- In today’s CEO Daily: Lila MacLellan talks to AlixPartners co-CEO David Garfield about “tariff war rooms”.
- The big story: Steel tariffs.
- The markets: All is calm.
- Analyst notes from EY, UBS, and Convera.
- Plus: All the news and watercooler chat from Fortune.
Good morning. Lila MacLellan here filling in for Diane.
It’s war. At least that’s how it feels to CEOs who are trying to navigate a confusing and chaotic environment where President Trump’s tariffs—if enacted—stand to dramatically impact their businesses.
The most “front-footed” companies have set up tariff war rooms to game out scenarios, David Garfield, co-CEO of consulting firm AlixPartners, told me in a recent conversation. This involves creating financial models and “a decision-making framework and process that gets sustained,” he explained. War rooms are not a place, nor a one-and-done meeting, but a working group that comes together regularly, pulling the appropriate C-suite executives and company leaders into focused conversations. (The executive sponsors of these “rooms” are usually CFOs or COOs.)
Tariff war rooms make it possible for companies to measure any number of outcomes from imposed tariffs, looking at what happens when a new tariff is higher or lower, or lasts longer than anticipated, or how a duty could trigger currency value changes or other economic policy shifts.
Once companies have collected data for various hypothetical situations, they can begin debating their options for how—or whether—to respond. For example, Garfield said, if a company knows it makes products more cheaply than competitors who will face the same tariffs, it might choose to absorb the extra cost of the levy to guard their market share. Or, perhaps it will exploit its price advantage, pass the tariff cost to customers, and maintain its margins. “It's a very interesting strategic choice to make,” Garfield told me.
Leaders of multinational businesses know that the number of variables that could enter the picture in a multi-front trade war seems infinite. As Garfield noted, building a playbook means making many small but consequential decisions. His firm has found that some companies jumped in early to begin weighing their options. You can’t change your operations overnight, he said, but “you need to be as prepared, as forward-thinking, and as resilient and responsive as possible.”
More news below.
