These measures caused disruptions in stock markets and tested relationships between the U.S. and its largest trading partners. Canada and Mexico swiftly responded with their own trade measures. Mexican President Claudia Sheinbaum enacted retaliatory tariffs. Canadian Prime Minister Justin Trudeau imposed matching 25 percent tariffs on American goods and urged Canadians to buy local. China also announced counter-tariffs on U.S. products, including a 15 percent duty on coal and liquefied natural gas and 10 percent on crude oil, agricultural machinery, and cars.

Although Trump framed the tariffs as necessary to achieve reductions in immigration and drug trafficking, the potential economic ramifications include higher prices and fewer supplier options for the U.S. market. According to Gregory Daco, chief economist at EY, the tariffs as originally ordered might have increased inflation by 0.4 percentage point and lowered U.S. economic growth by 1.5 percent this year and 2.1 percent next year. In addition, as most tariff costs are ultimately passed down to consumers, The Budget Lab at Yale University estimated that the tariffs could cost the average American household between $1,000 and $1,200 annually.

However, within a day of enacting the first round of tariffs, Trump agreed to a 30-day pause on the duties on imports from Mexico and Canada. This decision followed the neighboring nations’ pledge to boost border enforcement and address drug trafficking concerns. Trudeau announced measures such as appointing a fentanyl czar and forming a joint strike force with the United States to combat organized crime and drug smuggling. Similarly, Sheinbaum agreed to use the National Guard to reinforce borders and committed to stopping weapon trafficking.

The decision to delay the tariffs by a month temporarily averted the looming trade war in North America, although Trump’s 10 percent tariff on Chinese imports proceeded and he hinted that he would like to impose tariffs on the European Union in the future.

Then, last Tuesday, Trump again enacted 25 percent tariffs on imports from Mexico and Canada (10 percent on Canadian energy). On Wednesday, he exempted auto manufacturers, and on Thursday, he exempted until April 2 all products covered by the U.S.–Mexico–Canada Agreement (USMCA), the trilateral trade deal that he enacted during his first term as president.

The seesawing tariff situation has left markets and businesses uneasy. The reprieve until April 2 offers a temporary solution for companies that are eligible, but Trump has threatened that these tariffs—and “reciprocal” tariffs against all nations—will be fully implemented in early April. Needless to say, global economic dynamics remain uncertain in light of ongoing global negotiations.

Use the Tariff Reprieve to Plan Strategically

For smart companies, the short reprieve is serving as an urgent call to action. You can view this period as a business fire drill, during which your organization should be preparing for possible tariff scenarios. You can also take this time to stress-test your supply chains, examining potential disruptions and calculating the financial ramifications of different outcomes.

To get started, your business should create detailed financial projections for different scenarios. This involves examining best- and worst-case outcomes and determining how each would impact your organization. For example, what financial impact would a 10 percent, 20 percent, or higher tariff against a specific country have on your organization? Run these numbers exhaustively, and map out the financial repercussions across your balance sheets and cash flow statements. These projections will form the foundation for subsequent steps you will take.

A significant part of your planning must involve revisiting pricing strategies. Tariffs typically increase costs, and unless your business absorbs those costs, you will have to pass them on to customers. Now is the time to explore whether and how you can alter prices to maintain both competitiveness and profitability. Consider evaluating whether you have room to absorb some portion of the new tax costs by finding overlooked efficiencies in other areas of your operations.

Finally, your strategic planning may include stockpiling essential materials. If your cash flow allows, this may be prudent, given the pervasive uncertainty. Having an inventory buffer could mitigate the immediate impact of tariffs. It would also involve upfront costs, but the investment might pay off in the face of supply-chain disruptions or increased cost of materials.

Take the Opportunity to Fortify Supply Chains

Smart companies are also using the tariff reprieve as a time to scrutinize and reinforce their supply chains to help them withstand upcoming shocks. You should diversify to reduce your company’s reliance on affected countries and products. To minimize disruptions, take time to explore alternative suppliers and markets.

Start by thoroughly documenting your current supplier costs. You need a clear understanding of current expenditures, which will offer insight into where your vulnerabilities lie. Your documentation should include not just the cost for materials or supplies, but also payment terms, lead times, and other pertinent metrics.

Next, find alternative suppliers. Reliance on a single supplier or region can be detrimental in times of trade disruptions. Take time to identify alternatives, and reach out to those organizations to gauge their offerings, reliability, and cost structure. This is the time to build relationships and negotiate terms.

Note that expanding your supplier base could mean exploring both international and domestic options. By not placing all your eggs in one basket geographically, you can both create a buffer against tariffs targeting a specific nation or region and leverage your options to secure the best possible terms for your purchases. Negotiating now could prevent you from having to scramble later. Make sure that you will have alternatives at the ready if tariff conditions worsen.

At the same time, it makes sense to advocate for favorable trade policies and keep abreast of potential policy changes or exemptions. Consult customs experts and trade attorneys to help ensure compliance with new regulations and optimize tariff classifications to potentially reduce costs.

Use the Remainder of March to Prepare Financially

A secure financial foundation is indispensable in navigating uncertain trade environments. The temporary tariff reprieve is the perfect window for your business to bolster its financial reserves and prepare for potential cash flow impacts.

The key is to shore up your cash reserves in light of the looming uncertainty. Doing so can buffer your business from financial shocks and enable it to carry on smoothly for a while, even if tariffs hammer your supply chain. Whether you opt to revisit and reduce discretionary spending, accelerate receivables, or restructure debt, your goal should be to ensure that your organization has enough liquidity to stay resilient.

This is also a good time to have honest conversations with your lenders and investors. You need to apprise them of scenarios that you consider possibilities, as well as your business’s strategies for handling them. Engaging in these discussions ahead of time, rather than in a moment of crisis, can yield more favorable terms and a better understanding from partners in your financial supply chain.

Also, consider performing a thorough financial checkup. Create detailed projections that account for scenarios including tariffs taking effect, tariffs remaining on hold indefinitely, and potential variations in the level of tariffs imposed. Preparing for as many scenarios as you can imagine will help you build a road map that guides your organization through whatever actually comes to pass so that you come out the other side solvent and strategically positioned for growth.

Build a Resilient Long-Term Strategy

Resilience is rooted in long-term planning. To come out ahead, use the reprieve from tariffs to build flexibility and adaptive capabilities into your organization. This could mean investing in technology, exploring automation, optimizing operations, and re-evaluating your overall business model to ensure it is equipped to handle variability.

To remain competitive, your business must accept trade disruptions as an inherent part of the global business landscape. This means building systems and strategies that are adaptable rather than merely reactive. In other words, your company must foster a culture of continuous improvement and strategic foresight, attempting to always stay ahead of the curve. It should consider adopting technological solutions that help enhance visibility into your supply chain, streamline operations, manage your finances, and engage with stakeholders more effectively.

Your long-term strategy should also involve reinforcing relationships with your business’s key stakeholders, including customers, suppliers, investors, and employees. A transparent, communicative approach builds trust and facilitates smoother transitions during periods of change.

The 30-day tariff reprieve provides a temporary window to plan strategically, fortify your supply chain, prepare financially, and build a resilient long-term strategy. To emerge from the tariff drama stronger, treat this reprieve as a critical planning period, an opportunity to test your systems, build buffers, and cultivate adaptability.