Technology & Pharmaceutical Industry Tariff Exposure Checklist

What to assess now to understand your potential tariff exposure and business impact

Why Assess Your Tariff Exposure Now?

This checklist helps finance, tax, supply chain and operations leaders assess tariff exposure, identify issues requiring further review and make timely, informed decisions:

• Tariff changes are creating new considerations for technology hardware and pharmaceutical companies.
• The impact isn't limited to duties; it can reach costs, margins, pricing, cash flow, sourcing and supply-chain risk decisions.
• The complexity of tariff changes varies depending on your company’s import profile, including countries of origin for components and finished products.

Use the questions below to identify potential gaps in your tariff readiness and related international tax considerations.

Prepare for Continued Tariff Volatility

Frequent and significant tariff updates and shifts in the tariff landscape increase the need for timely decisions that may affect supply chains, pricing, cash flow, and taxes.

Creating a cross-functional team with specific areas of focus supports existing decision-making by acting as a source of information, rapid review and identification of challenges. The team helps ensure the flow of timely information and data to and from affected areas and senior leadership.

Your team may include representation from:

• Finance: How will the changes impact the firm’s financial health? Will tariff volatility affect internal audit review, taxes, credit, and other long-term planning?
• Legal: Are there exceptions or important nuances to explore? For example, are there differences depending on country of origin?
• Pricing: What are the potential responses, including passing along increases to customers through pricing or reducing margins to sustain volume?
• Sourcing/Procurement: Will the changes threaten supply availability? Are there alternative sources? How complex would it be to shift supply chains?
• Operations: What infrastructure support is needed to shift to new sources or a slowdown in imports? How nimble are you in responding to changes?
• Manufacturing: What changes to finished-product production may be required? Could shifting supplies affect product quality or reliability?
• Technology: Can existing systems respond to change? Are there concerns regarding access to support and expertise?
• Communications/Public Relations: Will pricing changes or reduced margins require a communications plan for clients, investors or employees?
• Client Relations/Sales: What information will sales and client relationship teams need to explain the impact of new tariffs and address related concerns?

The Tariff Exposure Checklist

Accurate product and classification data provides the foundation for identifying tariff exposure and estimating its financial impact.

Know what you're importing

Core question: Do you have a complete picture of the products entering your supply chain?

Begin with a comprehensive overview of your current exposures and consider potential concerns that further changes may bring.

• Have you identified your current tariff exposures by country of origin?
• Have you identified where finished products are shipped from regardless of their country of origin?
• Have you identified where components are sourced and shipped from? Are there any “hidden” exposures within the components used in your products?
• Do you know the current Harmonized Tariff Schedule codes affecting your imports?
• Have your current exposures been evaluated by your tax and legal teams? Have they considered additional potential exposures?
• Have you reviewed suppliers to determine where they are sourcing materials or assembling products? Have they made or are they planning changes that may shift exposures?

Industry callouts

It’s important to look within finished products for potentially hidden tariff exposures. Consider, for example:

Technology hardware: Semiconductors, components, equipment and other imported materials.

Pharmaceutical: Covered finished pharmaceutical products, active pharmaceutical ingredients and other associated ingredients/materials.

Potential Solutions

Managing tariff exposure requires more than passing costs to customers or accepting lower margins. Evaluating alternative suppliers and locations may reveal more sustainable options.

Investigate alternative sources and manufacturing locations

Review and model the costs of possible alternatives for various functions and sources before they become urgent necessities.

• Are there alternative suppliers or sourcing locations with more favorable tariff exposures?
• What is the potential cost of making specific changes against the cost of new or reduced tariffs?
• Will making supply chain changes potentially affect your domestic tax outlook?
• Does manufacturing or technology have quality control concerns if you make supply chain changes?

Quantify the potential impact of changes to prices and margins

Determine the incremental costs of new tariffs against current costs in order to help senior leadership make informed comparisons and decisions.

• What is the calculated annual value of potentially affected imports?
• Have you modeled the additional landed costs under various tariff scenarios?
• Have you reviewed how additional tariff costs affect cash flow?
• Are you able to quantify the impact of changes on your gross margins?
• Have you modelled the pricing impact of passing on additional costs to customers?

Quick calculation callout: Potential annual exposure

Annual value of affected imports × applicable tariff rate

= estimated incremental tariff cost

This is a starting point. Actual exposure may depend on classification, origin, applicable exceptions and other factors.

Evaluate your options

Don't make a supply-chain decision based solely on the present tariff rate. Tax, cost, quality, capacity, lead times and operational risk should be evaluated together.

Core question: Once you identify your exposure, have you evaluated what you can do about it?

• Have you reviewed whether exceptions or different tariff treatment may apply?
• Have you evaluated alternative suppliers or sourcing locations?
• Have you compared potential tariff savings against the operational costs and risks of changing suppliers?
• Could changes in manufacturing or domestic investment affect your strategy?
• Have you considered the potential tax implications of changing your supply chain?

Technology callout: Consider product use, semiconductor/component sourcing, alternative suppliers and domestic manufacturing/investment.

Pharmaceutical callout: Consider product and ingredient sourcing, country of origin, applicable treatment and domestic manufacturing or onshoring plans.

Make tariff planning a cross-functional process

Legal may understand the rules, procurement knows the suppliers, operations understands the supply chain and finance knows what happens when costs change. Effective tariff planning requires connecting those perspectives into a coordinated strategic response.

Core question: Who owns tariff exposure?

• Who is responsible for monitoring tariff developments?
• Is relevant information shared across departments in a timely manner?
• Is there a process for evaluating a new tariff announcement against company imports?
• Can your leadership quickly understand the financial impact when something changes?
• Do we have a process for periodically reassessing exposure?

Quick Status Check: How Prepared Are You?

As you build a detailed overview of your tariff exposure, take a moment to assess your confidence level about what you’ve addressed so far.

High confidence:

You feel that you have many of the fundamentals in place. Continue monitoring changes and reassessing exposure as tariff policy evolves.

Several questions unanswered:

You may have visibility gaps that make it difficult to accurately quantify your exposure. Prioritize gathering the missing import, classification, origin and financial data.

Significant uncertainty:

A more detailed tariff exposure assessment may be warranted before making sourcing, pricing or investment decisions.

What to Do Next

If this checklist surfaced potential exposure:

1. Validate your data.
   Confirm affected imports, classifications and country of origin.
2. Quantify the impact.
   Model potential costs and the effect on margins, cash flow and forecasts.
3. Evaluate your options.
   Consider available tariff treatment, sourcing alternatives and broader tax and operational implications.
4. Establish ongoing monitoring.
   Determine who will evaluate future changes and communicate their potential impact.

Stay on Top of Tariff Changes

Tariff exposure can affect your business in ways that may not immediately be apparent. Find out how our tax consultants can help you assess your exposure and navigate an evolving tariff landscape.