Are your products still profitable in the US? Since President Trump introduced steep import tariffs, many European companies have seen their margins take a hit. For financial managers, the pressure is on: how do you navigate these new costs and still make smart, strategic decisions about your product portfolio?

The response to these tariffs has been varied. Initially, there was a surge in exports from all over the world before the tariffs took effect, followed by a sharp decline. While some tariffs have been delayed, a minimum tariff on European goods remains. These tariffs also have secondary effects, such as fluctuations in the dollar exchange rate, increased financing costs, and differing inflation expectations.

A 145% tariff previously imposed on Chinese products effectively closed those borders, redirecting their exports to Europe and impacting prices there.

What can you do?

While some may adopt a passive approach or halt exports entirely, others might pass on the costs to customers, though this is not always feasible.

The most strategic approach involves a data-driven strategy. Incorporate the impact of tariffs into strategic considerations, leveraging both financial and supply chain data. The effect of tariffs varies across products, making portfolio management crucial. By gaining a precise understanding of each product's margin, you can make objective decisions. This is not about blindly eliminating products but identifying profitable items in specific situations. Focus on products with strong margins and favourable taxation.

We offer a strategic concept based on integrated planning, aligning financial and supply chain objectives, and portfolio management focused on product profitability. Analysing years of manufacturing performance reveals that just a few products often decide the profitability of the company, while many others are loss-making. Identifying and addressing these loss-making products is key to improving overall profitability.

Solventure Perform

To facilitate this, Solventure has developed the Solventure Perform software suite including the Portfolio Optimiser module. This solution evaluates SKUs based on margins, volumes, import taxes and complexity costs, providing a data-based picture of profitable and unprofitable products. It translates complex financial implications into clear portfolio decisions, enabling financial managers to steer towards higher profitability, especially when tariffs are a factor.