Nowadays, there is news about tariffs almost every other day, whether it involves a pause, a negotiation, or a new tariff. Businesses are getting lost in this maze of ever-shifting trade policies. However, amidst this uncertainty, there are concrete steps that internationally active companies can take to navigate the current landscape and prepare for future developments. This paper provides a comprehensive analysis of the tariff challenges faced by businesses, offering practical strategies and forward-thinking approaches from a robust business administrative, finance, and tax perspective.

As of July 28, 2025, the transatlantic trade relationship has shifted from a fragile state to managed but costly stability, following a last-minute deal that sets a 15% US tariff on most EU goods. While this agreement prevents an immediate trade war, the new tariff structure, along with unresolved issues in key sectors and EU commitments on US energy and investment, creates a new economic landscape for NL/EU businesses.

This article was written by Mourad Seghir ([email protected]) and Hans van Loenen ([email protected]). Mourad & Hans are consultants with RSM Netherlands Business Consulting, focusing on trade and business strategy consulting.

Amid threats, a breakthrough was made on July 27, 2025. The negotiations resulted in a 15% import tariff on EU goods. Although higher than the current 10%, this is significantly less than the threatened 30%. To prepare for possible escalation, the EU has developed a strong retaliation plan estimated to be worth between $84 billion and $100 billion. This plan targets a broad range of US products, including industrial goods, aircraft, vehicles, machinery, chemicals, plastics, medical devices, electrical equipment, wines, agricultural and food products, toys, hobby gear, sporting goods, and musical instruments. These reciprocal actions highlight the risk of a full-scale trade war, which could have negative ripple effects on global supply chains and consumer prices.

Beyond the overall 15% tariff agreement, certain sectors are dealing with a patchwork of levies. The steep 50% tariff on aluminium and steel imports from the EU remains unchanged and stands out as an exception to the new deal. This tax continues to present a major challenge for industrial supply chains. The automotive industry, however, has seen notable progress.  

Under the agreement of July 27, 2025, the 25% tariffs on both vehicles and auto parts have been replaced by the new 15% general tariff. This offers some relief from the higher rates that had been in place since spring. In a separate bilateral agreement that took effect on June 30, 2025, the United Kingdom secured a more favourable 10% tariff on its automotive exports to the US. 

Operational impact

The ramifications of tariffs extend far beyond mere price increases, creating a cascade of administrative and operational challenges for internationally active companies.

Supply Chain Disruption and Reconfiguration: Tariffs directly inflate the cost of imported raw materials, components, and finished goods, forcing businesses to re-evaluate their entire supply chain architecture. This can lead to significant disruptions as companies scramble to find alternative, more cost-effective suppliers, or even consider reshoring (bringing production back to the home country) or nearshoring (relocating production to geographically closer countries). Such shifts, while potentially beneficial long-term, involve substantial upfront investment, complex logistical adjustments, and risks associated with new supplier vetting and quality control. The constant threat of tariff changes also creates an environment of instability, making long-term supply chain planning exceedingly difficult.

Increased Operational Costs and Complexity: Beyond the direct cost of duties, businesses face a myriad of indirect expenses. These include increased administrative burdens related to customs compliance, documentation, and reporting. Logistics headaches, shipping cost inflation, and challenges in inventory management (such as stockpiling to avoid future tariff hikes, leading to higher warehousing costs, or difficulty in demand forecasting) become prevalent. Small and medium-sized enterprises (SMEs) are particularly vulnerable to these complexities due to limited resources and expertise.

Compliance and Regulatory Burden: Navigating the intricate web of EU customs procedures is a significant administrative undertaking. Businesses must meticulously classify their goods using the Harmonized System (HS) codes and ensure accurate declarations within the EU's TARIC (Integrated Tariff of the European Union) database. Compliance with the Common Customs Tariff (CCT) and understanding special customs procedures like inward processing (for goods imported, processed, and re-exported) or outward processing (for EU goods temporarily exported for processing) is crucial. Furthermore, product-specific compliance requirements, such as CE marking, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals), RoHS (Restriction of Hazardous Substances), and WEEE (Waste Electrical and Electronic Equipment) directives, add layers of regulatory complexity that must be meticulously managed to avoid penalties and delays. 

Financial and Tax Analysis

The financial and tax implications of tariffs are multifaceted, directly impacting a business's profitability, cash flow, and overall financial health.  

The most immediate financial impact is the increase in the cost of goods sold. Businesses face a critical decision: absorb the tariff cost, thereby eroding profit margins, or pass it on to consumers through higher prices. The latter can lead to reduced competitiveness and diminished demand. The choice depends on market elasticity, competitive landscape, and brand loyalty. Re-evaluating existing supplier contracts to negotiate lower prices or exploring new, tariff-free sourcing options becomes paramount.

Cash Flow Management: Tariffs represent an additional cash outflow at the point of import. Businesses must ensure sufficient liquidity to cover these increased duties, which can strain working capital, particularly for companies with high import volumes. Accurate short-term cost assumptions and updated accounting systems are crucial for accurately reflecting these changes.

Financial Reporting and Disclosure: Tariffs necessitate adjustments in financial reporting. Businesses must accurately reflect the increased material costs, changes in inventory valuation, and potential impacts on revenue recognition. Furthermore, transparent disclosures in financial statements regarding supply chain changes, material cost fluctuations, and relevant risk factors are crucial for investors and stakeholders.

Leveraging Duty Drawback Programs: One of the most significant tax mitigation strategies is the utilization of duty drawback programs. These programs allow for a refund of up to 99% of customs duties, taxes, and fees paid on imported goods that are subsequently exported or destroyed. For NL/EU businesses that import goods for manufacturing and then export the finished product, or re-export imported goods in the same condition, duty drawback can provide substantial relief.

Scenarios and mitigating steps for internationally active companies

While a negotiated compromise has been reached for transatlantic tariffs, placing the current situation in Scenario 1, the history of trade negotiations suggests that businesses must remain prepared for potential shifts. It is crucial to stay aware of the other scenarios that could unfold should roadblocks emerge, as each demands a tailored response. 

A crucial insight for Dutch importers reveals a nuanced picture of the distribution of tariff burdens. While some foreign-owned multinationals operating in the Netherlands possess the leverage to pass on a significant portion (around 44%) of tariff increases to their foreign exporters, other Dutch importers (especially SMEs) often bear 100% of the tariff increase.  

This directly impacts their profitability and, in many cases, leads to a significant reduction in imported quantities. This highlights the crucial need for proactive strategies for smaller, domestically focused businesses.

Forward Thinking: Building Resilience for the Future

Beyond immediate action, successful businesses adopt a forward-thinking mindset, building inherent resilience into their operations to navigate an era of persistent trade volatility.

Strategic Supply Chain Reinvention: The traditional model of optimizing for cost efficiency alone is no longer sufficient. Businesses must prioritize supply chain resilience and flexibility. This involves:

  • Regionalization: Developing regional supply hubs and production capabilities to serve specific markets, reducing reliance on single global pathways.
  • Dual Sourcing and Multi-Sourcing: Establishing multiple suppliers for critical components or products to minimize disruption from any single point of failure.
  • Vendor Relationship Management: Cultivating strong relationships with suppliers, including open communication about risk and shared mitigation strategies.
  • Technology Adoption: Leveraging advanced analytics, AI, and automation for real-time supply chain visibility, demand forecasting, and inventory optimization. Digital twins of supply chains can help model the impact of tariff changes.

Rather than solely reacting to tariffs, businesses should invest in research and development (R&D) to create more innovative products or more efficient production processes. This can reduce reliance on imported components, decrease overall production costs, or create unique offerings that justify higher price points, even in the face of tariffs. For instance, developing proprietary technologies or materials could mitigate the impact of tariffs on imported components.

Over-reliance on a single export market, particularly one prone to tariff disputes, is a significant vulnerability. Businesses should actively identify and develop sales channels and customers in new, stable markets to spread risk and reduce dependency. This requires significant market research, cultural understanding, and adaptation of products or services.

Establishing a comprehensive enterprise-wide risk management framework that specifically addresses geopolitical and trade policy risks is essential. This includes scenario planning, stress testing financial models against different tariff outcomes, and developing contingency plans for various levels of trade disruption. Regular monitoring of global trade policy developments and intelligence gathering on potential future tariffs or non-tariff barriers should be an ongoing activity.

Conclusion

The current tariff landscape presents significant challenges for NL/EU businesses, demanding a proactive and adaptive response. While the constant flux of trade news can be disorienting, understanding the specific scenarios, administrative burdens, and financial implications is the first step towards resilience. By strategically reconfiguring supply chains, meticulously managing financial and tax obligations (especially leveraging duty drawback), and adopting a forward-thinking approach that prioritizes innovation, market diversification, and robust risk management, businesses can not only weather the current storm but also emerge stronger and more competitive in an increasingly complex global trade environment. The ability of individual businesses, particularly SMEs, to bear the full burden of tariffs underscores the urgency of these mitigating steps for sustained viability

RSM is a thought leader in the field of supply chain and tax consulting. We provide frequent insights through training and the sharing of thought leadership, based on a detailed understanding of regulatory obligations and practical applications in working with our customers. For more information, please contact one of our consultants.