Building resilience: mitigating US tariffs for treasurers
With the growing uncertainty of new U.S. tariffs on Canadian businesses, corporate treasurers should consider building resilience into their hedging programs to manage financial uncertainty. Tariffs can significantly impact cash flows, margins, and supply chains, creating new FX risks that require proactive strategies.
We examine key approaches available to clients to strengthen their risk management framework.
Dynamic hedging strategies
Rather than relying on static hedging policies, treasurers treasurers may wish to consider a dynamic hedging approach that adapts to tariff-related volatility. This includes:
- Layered hedging: Gradually increasing hedge positions as uncertainty around tariffs rises, rather than locking in all FX exposure at once.
- Participating forwards & options: Utilizing structured products that provide flexibility, allowing treasurers to benefit from favorable currency movements while protecting against adverse shifts.
Diversifying supplier & customer relationships
If tariffs increase costs with key U.S. partners, treasurers may wish to consider working closely with procurement and sales teams to explore:
- Supplier diversification: Identifying alternative suppliers in tariff-free jurisdictions to reduce dependency on U.S. imports.
- Pricing adjustments: Strategically adjusting pricing models to pass on tariff costs where possible, while maintaining competitiveness.
Scenario planning & stress testing
Treasurers should consider modeling different tariff scenarios to understand their impact on cash flows, pricing, and FX exposure. This includes:
- Running what-if analyses to estimate the financial impact of various tariff levels.
- Identifying stress points in supply chain costs and adjusting hedging ratios accordingly.
- Developing contingency plans for cost pass-through or alternative sourcing strategies.
Strengthening FX partner relationships
With tariffs creating new challenges, treasurers should engage with their FX providers to:
- Gain access to real-time market intelligence on currency trends and political risks.
- Leverage customized hedging solutions that align with their specific tariff exposure.
- Stay ahead of regulatory changes that may impact FX transactions in a tariff-heavy environment.
Awards
A few notable recognitions we've received for our work in the international payments space.
Top 100 Cross Border Payment Company
FXC Intelligence
Best Payments Solutions Provider
Systems in the City
Best FX for Payment Solution
Global Finance
Leveraging cross-border payment solutions
Tariffs will add costs, but treasurers can offset some of this impact by optimizing their cross-border payment strategies:
- Using multi-currency accounts to manage transactions in local currencies and avoid unnecessary conversions.
- Implementing netting solutions to minimize transaction fees and reduce overall FX exposure.
Proactive risk management is key
Uncertainty around U.S. tariffs requires treasurers to take a proactive stance in managing FX risk. By adopting flexible hedging strategies, scenario planning, and payment optimization, businesses can mitigate tariff-related challenges and maintain financial resilience.
How is your company preparing for potential U.S. tariffs?
Let’s discuss how Moneycorp can help you build a resilient hedging strategy.
Call or email us today to learn more about our comprehensive risk management solutions and how we can support your business in navigating financial uncertainties.
Contact usYou may also like:
The information presented in this article is provided for general informational purposes only and should not be construed as financial or other professional advice from Moneycorp US Inc. (Moneycorp), the author, or any affiliated entities. Please seek professional advice before acting on any of the strategies outlined in the article as their applicability is highly dependent on the facts and circumstances of the business. This article is comprised of the author’s opinion and is not necessarily the opinion of Moneycorp.
