Tariffs in Focus:
What Every Operating Partner Needs to Know Right Now

Tariffs pose an increased risk to portfolio performance, demanding direct action from private equity operators. The Private Equity International (PEI) Operating Partners Forum in Napa, California, this June brought together industry leaders to share insights and best practices for navigating an uncertain global economy. I was pleased to join my LogicSource colleague, Jo Seed, Chief Operating Officer, alongside Johnathon Baker, Operating Partner at Apollo, for an insightful conversation on confronting tariff volatility. Through this roundtable, we discussed the central role of data and analytics, new supply chain strategies, and negotiation tactics vital to protect resilience and profitability despite unpredictable trade policies.

Data and Analytics for Tariff Mitigation

Data and analytics help executives understand and reduce the impact of tariffs across industries; this information provides intel into supplier mix, spending levels, and country-of-origin data and supports accurate cost forecasting and creation of supplier-specific mitigation plans.

Strong data shifts procurement from a simple cost-control function to a strategic asset. With insight on spending patterns, supplier performance, and market shifts, executives can make faster, smarter decisions. This foundation supports operational efficiency, targeted negotiations, and effective inventory management.

A solid data framework also improves risk management by helping procurement teams detect and address potential supply chain threats through ongoing reviews of supplier financial stability and operating weakness. This strategic use of data improves resilience, supplier relationships, demand forecasting, transparency, and sustained value.

Tariff Impact Across Industries: A Moving Target

Tariffs have a heightened impact on healthcare, retail apparel, and manufacturing. These industries are more vulnerable to tariff changes because the products they source often depend on fragile global supply chains. The construction sector has also faced significant indirect cost issues, driven by tariffs on steel and related equipment. Raw materials have seen the steepest price jumps and tightening cost pressures.

This volatile and geographically scattered tariff environment is reshaping the global economy. China remains a central point of concern, forcing many companies to look at manufacturing alternatives in lower-cost countries such as Vietnam, Malaysia, Taiwan, and Mexico.

One clear sign of this is the temporary 90-day tariff reduction between the U.S. and China. Rates fell sharply, from 145% to 30% on some Chinese goods bound for the U.S., and 125% to 10% on U.S. exports to China. This short-term pause only underlines the deep uncertainty in trade relations, offering a brief break before rates shift again. Despite this instability, few companies seem willing to invest in domestic manufacturing, preferring to diversify across other international low-cost hubs. Organizations must turn to mitigation strategies to stay afloat amid frequent disruptions.

Navigation Plan: Key Negotiation Tactics for All Businesses

Navigating supplier-proposed cost increases due to tariffs demands strategic negotiation. Our roundtable conversation revealed that many companies open discussions by rejecting the increase, citing existing contract terms. This firm stance becomes a foundation for further negotiation.

With key suppliers and strategic partners, a collaborative approach often works best. This method builds trust and achieves better outcomes where suppliers absorb part of the tariff cost or postpone price increases for several months. Mastering both tactics is vital to protect margins and keep supply chains stable.

There is a bright spot amid widespread concern about rising import costs: IT costs have held steady despite early fears, giving companies a modest reprieve while they manage heavier supply chain expenses.

Next Steps on the Tariff Frontier

The PEI Operating Partners Forum delivered valuable insight on tariffs, their immediate effects, the rapid shifts businesses face, and the need for ongoing agility. One message is clear: staying informed is essential for strategic resilience. Passive observation in this climate poses a major risk. Proactive engagement, constant review of new regulations, insights from experts, and the right partnership are critical to limit risk and maintain a competitive edge.

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