Tariff challenges: Pricing scenarios that turn volatility into opportunity

June 2025

 

<p>Tariff challenges: Pricing scenarios that turn volatility into opportunity</p>

Middle market finance leaders are rapidly adapting to shifting U.S. tariff policies that are disrupting critical parts of their business. In fact, according to KeyBank’s recent survey of middle market businesses conducted in May 2025, 58% ranked managing tariff impacts as a high priority when asked how they’re navigating current economic policies. 

As part of our four-part series on tariff solutions, we’ve explored key capital strategies to help companies protect their margins and keep growth on track. We’ve also shared scenarios that show how businesses can maintain strong supply chain resilience and cash flow stability — even in changing conditions.

Now, we shift focus to another growing concern for finance leaders: pricing volatility. KeyBank’s latest survey shows that companies are considering a mix of strategies to manage increased costs from tariffs. The most common include adjusting supply chain strategy (60%), passing costs to customers (53%), and applying for tariff exclusions (50%).

Others are finding alternative customers and markets (48%), absorbing costs internally (47%), passing costs to vendors/suppliers (47%), relocating production to lower-cost tariff locations (40%), and even redesigning products (35%).

These varied business responses underscore the complexity of today’s pricing environment — and the growing need for financial flexibility. That’s where the right banking partner, equipped with tailored working capital tools, can make a significant difference.

In this article, we’ll take you through three scenarios centered around challenges that companies may face when it comes to volatile pricing and how finance leaders can work with KeyBank to help protect margins, manage risk, and stay competitive in an evolving global market.

 

Scenario 1: Responding to the double shock of tariff hikes and currency drops 

Even well-established trade relationships can be vulnerable to sudden policy shifts and market turbulence. For exporters operating under long-term contracts, changes in tariffs or currency values can quickly turn a profitable shipment into a financial liability.

Here’s how a U.S. manufacturer can navigate a sudden disruption to its cross-border operations. 

The challenge

A U.S.-based textile manufacturer regularly exports to Canada under long-term contracts. Overnight, two disruptive events hit: Canadian tariffs on U.S. textiles increase and the Canadian dollar drops by 8%.

The combined impact threatens to erase the manufacturer’s profit margins on goods already in transit. With duties rising and the value of incoming payments shrinking, the company faces a critical cash flow strain and the potential for contract losses.

The solution

To help the manufacturer navigate this double shock, a rapid-response financial strategy can be deployed:

  • Execute a foreign exchange (FX) swap through KeyBank to immediately offset the currency loss, allowing the company to protect the value of its expected Canadian payments.
  • Extend short-term trade finance with support from KeyBank to cover the unexpected increase in tariffs and production costs, helping ensure the company can continue fulfilling orders without delay.

This integrated approach helps the manufacturer stabilize operations and avoid reactive cost-cutting or renegotiation that could negatively impact customer relationships.

The result

With KeyBank’s support, the manufacturer can avoid financial losses, maintain delivery schedules, and reinforce its reputation for reliability. By responding swiftly to currency and tariff swings, the company both protects its margins and demonstrates resilience to customers and investors — turning a potential setback into a forward-thinking strategy.

 

Scenario 2: Stabilizing global pricing through FX strategy

As companies expand into multiple international markets, they often face pricing complexities that can erode margins and create confusion for customers. Setting consistent and competitive pricing becomes an even harder challenge when each country has its own tariff schedules, currency shifts, and regulatory requirements.

Let’s consider how an exporter can navigate these complexities and maintain clear pricing strategies across borders.

The challenge

A U.S.-based machinery exporter is entering both Asia and Latin America. Each region presents unique hurdles: fluctuating exchange rates, inconsistent tariff structures, and varying customer expectations. The exporter struggles to set prices that are both competitive and profitable and internal teams are overwhelmed trying to manage constant updates across markets.

Without a structured pricing model that accounts for an unpredictable market, the company risks losing deals, damaging customer trust, and misaligning internal forecasts.

The solution

One way to address the complexity of pricing across different markets is through a structured financial strategy that includes:

  • Multi-currency FX hedging that locks in exchange rates for key currencies through KeyBank, helping mitigate economic shifts and enable stable pricing in local markets.

 

quote icon

When you can quote customers in their home currency it eliminates their uncertainty of cost increase, and you move to the front of the bid list. We give exporters the tools to protect against margin erosion and confidence to turn currency invoicing into a sales differentiator rather than a risk factor.

Brandon Nowac
KeyBank Commercial Executive


The result

With currency exposure under control and tariff impacts accounted for, the exporter can strategically establish stable and region-specific pricing. Pricing clarity helps build trust with customers, while internal teams can plan and budget more effectively. 

By working with a bank that understands the complexities of global trade, the company is well-positioned to grow internationally without giving up control or cutting into profits.

 

Scenario 3: Navigating payment delays in volatile markets

Expanding into international markets can unlock new revenue streams, but it also introduces financial complexity that can strain even the most prepared exporters. Delayed payments, shifting tariffs, and currency swings are just a few of the unforeseen risks that can arise.

Let’s take a closer look at how these challenges might play out — and how a food exporter can respond to stay competitive.

The challenge

A U.S.-based specialty food exporter secures a large order from a major buyer in Southeast Asia. But just as the shipment is finalized, the exporter faces a 60-day payment delay and new tariffs. To make matters more complex, the local currency begins to fluctuate significantly. 

The unstable pricing raises concerns that the final payment could lose value when converted back to U.S. dollars, while the delayed payment puts added pressure on the exporter’s cash flow. 

The solution

To help the exporter stay financially stable and help protect against further pricing instability, a two-part financial solution can:

  • Provide export receivables financing through KeyBank to bridge the 60-day payment gap, giving the company immediate access to working capital without waiting for funds to clear.
  • Implement an FX option with KeyBank that sets a protective floor on the exchange rate, allowing the exporter to benefit from favorable currency movements while reducing downside risk.

The result

With cash flow stabilized and currency risk managed, the exporter can confidently fulfill the order and continue pursuing new business in the region even amid ongoing fluctuations in both payments and pricing. 

By working with a bank like KeyBank — one that understands the complexities of today’s trade and tariff environment — the exporter can avoid disruption and strengthen its position in a key growth market.

 

Final thoughts

As these scenarios illustrate, pricing volatility is a challenge that can disrupt cash flow, impact margins, and stall growth. In today’s uncertain environment, working with a bank that understands global trade dynamics and offers a full spectrum of working capital solutions is essential to staying resilient. 

Over the course of our four-part series on tariff solutions, we’ve highlighted tactics to help companies adapt — from effectively managing supply chain and cash flow disruptions to deploying capital strategies that support long-term growth. These insights reflect the growing need to work with the right banking advisor that can help navigate a complex global market.

KeyBank’s combination of trade finance services, liquidity solutions, and advisory insight helps middle market companies adapt contracts, payment terms, and currency exposure to shifting trade rules.

Looking to strengthen your response to pricing instability in today’s inconsistent trade environment? A tailored financial strategy can make all the difference. Connect with your KeyBank Relationship Manager to schedule a consultation that can help turn tariff challenges into growth opportunities.

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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