President Trump’s 90-day pause on reciprocal tariffs which was set to expire on July 9th has extended to August 1st. That means a few more weeks of uncertainty on the way to potential tariff-induced volatility. Now is the time to act.
PE sponsors are keenly aware that their portfolio CFOs are at the forefront of mitigating tariff risk: protecting margins, managing uncertainty, and defending enterprise value. Sponsors gathered at our recent roundtable, which addressed the tariff landscape facing PE-backed companies, believe that the best-prepared CFO are those who are building both short-term tactics and longer-term structural strategies, even as the landscape remains in flux.
Here are 7 such tactics and takeaways for CFOs from that roundtable:
1. Get a clear view of exposure…fast
Why it matters:
Visibility remains the single most important starting point. In a volatile environment wherein tariff structures can shift overnight, CFOs must be equipped with real-time insight into exposure at the SKU, supplier, and country-of-origin level.
What to do:
- Automate data extraction from ERP systems—link supplier, HTS code, and cost data in one platform.
- Maintain real-time connection to tariff schedules via government APIs.
- Quantify exposure across product lines, including balance sheet impact (e.g., inventory revaluations).
“We created a tracker—just like during COVID—to understand impact in real-time across the portfolio.”
“We’re building a complete dataset: item master, supplier origin, volume, and costs. It’s the only way to make fast, informed decisions.”
Key takeaway:
Even though uncertainty reigns, portfolio companies are actively building short-term response plans. But no one can act until they know what they’re facing.
2. Pursue exemptions, extensions, and duty drawbacks aggressively
Why it matters:
Many CFOs are leaving money on the table by not pursuing tariff exclusions, especially for products that may qualify under regional agreements (e.g., USMCA) or through existing relief channels.
What to do:
- Review HTS codes to check for exemptions or delayed effective dates.
- Investigate potential for duty drawback on past imports.
- Stay flexible—exclusion lists are changing weekly.
“There’s claw back money out there. If you haven’t gone after duty drawbacks yet, you’re leaving value on the table.”
“Aluminum was excluded from tariffs under USMCA—it hadn’t been prior. You have to be checking every day.”
Key takeaway:
These are fast wins while broader restructuring is underway—but someone (like the CFO!) needs to own this process.
3. Expand the sourcing playbook beyond China
Why it matters:
China remains a primary target, and most stakeholders agree the country will stay under pressure in future policy shifts. Still, moving away is not simple. Capable alternatives (India, Vietnam, Mexico) are limited and overloaded—and in many cases, new suppliers can’t meet quality or regulatory requirements.
What to do:
- Vet alternative countries on cost, capacity, quality, and validation time.
- Evaluate blended sourcing: combine lower-value manufacturing abroad with U.S. finishing to shift tariff classifications.
- Prepare for long lead times—supply shifts are 12–24-month projects.
“We’ve diversified away from China—down to 15%—but India and Thailand can’t always match quality. Sometimes you just eat the tariff.”
“We tried India for auto parts. Bubbles, scratches, defects—it just didn’t work. The transition could take years.”
Key takeaway:
Long-term tariff relief often means supply chain overhaul. These aren’t quick fixes—they’re 1–2-year projects that depend heavily on where a company is in its hold cycle.
4. Strengthen commercial strategy to offset tariff costs
Why it matters:
If cost relief isn’t feasible on the sourcing side, CFOs must turn to pricing, vendor negotiation, and customer terms to avoid margin erosion. Companies with scale or brand equity have leverage—and they should be using it.
What to do:
- Benchmark competitors’ pass-through rates and set pricing strategy accordingly.
- Use strategic surcharges, rebates, or supplier discounts to absorb shocks.
- Align commercial teams around value-based selling, not just cost recovery.
“We’re passing on 2–4% to customers, even though we could justify more. That becomes a market share opportunity.”
“Our suppliers are covering part of the tariff—we’re structuring it, so they win when we exit.”
Key takeaway:
Strong commercial strategy can turn tariff risk into margin expansion—especially when competitors are slower to react.
5. Anticipate macro effects and time inventory strategically
Why it matters:
The tariff impact won’t show up all at once. Existing inventory may delay the financial hit, but that also creates a false sense of security. CFOs should model timing, cost layers, and customer demand sensitivity in advance.
What to do:
- Track when tariff-impacted inventory will land.
- Model cash impact under different scenarios—especially for revaluation or high working capital positions.
- Consider pre-buying only if the math works across freight, storage, and demand.
“We’ve got lower-cost inventory on the books, so we’re holding pricing steady to see what competitors do.”
“Containers are still on the water. The impact is coming—but hasn’t hit yet.”
Key takeaway:
Short-term plays are about timing and cash optimization. But the longer the lag, the more disruptive the eventual adjustment.
6. Prepare for structural shifts, not just short-term pain
Why it matters:
Tariff policies may eventually push U.S. manufacturing back into favor, but labor and capability gaps are major constraints. Investors need to assess which businesses can truly reshore, and which must rely on hybrid solutions.
What to do:
- Identify what processes can realistically be done in-house or nearshore.
- Consider acquisitions to buy capabilities vs. building from scratch.
- Weigh the ROI of manufacturing investment against hold period and exit timeline.
“Welders, screw-machine operators, foundry techs—they’re aging out. We don’t have the labor to bring it all back.”
“Our U.S.-based manufacturer could benefit if competitors can’t adapt. But you can’t just build it overnight.”
Key takeaway:
The idea of reshoring is appealing, but execution will be uneven.
7. Rely on your sponsor for a portfolio lens, but act locally
Why it matters:
Not all companies in a portfolio are equally exposed. But the best investors will share lessons across assets. And the best CFOs will tailor the playbook to their business’s situation, industry, and maturity.
What to do:
- Ask the sponsors for tariff mitigation efforts across the portfolio.
- Collaborate with other portfolio CFOs on sourcing or commercial best practices between assets.
- But avoid overgeneralizing based on portfolio feedback
“Some of our portfolio companies will lose, but some will actually benefit. We’re just staying agile and learning across the platform.”
Key takeaway:
No one has a perfect plan—but connected insights from peer CFOs or their consulting partners may be the next best thing.
Final take: Tariffs as catalyst, not just cost
Many sponsors and CFOs admit uncertainty dominates the tariff conversation, and that few have a complete, long-term plan. But by focusing on data, commercial agility, and portfolio partner collaboration, PE-backed CFOs can mitigate near-term pain and prepare for long-term resilience.
“This isn’t just about reaction—it’s a war on waste. You go line by line and claw back value.”