INSIGHT

Navigating tariffs, transfer pricing and economic uncertainty: Three strategic approaches

April 14, 2025

Services: Transfer Pricing

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The current geopolitical uncertainty and the Trump administration’s recently proposed tariffs are changing how multinational companies re-examine and handle cross-border transactions. Companies are focusing on three main strategies to adapt. 

Unbundling transactions: A transfer pricing approach 

Traditionally, transfer pricing has focused on allocating income within multinational organizations, while customs concerns stayed in the background. This is changing rapidly with the new tariff proposals. 

Companies are now examining their tangible goods transactions more carefully. The key question: “Are these priced correctly from a transfer pricing and customs standpoint?” 

Many companies bundle product prices with payments for royalties, intellectual property and services. By unbundling these elements, companies can create more advantageous pricing structures. This unbundling allows organizations to: 

• Separate physical goods from intangible assets and services 
• Allocate value more precisely across different transaction components 
• Potentially reduce the impact of tariffs on certain elements 
• Maintain compliance with tax and customs regulations 

Transfer pricing, primarily a tax planning and compliance matter, has now also become a strategic tool for navigating the new tariff landscape. 

First sale: Leveraging customs rules 

Companies are also turning to established customs strategies, particularly the “first sale” doctrine. This rule allows import duties to be calculated based on the price paid by the original manufacturer earlier in the supply chain, rather than the final transfer price. 

Using first sale principles can help companies: 

• Lower the dutiable value of imported goods 
• Reduce the overall tariff burden 
• Create a more efficient supply chain pricing structure 

This approach requires careful documentation but offers significant potential savings. Companies that previously paid little attention to first sale are now actively exploring how to incorporate it into their cross-border transaction planning. 

Financial modeling: Planning for multiple scenarios 

Beyond pricing adjustments, companies are using financial modeling to prepare for various possibilities. This operational response involves developing models to evaluate: 

• Sourcing alternatives from countries not subject to the proposed tariffs 
• New manufacturing locations and distribution networks 
• Restructured supply chains 
• Cost implications of different strategic options 

These models provide the analytical foundation for decision-making. They help companies quantify the potential impact of tariffs before committing to major operational changes. 

Financial modeling transforms abstract tariff concerns into concrete numbers that can guide strategic planning. Companies can test multiple scenarios to find the most cost-effective approach. 

Bringing it all together 

While these three strategies represent different approaches, they work best when integrated. Companies that coordinate their transfer pricing, customs, and operational planning functions are developing the most effective responses. 

The proposed tariffs are forcing companies to reconsider how they structure international transactions. This reconsideration, while challenging, may reveal opportunities for more sophisticated approaches that work across multiple regulatory areas. 

As tariff policies continue to evolve, companies that skillfully combine unbundling transactions, first sale customs strategies, and robust financial modeling will be best positioned to adapt. The coordination of these three approaches allows multinational organizations to respond strategically rather than reactively to the changing global trade environment. 

How BPM can help 

BPM offers expert support to companies navigating these tariff challenges. Our team can help implement all three strategic approaches discussed above. Contact BPM today to position your organization for success amid changing tariff policies.