Tariff Defense: Navigating Tariff Shocks with Commercial Analytics

Let’s indulge in a little thought experiment. Imagine Cheerios, a beloved cereal staple, are made in Canada. This isn’t too far-fetched—in fact, a 2014 promo confirms the oats actually come from a picturesque farm in Manitoba. Now imagine a few months of buzzing headlines about new tariffs, planned tariffs, repealed tariffs, and (re-)negotiated tariffs stirring anxiety among leaders in finance, marketing, and supply chain. Cheerios sits comfortably in the moderately elastic cereal category, sensitive to price shifts yet central to the breakfast table. So, what’s a brand to do? One framework suggests it’s time to innovate—or, as consultants love to say, “renovate and reinvigorate the product portfolio.” Maybe, just maybe, that means creating a locally sourced, premium-priced cereal capable of masking price increases: Bacon Cheerios, anyone?

If only things were that simple…

Tariffs aren’t just hurdles; they’re strategic turning points. They represent uncertainty—and uncertainty is opportunity wearing a disguise. This is especially true in 2025 where the tariff schedule is practically a quantum particle—the very act of trying to measure tariff changes seems to change their state. With so much volatility, brands that leverage Commercial Analytics to quickly grasp and adjust to the complete business picture will lead the pack.

Want to be one of the leaders? Here’s your roadmap.

Avoiding the Pitfalls:

• Don’t assume low pass-through. In many categories, tariffs flow straight through to shelf price, often approaching 100% pass-through. Planning to absorb only a sliver of the cost risks aggressive margin surprises (or, worse, a sudden share erosion when you belatedly hike price). Pass-through rates can also vary by product, making portfolio analytics, such as driving extra demand for low-tariff items, more critical.
• Beware of the ‘easy slice’ illusion. Digital attribution (or an incrementality test) is like grabbing the first, perfectly uniform slice of pie off the dessert tray—handy, tasty, and deceptively comforting. But real strategy requires tasting all the deserts, even the ones you think you won’t like, because that’s where the surprises (and profit) hide. Tariffs require a comprehensive view that goes beyond the basics of direct response and a short time window so common with attribution.
• Protect your brand investment. Strong analytics demonstrate the long-term value of maintaining brand equity, ensuring you don’t sacrifice future growth to prop up short-term performance. Brand investments are a multiplier on performance, not a competitor. Past market shocks remind us of the risk of over-indexing on promotions. While I expect a flight to performance marketing, our ROI Genome® research suggests the opposite since brand messaging outperforms performance messaging 80% of the time.
• Proactivity pays off. Robust analytic capabilities allow you to quantify marketing’s strategic value upfront, clearly demonstrating how marketing investments mitigate tariff induced price hikes before budget cuts are even proposed. Our ROI Genome® research highlights that media drives growth even during a recession, where those who reduced media investment saw a two-thirds decline in incremental sales. In economic downturns, strong brands don’t just survive – they gain share.

Five Ways to Strengthen Strategy with Commercial Analytics

Tariffs aren’t about pinpoint predictions—their exact timing and magnitude fluctuate with every new tweet or headline. But having a robust, analytics-driven scenario playbook? That’s gold standard practice. It successfully guides businesses through crises such as the global financial downturn, border closures, and inflation shocks during COVID-19. And if you think tariffs are still background noise, think again: the Federal Reserve Bank of Richmond now pegs the average effective tariff rate at 27.5%, up from a paltry 2.2% barely a year ago. Deloitte’s latest macroeconomic outlook also warns that the proposed duties will chip away at GDP growth. Translation: the CFO’s margin cushion and the CMO’s growth runway both just got a lot smaller. To stay ahead, your analytics need:

1. Preemptive Scenario Planning: Powerful analytic tools allow the modeling of multiple tariff impact scenarios (low, medium, high) coupled with varying competitor responses. This approach produces clear, actionable response strategies for each scenario, facilitates internal alignment, and enables rapid execution —and its modular design lets you iterate at the speed of news: headline changes in the morning, update the plan with your first cup of coffee.
2. Competitive Intelligence for Scenario Planning: Fold hard data on rival pricing and distribution directly into preemptive tariff scenario planning. Stress testing these competitive variables up front reveals margin and share breakpoints well before they appear in the market, ensuring your C-Suite already has an approved response playbook. With the right platform it is easy to update scenarios in minutes across KPIs as conditions evolve.
3. Not Price—Pricing Intelligence: Pricing never happens in isolation—what you charge only matters relative to the market and across your portfolio. You need to be able to incorporate pricing gaps versus pricing effects as you model out elasticities. If your model can’t forecast how a Cheerios bump ripples through Honey‑Nut, Multi‑Grain, and beyond, your best-laid plans won’t save your bacon.
4. Balanced KPI Optimization Under Tariff Stress: Use analytics that quantify tradeoffs across margin, volume, brand equity, and cash flow when duties spike. Effective analytics should guide these nuanced tradeoffs effortlessly through visualizing summary comparisons and drill-downs. The goal: land on a mix of price moves, media spend, and promo intensity that cushions the P&L today without starving tomorrow’s growth.
5. Consumer Sentiment Tracking (Tariffs Are Not a Launch Date): Shoppers rarely wait for an official tariff start‑date; they react to headline chatter, fuel prices, and grocery‑bill anxiety in real time. Continuous sentiment signals—search trends, social buzz, and card spend—should be integrated into your approach, allowing you to recalibrate media, promo, and pricing as consumers’ moods evolve.

At Analytic Partners, we provide a comprehensive analytics platform that equips CFOs, CMOs, and their teams with precisely these capabilities, ensuring they’re ready when uncertainty inevitably arrives.

And who knows—maybe Bacon Cheerios isn’t such a wild idea after all, but you’ll still need the marketing budget to promote it.