Tariff challenges: 7 capital strategies to help protect margins and momentum

May 2025

<p>Tariff challenges: 7 capital strategies to help protect margins and momentum</p>

Tariffs can change the cost structure of a business almost overnight. For middle market companies — large enough to rely on global supply chains yet lean enough that every margin point matters — sudden duties on critical inputs can squeeze cash flow, unsettle supplier relationships, and cloud long-term planning.

U.S. Tariff Policy: 2025 Snapshot

The current administration has enacted a sweeping tariff policy. As a result, American businesses face rising input costs, global retaliation, and a rapidly shifting trade environment that demands new levels of financial agility and supply chain resilience. 

 

2025 Tariff Timeline

Date Event
April 2 Universal 10% tariff takes effect on nearly all U.S. imports.
April 9

90-day pause begins on new tariffs above 10% (except China).

May 12 U.S. and China agree to reduce import tariffs on each other's goods for 90 days. U.S. tariffs on Chinese imports cut to 30%, while China’s levies on U.S. imports are cut to 10%.
May 28

The U.S. Court of International Trade blocks several of President Donald Trump's major tariffs. Tariffs affected by the ruling:

  • 30% on goods from China
  • 25% on some imports from Mexico and Canada
  • 10% on most other imports

The ruling does not affect the 25% tariffs on autos, auto parts, steel, or aluminum.

The administration filed notice of appeal following the ruling.

May 29

Tariffs are reinstated after a federal appeals court grants the Trump administration’s request to temporarily pause the U.S. Court of International Trade’s ruling.

July 9

90-day pause scheduled to end; higher tariffs may be reinstated.

* Last updated May 29

 

The Effects of Tariffs on Businesses

Before diving into seven tactics that can help a business ride out this volatility, let’s frame tariffs as a capital problem with distinct pressure points — from concentration risk in your supply chain to sudden liquidity gaps, contract rigidity, and foreign-exchange (FX) swings. Each pressure point can erode margins in a different way, which is why plug-and-play fixes (like across-the-board price hikes that can erode customer loyalty) rarely work. What can work is a coordinated capital strategy that anticipates where tariffs will hurt first, frees up cash before that pain arrives, and builds optionality into every trade, payment, and financing decision.

That’s where working with a bank with a full spectrum of working-capital tools becomes critical. KeyBank combines its liquidity solutions with seasoned advisory insight, connecting clients to external specialists whenever that creates the best outcome. The following seven capital strategies showcase how we deploy our own solutions or arrange outside expertise to help you safeguard margins and keep your growth plans on track.

 

7 capital strategies to help protect margins and momentum


1. Diversify supply lines to cut tariff exposure

The challenge: When tariffs strike a narrow band of goods, companies that rely on a single country or supplier feel the pain first.

How KeyBank can help:

  • Trade finance services can deliver import loans and payment guarantees so overseas suppliers are paid on time — critical when new duties tie up working capital.
  • Letters of Credit help reassure both buyer and seller that payment will arrive in full and on schedule, giving you leverage to source from new markets without worrying about counter-party risk.

By pairing trade-specific capital with risk-mitigation tools, KeyBank helps turn tariff turbulence into an opening to fortify your supplier network. This can result in a more reliable flow of goods, stronger negotiating power with vendors, and the confidence to keep production on schedule.

2. Optimize inventory levels and time your purchases

The challenge: Should you buy ahead of a scheduled tariff increase or run lean and risk stock-outs if duties are delayed? The answer changes weekly.

How KeyBank can help:

  • Asset-based lending (ABL) helps you build stock strategically without draining operating cash, taking advantage of pre-tariff pricing or volume discounts.
  • Integrated payables can consolidate every outgoing payment into a single workflow, so finance can time disbursements to match tariff milestones, cash-flow forecasts, and supplier incentives.

Timing the market is hard — funding the timing shouldn’t be. With inventory financing and integrated payables, you can buy ahead of tariff deadlines or slow-roll purchases when duties might fall. This can help lock in cost advantages that feed directly into stronger margins and steadier customer fulfillment.

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Buying ahead of a tariff hike, or holding off when rates might drop, only works if you have fast access to funding and a seamless way to pay. By aligning short‑term credit with streamlined payment processes, we help finance teams act on market signals the moment they appear.

Laurie Muller-Girard
KeyBank Commercial Executive

3. Reshore production and broaden your supplier base

The challenge: Shifting production back to the U.S. or onboarding new suppliers requires upfront investment in facilities, tooling, and onboarding processes.

How KeyBank can help:

  • Equipment financing helps spread the cost of new machinery over its useful life, aligning cash outlay with production ramp-up.
  • Commercial real estate lending funds plant expansions or new facilities, whether you’re reshoring entirely or adding a near-shore distribution point.
  • Vendor payment solutions automate supplier onboarding and payments, letting procurement teams pivot quickly without overwhelming AP staff.

Reshoring requires capital today, but it delivers pricing certainty and supply autonomy for years to come. KeyBank can help finance the move and streamline vendor onboarding so you can shorten lead times and cut freight expenses.

Read more: Tariff challenges: Supply-chain scenarios that help keep goods moving and costs in check

4. Fortify liquidity and flex your working capital

The challenge: A 10% duty on imports can appear with little warning, forcing businesses to fund higher inventory costs, accelerated freight, or one-off purchases.

How KeyBank can help:

  • A revolving line of credit can provide a flexible borrowing base you can draw and repay as conditions change.
  • Working-capital loans help bridge cash gaps caused by higher landed costs or slower customer payments.
  • Asset-based lending (ABL) helps to unlock liquidity tied up in receivables, inventory, or equipment — often at higher advance rates than conventional loans — creating a cushion against tariff-driven shocks.

Liquidity is your first line of defense against tariff-driven price spikes. With multiple draw-down options already in place, you can act faster than competitors, seize inventory before costs climb further, and help protect your balance sheet without interrupting day-to-day operations.

 

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You can’t protect what you can’t see. Real-time cash flow insights paired with rapid access to working capital let finance teams absorb cost spikes today and keep strategic projects moving tomorrow. It’s about turning information and liquidity into two sides of the same competitive coin.

Chris Doyle
KeyBank Commercial Leader

5. Defend margins and smooth short-term cash flow

The challenge: When landed costs rise faster than you can re-price finished goods, margins compress and liquidity tightens.

How KeyBank can help:

  • Cash-flow forecasting tools combine historical data with scenario modeling so finance leaders can better see the impact of different tariff schedules in real time.
  • Corporate card solutions extend payment cycles, help improve spend visibility, and potentially capture rebate income — small levers that can add up when margins are thin.

When margin erosion threatens growth plans, visibility and speed matter most. KeyBank’s forecasting tech and quick-turn cash solutions give you the data to defend margins early — and the liquidity to keep pursuing strategic initiatives.

6. Build flexible contracts that absorb tariff shocks

The challenge: To share risk — and opportunity — companies need to bake tariff clauses, flexible payment terms, and escalation triggers into contracts.

How KeyBank can help:

  • Our treasury management advisory team can connect you with experts who can review payment terms, currency clauses, and credit exposure, helping you renegotiate contracts that protect cash.
  • Payables solutions (ACH, wire, check, card) reside in a single platform, giving you the freedom to execute on whatever terms you negotiate without adding back-office complexity.

Smart contracts can help shift risk, unlock savings, and even create upside when trade rules change. With treasury advisors at the table and automated payables behind the scenes, you’ll negotiate from a position of strength and execute with the precision your associates (and auditors) demand.

Read more: Tariff challenges: Navigating cash flow pressure in uncertain times

7. Hedge FX and de-risk every export sale

The challenge: Tariffs rarely move in isolation; they often coincide with currency swings and slower payment cycles abroad.

How KeyBank can help:

  • Trade finance services bridge the working-capital gap between production and customer payment, ensuring you can fulfill orders even if buyers seek longer terms, while also handling documentation, collections, and compliance, reducing administrative burden so your team can concentrate on finding new markets. 
  • FX hedging locks in exchange rates or sets protective floors, turning a potential double hit — higher tariffs and an unfavorable currency move — into a known cost.

Global sales shouldn’t come with global headaches. By pairing trade finance services with targeted FX hedges and trade-documentation support, KeyBank lets you quote in local currencies, promise reliable delivery, and collect cash with minimal friction.

Read more: Tariff challenges: Pricing scenarios that turn volatility into opportunity

Final thoughts

Tariffs introduce uncertainty — but with the right banking advisor, uncertainty becomes manageable risk. KeyBank’s combination of trade finance services, liquidity solutions, treasury technology, and advisory insight helps middle market companies to:

  1. Maintain resilient, diversified supply chains
  2. Secure flexible liquidity before, during, and after cost shocks
  3. Protect margins and cash flow through smarter forecasting and financing
  4. Adapt contracts, payment terms, and currency exposure to shifting trade rules

 

We understand no two businesses are the same. Tariffs are a complex issue that require a deep discussion. With that in mind, connect with your KeyBank Relationship Manager to schedule a tailored consultation that can help turn tariff challenges into opportunities for smarter sourcing, stronger balance sheets, and sustained growth.

This article is for general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual person or entity.

Banking products and services are offered by KeyBank National Association. All credit, loan, and leasing products are subject to collateral and/or credit approval terms, conditions, and availability and subject to change.

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