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Tariff shocks are difficult to predict and rarely land evenly. Companies need the commercial agility to respond as costs, competitors, and markets shift.
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Exposure is rarely where companies think it is
Precision matters more than blanket action
Three responses, and no universal answer
For most companies, pricing agility does not mean changing prices every day. It means being able to act when market conditions require it.
An industrial business may still issue core list prices twice a year or quarterly, but introduce a surcharge, change discount levels, or make targeted adjustments when conditions demand it.
Echter says some companies can move from a CEO decision to an implemented pricing action in four to six weeks. Those dependent on manual spreadsheets and disconnected systems can take three or four months. "The dynamic is not that prices are changing all the time," he says. "The dynamic is that the company can move."
That capability rests on four foundations.
Built for, not waited out
Find out more from Simon-Kucher
Do we know exactly where our tariff exposure sits, including in suppliers and categories we assumed were unaffected?
01
Are we pricing by product, segment and region, or applying one increase everywhere?
02
Can we make pricing decisions at the speed this environment now demands, rather than waiting for certainty that isn't coming?
03
Is pricing owned by a single person or team, continuously, rather than set once a year and left alone?
04
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Eugene M. Isenberg Chair, Integrative Studies, Isenberg School of Management, University of Massachusetts Amherst
Tariffs are a wedge. They come in from a governing authority, and they split a supplier and a market. Everyone upstream and downstream gets impacted. You can't escape it. — Adam Echter, Partner and Global Head of Industrials, Simon-Kucher
A single percentage increase across a portfolio ignores the economics of individual products. A high-volume product with strong customer loyalty may be able to carry an increase that a more substitutable product cannot.
Crépy argues for a “more surgical” approach, with pricing decisions made by product, customer, channel, and region.
That creates another tension for consumer companies. Local teams know their consumers, retailers, and competitors, but wide price differences between markets can create problems of their own. Crépy gives the example of the same product carrying markedly different prices in Spain and France, giving a retailer an incentive to source from the cheaper market and move stock across borders.
Global price standardization is not the answer. Consumer behavior, incomes, private-label penetration, and channel economics vary too widely between markets. Local teams need room to respond, but within regional guardrails that prevent price gaps becoming commercially damaging.
That requires consistent data and a common view of products, prices, and margins across markets. Without them, regional decisions slow down and broad price increases become the default. — Martin Crépy, Partner and Global Head of Consumer
Tariff volatility is a test of commercial readiness. Companies need to know where their exposure sits, understand which customers and products can bear a change, and have the means to act before a temporary response becomes a structural problem.
The capability has uses beyond tariffs. Shifting demand, supply disruption, inflation, and the competitive environment all put pressure on the same commercial systems.
Tariff volatility must be built for. It cannot be waited out.
Partner and Global Head of Industrials, Simon-Kucher
Partner and Global Head of Consumer, Simon-Kucher
Anna Nagurney
Adam Echter
Martin Crépy
A company does not need to import directly to have a tariff problem. Adam Echter, Partner and Global Head of Industrials at Simon-Kucher, recalls working with a US manufacturer of highway guardrails. The company sourced its steel and fasteners domestically and believed it was insulated from tariff risk. It was not.
Few US suppliers made the screws and bolts it needed. As tariffs redirected demand towards domestic producers, those suppliers gained pricing power and raised their prices. The guardrail manufacturer faced higher costs despite importing no parts itself.
"That's a huge mistake," Echter says of assuming a domestic supply chain means no exposure.
Tariff exposure cannot be understood by looking only at a company's own import flows. Nagurney argues that companies need to treat supply chains as networks rather than linear flows. That means identifying critical suppliers and locations, then testing what happens if a supplier fails, a route becomes too expensive, a warehouse moves, or another supplier is added.
Businesses that have done that work before disruption hits can make decisions more quickly. Those that begin mapping their exposure only after a tariff announcement are already playing catch-up.
More than three in four trade professionals expect the current tariff environment to represent a long-term shift in US trade policy rather than a passing disruption, according to the Thomson Reuters Institute’s 2025 Tariffs Report.
For companies accustomed to setting prices annually, that creates a problem. Tariffs can change quickly, affect products and markets unevenly, and push up costs in parts of the supply chain that may have appeared insulated.
Pricing processes need to keep pace. Companies must be able to see where costs are emerging and judge whether to absorb them, pass them through, or change the offer. Those decisions will vary by product, customer, and market, and may need to be revisited as conditions change.
Anna Nagurney, Eugene M. Isenberg Chair in Integrative Studies at the Isenberg School of Management, University of Massachusetts Amherst, estimates that there were around 50 changes to US tariff regulations during 2025. At one point, rates on some Chinese goods reached 145%.
of consumers say they fully understand what a tariff is
33
%
Source: Simon-Kucher, 2025 Tariff Consumer Market Study
When tariffs raise costs, companies have three broad choices: pass them through to the customer, absorb them, or redesign the offer. The right response depends on the product, the customer, and the competitive set.
Passing through a tariff is easiest when customers have limited alternatives. "If you're making the cutting-edge technology that goes into semiconductor manufacturing, and you're the only company in the world who does that, you're going to raise your price and it's going to flow through," Echter says.
The calculation changes where products are substitutable. If several competitors offer credible alternatives, raising prices alone risks losing volume quickly. For industrial businesses with high fixed costs, the effect can compound: lost sales do little to reduce the cost of the plant, equipment, or workforce supporting them.
"You wake up one day and your plant's half empty," Echter says. "You start to lay people off, and you end up in a volumetric spiral."
The same principle plays out differently in consumer markets. Martin Crépy, Partner and Global Head of Consumer at Simon-Kucher, says much depends on who else is competing for the same customer. When international brands face similar tariff pressure, prices may move across the category. A brand competing with local private-label producers has less room to maneuver if those competitors can hold prices and capture consumers who trade down.
"The more desirable you are, the easier it has been," Crépy says. Brand desirability, uniqueness, and innovation can give companies more room to raise prices while retaining customers. Pricing cannot compensate indefinitely for a proposition that customers no longer see as worth the premium.
Pass through the cost where customers have few alternatives
01
Absorb the cost, but know what it is buying
Absorbing a tariff can protect volume, preserve strategic customer relationships, and give a company time to decide what comes next. But it is not equally available to every business. Smaller companies may lack the liquidity to carry the cost for long. "It would not be sustainable for them to just encumber the cost themselves," Nagurney says.
Larger businesses may have more room to absorb a cost increase temporarily. Even then, the purpose needs to be clear. It might protect a priority account, bridge a contract cycle, or buy time to change suppliers or redesign a product.
Without a clear answer, margin absorption becomes inertia.
The risk is especially high when companies assume tariff changes will quickly reverse. The current environment has shown that even when one measure is delayed, challenged, or withdrawn, another may follow.
02
Redesign the offer or the system behind it
Where neither full pass-through nor margin absorption is sustainable, companies can change the proposition itself. Echter describes the problem through price and value: a tariff raises the price customers pay without increasing the value they receive. A product that once represented a good deal can become harder to justify.
One response is to reduce cost without damaging what customers value, whether through different materials, simpler specifications, less portfolio complexity, or a different supply configuration. Another response is to strengthen the offer through service, warranties, guarantees, or other improvements.
The principle is consistent with the first article in this series: pricing power is earned through value. Tariffs may force a price increase, but they do not give customers a reason to accept one.
In consumer markets, redesign can mean changing the price architecture. Crépy points to fragrance brands developing smaller formats, such as 10ml mists, to create a more accessible entry point. Other businesses are changing pack sizes or introducing offers at different price points.
"The main mistake is trying to do a single, blanket pass-through," Crépy says. Companies need to understand which products can carry an increase and where consumers are likely to switch.
03
At a 5% increase, consumers are more likely to seek promotions, smaller purchases or lower-cost substitutes.
The operating model behind pricing agility
Four questions for leadership teams:
A named pricing leader or standing cross-functional group needs responsibility for keeping price aligned with market conditions and customer value. Echter's advice to CEOs goes further: "Don't just have the team," he says. "Have the team, and have the person, and then stick your nose in and start asking: is our price to value right?"
Clear ownership
Supply-chain visibility and scenario planning
Leaders need to know where risk sits, including beyond their immediate suppliers, and test the impact of changes to sourcing, routes, and product configurations.
Systems that can execute
Pricing decisions only matter if they can reach the market quickly. Data, systems, and governance need to turn decisions into action without months of manual work.
Local decision-making within shared guardrails
Local teams need room to respond to their markets, within regional guardrails that prevent decisions in one market creating problems elsewhere.
What consumers understand, and what they feel
see tariffs simply as a tax that raises prices, versus 20% who see them as protecting domestic jobs
80
%
have felt noticeable inflation over the past three years, which shapes how they read every price increase, tariff-driven or not
79
%
Consumer response rises sharply with the size of the increase
At 10% and 20%, down-trading and stopping purchases become more likely, especially in discretionary categories.
Essential categories are more resilient, but consumers still look for ways to reduce the basket cost.
Source: Simon-Kucher, 2025 Tariff Consumer Market Study
The speed and uncertainty created a great deal of challenges for manufacturers, wholesalers, retailers and, of course, consumers. — Anna Nagurney, Eugene M. Isenberg Chair, University of Massachusetts Amherst
Why tariff volatility makes pricing a forever process
Learn more about the growth gap
Read the first article in the series
the growth gap
