impact of these tariff changes, reinforcing the urgency for companies to take a proactive stance (White House Fact Sheet, 2025).

Pricing technology serves as a future-proof tool, enabling businesses to stay ahead of shifting trade policies and economic conditions. By leveraging AI, automation, and strategic pricing approaches, organizations can navigate uncertainty with confidence, ensuring resilience in an unpredictable global market.

The question is not whether tariffs will impact your costs, but how prepared you are to manage them. Is your pricing infrastructure ready?