Tariffs have long been used as tools of political and economic leverage, meant to protect domestic industries and address trade imbalances. But their impact today has evolved into a persistent and complex global pressure point. In his annual letter to shareholders, JPMorgan Chase CEO Jamie Dimon warned that the global economy is facing rough waters ahead. He pointed to rising geopolitical tensions, stubborn inflation, high fiscal deficits, and volatile asset prices, all factors that are increasingly shaping the economic landscape. While tax reform and deregulation offer some upside, Dimon flagged tariffs and looming “trade wars” as key threats to growth and stability.
On April 5th, the U.S. government implemented sweeping new tariffs, imposing a rate of 10% or higher on nearly all foreign imports. China, in particular, is facing even steeper penalties. While some goods and countries are exempt, the impact of tariffs, both short-term and long-term, will be felt by manufacturers, retailers, and shoppers.
The newly imposed tariffs have sent decision-makers, ranging from Revenue Growth Management (RGM) leaders to CEOs and CFOs, scrambling to reassess their strategies. Key questions are now on the table:
It’s important to recognize that there’s no one-size-fits-all solution to managing the impact of tariffs. Each business must respond in a way that aligns with its unique market dynamics and brand strategy.
RGM levers aren’t the only points to consider when navigating the impact of tariffs; supplier contract renegotiation, near-shoring or reshoring, inventory management, supply chain mapping, risk assessment, and supplier diversification will all play a significant role.
However, in this post, we’ll focus exclusively on shopper-facing strategies. This means the levers that directly impact what consumers see, experience, and ultimately purchase. From pricing adjustments to pack changes and promotional shifts, we’ll explore the most commonly used tactics for protecting topline KPIs such as sales, revenue, and profitability. This is a practical guide for RGM teams looking to stay agile and effective in a landscape shaped by ongoing tariff pressures.
Raising prices to offset the impact of tariffs is the most direct response to tariff-induced cost pressures. It provides fast margin relief but carries significant volume and market share risks if pricing changes are not matched by competitors.
Raising prices in response to tariff-related cost increases is often the most straightforward way to protect margins. However, this strategy can come with significant downsides, such as reduced volume, lost market share, and heightened sensitivity among price-conscious shoppers.
This challenge is compounded by the fact that final pricing is typically controlled by retailers, limiting manufacturers' ability to manage how price changes are presented on the shelf fully. The risk becomes even greater if competitors choose not to follow with similar price increases, leaving one brand exposed to shoppers switching products and negative price comparisons.
A recent example of this played out in the chocolate category, following a sharp rise in cocoa prices. To manage the cost spike, manufacturers responded by increasing prices or reducing the sizes of their products.
While these actions helped defend profitability, they also led to shopper frustration and, in some cases, a decline in sales. This highlights how pricing, while effective in the short term, must be carefully balanced with shopper perception, competitor moves, and overall category dynamics, especially in categories with high visibility and frequent purchase occasions.
For Buynomics customers, we recommend using the Buynomics Decision Guide to simulate a differentiated price increase across the entire portfolio, rather than implementing a flat price increase. This allows you to balance the impact a price increase would have on your shoppers.
Our case study explains how a manufacturer achieved a 2% revenue uplift across its portfolio through a differentiated price increase using the Buynomics Decision Guide. In times of tariff pressure, this kind of structured, data-driven approach can make all the difference.
One of the key levers to pull in response to tariffs is Price Pack Architecture (PPA). By subtly adjusting pack sizes, formats, or price points, companies can manage margin pressure without triggering immediate shopper pushback.
Product reformulation can be a smart way to mitigate the impact of tariffs on business, especially when input costs rise due to the use of imported ingredients or materials. By adjusting recipes or substituting specific components with more cost-effective or locally sourced alternatives, manufacturers can maintain margins without significantly altering price points.
Reformulation also offers an opportunity to align with evolving consumer preferences, such as cleaner labels, reduced sugar, or sustainability, making it not just a cost-saving measure but also a potential value driver.
Some manufacturers are hesitant to pursue product reformulation or new product development because understanding the potential impact on their portfolio often requires time-consuming conjoint studies and in-depth market analysis. These traditional methods can be resource-intensive and slow down the decision-making process.
Buynomics platform, powered by Virtual Shoppers AI technology, enables RGM teams to model and assess how PPA changes, such as decreasing the pack size, reformulation or new product development, might affect manufacturers revenue in SKU, portfolio and category performance in just minutes, making it easier and faster to evaluate trade-offs and act with greater confidence.
Adjusting your promotion schedule is a quick win to stay profitable while facing the pressure of tariffs, and it can be complemented by adjusting other levers and forming a long-term strategy.
Decreasing the number of promotions you run per year or running them with a smaller discount than usual is often less visible to consumers than direct price increases and faster than adjustments in PPA.
This approach can also be selectively applied by channel or market, allowing for more targeted responses. However, it comes with trade-offs. It may result in reduced unit sales, but not necessarily a decrease in profits. There is also a risk of creating tension or conflict with channel partners if it's not carefully executed.
Buynomics helps manufacturers optimize their promotional strategy by simulating the impact of different mechanics, depths, and timings across products and channels.
Virtual Shoppers AI agents accurately predict how real shoppers will respond to various promotional scenarios, enabling RGM teams to identify the most effective and profitable options for real shoppers.
Our platform also considers the interaction between promotions and other key RGM levers, such as pricing and pack architecture, providing a comprehensive view of their combined impact.
Sharing tariff costs with retail partners through renegotiated trade terms helps avoid a direct impact on consumer prices, but may create tension if approached without accurate data and consideration.
Although it is not easy, manufacturers should strive to achieve a triple-win strategy that benefits themselves, retailers, and shoppers. This can be modeled with the Buynomics platform and used when negotiating with retailers.
One of the key advantages of Buynomics is its ability to model all five core RGM levers—pricing, price pack architecture, promotions, product mix, and trade terms—in a single platform.
This holistic approach allows manufacturers to simulate a wide range of realistic market scenarios, understand cross-effects between levers, and evaluate how different strategies impact topline KPIs like revenue, volume, and profit.
With these insights, RGM teams can enter retailer negotiations better prepared, equipped with data-backed options that align with business goals while addressing the needs of the retail partner. Whether negotiating a price increase, adjusting trade terms, or proposing a new promo mechanic, Buynomics provides the clarity and confidence to support more productive, value-driven conversations.
Uncertainty is now a part of everyday business, whether it involves navigating the lasting impact of the pandemic, rising input costs, inflation, or newly imposed tariffs. In this environment, adjusting a single RGM lever or relying on a single isolated tactic is rarely enough to remain resilient. Instead, companies need a holistic approach that combines quick-win strategies with long-term structural changes to drive sustainable growth.
For tailored guidance on navigating volatile markets driven by tariff challenges and driving sustainable growth, schedule a demo with our team today and see how Buynomics can support your organization’s success.