A New Playbook for Tariffs and Trade Uncertainty

For retailers, hospitality companies, and food and beverage operators, tariffs are no longer simply a customs or procurement issue. They are becoming an enterprise-wide business risk—one that can affect everything from the cost of a product or ingredient to menu prices, inventory decisions, supplier relationships, capital allocation, and ultimately, profitability.

That challenge is compounded by the speed and unpredictability of global trade policy. New tariff measures, retaliatory actions, and changing enforcement priorities can disrupt yesterday’s supply-chain assumptions overnight. Recent U.S. tariff actions have reinforced that uncertainty, with new duties affecting imports from dozens of countries and additional country-specific measures creating further exposure.

Beginning in January 2025, the administration relied on two primary legal authorities to impose increased tariffs. The International Emergency Economic Powers Act (IEEPA), used for country-specific “reciprocal” tariffs of 10%–145% on nearly all trading partners, and Section 232 national-security investigations, which produced sector-wide tariffs on steel, aluminum, autos, copper, semiconductors, pharmaceuticals, and lumber. The IEEPA structure was upended on February 20, 2026, when the Supreme Court ruled 6-3 that IEEPA does not authorize tariffs. A temporary 10% Section 122 tariff replaced the IEEPA tariffs, while the Section 232 sectoral tariffs remained fully in force. Upon the expiration of the Section 122 tariffs, the Office of the U.S. Trade Representative (USTR) has implemented Section 301 tariffs, by imposing additional duties of 10% or 12.5% on imports from 60 economies, for failing to ban or effectively enforce prohibitions on importing goods made with forced labor. The result is a patchwork of tariff measures still shifting by country and sector.

Tariffs as an Enterprise-Wide Business Risk

For American companies, the implication is clear: Trade risk increasingly belongs in the broader business-planning conversation.

The immediate impact of a tariff is easy to identify—the cost of imported goods goes up. The harder question is what happens next. A retailer may face higher costs for apparel, packaging, or electronics. A restaurant may see higher costs for imported ingredients, equipment, or supplies. A hotel may encounter increased costs for everything from linens and fixtures to furniture, and food and beverage products.

Those costs can move through the organization in several directions. Businesses may absorb some of the increase and accept lower margins, pass costs onto customers through higher prices, negotiate with suppliers to share the tariff burden, or find substitutions for products or suppliers.

However, none of these choices occur in isolation. Passing through costs may protect gross margin but reduce customer demand. Absorbing costs may preserve pricing but erode profitability. Switching suppliers may reduce tariff exposure but introduce quality, capacity, logistics, or compliance risks.

The restaurant industry illustrates how these trade-offs play out in practice. According to the National Restaurant Association’s 2026 State of the Restaurant Industry report, 68% of operators said tariffs drove higher food or beverage costs in 2025. Many initially absorbed those costs, but by year’s end roughly 90% of full-service and 85% of limited-service operators had raised menu prices, while also shopping for new suppliers, trimming menus, and adjusting portion sizes to protect margins. Few relied on a single strategy; most combined several at once.

Pricing and Profitability Requires More Than a Percentage Increase

For consumer-facing businesses, tariff-related pricing decisions are particularly difficult because customers are already sensitive to price.

Rather than applying a blanket surcharge, companies should identify where they have pricing flexibility. That means evaluating tariff exposure at the SKU, product category, ingredient, menu item, or service level and considering factors such as customer price sensitivity, competitive pricing, product availability, and strategic importance.

Legal should be involved early, particularly where contracts govern price adjustments. Counsel should review provisions addressing price increases, change in law, force majeure, termination rights, minimum purchase commitments, and supplier cost pass-throughs.

The objective is not simply to determine whether a price increase is legally permissible. It is to understand what contractual flexibility the business has—and how that flexibility can support a broader commercial strategy.

Building Resilient Supply Chains Is Becoming a Business Strategy

Tariffs are also accelerating a reassessment of supply chains. For years, businesses often optimized sourcing around cost, scale, and efficiency. Trade uncertainty is forcing companies to place greater value on resilience. That may mean developing alternative suppliers, sourcing from multiple countries, increasing domestic capacity, or redesigning products to reduce exposure to vulnerable inputs.

But diversification itself creates legal and compliance considerations. Companies should understand the true origin of products and components, maintain reliable supplier certifications, and assess whether changes in manufacturing or assembly actually change the applicable country of origin. With enforcement increasingly focused on tariff evasion and transshipment, businesses cannot assume that routing goods through a third country will change their tariff treatment.

A practical first step is to map critical suppliers and inputs by country, tariff exposure, substitutability, and time required to switch. The goal is to identify the vulnerabilities that would matter most if a particular supplier, country, or trade route suddenly became unavailable or significantly more expensive.

Incorporating Trade Risk Into Business Planning

Perhaps the most important shift is moving from reacting to tariff announcements to planning for multiple possible futures.

Legal, procurement, finance, supply chain, and operations should work together to model scenarios such as a 10% tariff increase, a country-specific escalation, a retaliatory tariff, a sudden change in rules of origin, or the loss of a critical supplier.

Each scenario should answer practical questions:

• What happens to landed cost?
• Which products or services are most exposed?
• How much margin is at risk?
• What pricing changes would be required?
• Which supplier contracts provide flexibility?
• How quickly could an alternative source be qualified?
• What inventory should be held?
• What compliance documentation would be needed?
• What decisions require executive or board approval?

This approach turns trade uncertainty from an abstract geopolitical issue into a measurable business risk.

Actions Companies Can Take Now

The companies best positioned to navigate a constantly evolving trade environment will not necessarily be those that predict the next tariff correctly—they will be those that can respond quickly when the prediction is wrong:

First, create a tariff exposure map. Identify major imported products, ingredients, equipment, and materials and connect them to suppliers, countries of origin, and applicable tariff exposure.

Second, review the contracts that matter most. Prioritize supplier agreements and customer contracts containing price-adjustment, cost-sharing, change-in-law, termination, force majeure, and sourcing provisions.

Third, stress-test supplier concentration. Determine where the company has single-country or single-supplier dependencies and develop realistic alternatives before a disruption occurs.

Fourth, strengthen trade compliance controls. Confirm that classification, valuation, country-of-origin determinations, supplier certifications, and recordkeeping are accurate and auditable. Rapid sourcing changes should not create new customs or regulatory problems.

Fifth, make trade risk part of strategic planning. Tariffs should be incorporated into budgets, pricing reviews, inventory decisions, capital planning, and major sourcing decisions—not treated as a separate legal issue.

Finally, don’t leave policy engagement out of the plan. Tariff policy is shaped by executive action, congressional pressure, and ongoing trade negotiations, so retailers, restaurants, and hospitality operators have real opportunities to influence the outcome rather than simply absorb it. Engaging directly with the offices, agencies, and staff shaping trade policy builds a clearer picture of where things are headed, which negotiations are active and which legislative proposals have momentum. This allows sourcing and pricing decisions to be grounded in policy context rather than reaction to headlines. Companies engaged with Congress and relevant agencies are often better positioned to understand potential policy changes, evaluate their business implications, and ensure their interests are represented in ongoing trade discussions.

Conclusion

Companies should focus on agility rather than perfect predictions. Legal representatives can help connect trade compliance with commercial strategy. For counsel, this creates an opportunity to move beyond traditional compliance and become a strategic partner in managing commercial uncertainty. Is your legal department prepared not just to respond to the next tariff change, but to help the business decide what it should do next?

Contact Clark Hill

Clark Hill’s International Trade attorneys and the professionals at Clark Hill Public Strategies work together closely to provide tailored solutions for businesses on these matters.

If you have questions regarding the content of this alert, please contact Clark Hill’s International Trade Practice by emailing tariffs@clarkhill.com or by calling +1 202-230-9889.