It started as a headline. Next, it probably landed on your feed or inbox. Now, it’s having an impact on your supply chain, your delivery and your profitability.
In early 2025, the U.S. government announced a sweeping new tariff package, starting at 10% and scaling up to 25%, and higher for some countries, on hundreds of imported goods. In the case of China, the reciprocal tariff announced is in continued escalation and now recognized as a trade war. China adjusted retaliatory tariffs to match imposing the same tariff on U.S. imports. Further,, China has now added 12 companies to its export control list along with banning their imports and exports relating to China, all of which came into effect in April of 2025.
After announcing a 90-day pause on the previously announced reciprocal tariffs applicable to all other countries, the U.S. is now in country by country negotiations on specific trade agreements with more than 100 countries.
In fact, within weeks, countries like Mexico and Canada issued retaliatory tariffs of their own, targeting sectors like energy, manufacturing, and consumer goods. The message is clear: the global trade chessboard is shifting, again.
Suddenly, for multinational companies, trade compliance went from a predictable stable requirement for reporting to a minefield of compliance and operational risk with high penalties, fines and potential litigation. This constant change to country by country trade agreements requires processes that control and mitigate risks in sourcing, procurement and sales The risk these issues impose has elevated the management of tariffs to a boardroom priority.
If your enterprise has exposure to international sourcing or cross-border logistics, control and compliance is a first order concern but competitive advantage comes from ready access to analytics. Second order benefits come from applying the knowledge found in analytics to source at the lowest cost provider with the lowest risk country of origin. Finally, companies executing vertical or horizontal growth through acquisition strategy can mitigate risks and identify the most ideal acquisition targets. There is a narrow window to evaluate trade risk exposure, align your internal systems, and put a robust controls and compliance strategy in place.
Noncompliance risk is real. From mounting landed costs to blocked shipments and multi-million-dollar fines, enterprises that fail to act quickly risk being blindsided. Not just by customs enforcement, but by the inability to turn this into a competitive differentiator.
This blog aims to walk you through why the current wave of tariff volatility is different, why traditional compliance tactics are falling short, and what leading companies are doing right now to stay ahead of the next trade shock.
Tariff Volatility Is Here
If there’s one thing business leaders have learned in the past five years, it’s that the world is changing and geopolitical tensions are creating volatility that isn’t going away…it’s being institutionalized and a new operational standard.
The 2025 U.S. tariff package is not a one-time shock. It’s the latest move in a long, escalating series of trade disruptions that can be traced back to 2018. This new global is different. Having sourcing options identifying potential raw material substitutes and the agility to respond quickly is the only way to protect the enterprise from coordinated multi-national retaliations, sector and commodity specific targeting, and the speed of enforcement can only be managed with proper controls and processes.
According to Gartner, tariff-related risks are now considered “persistent and structural,” not transitory. Their research projects that by 2028, over 70% of global supply chains will undergo regional restructuring to mitigate geopolitical and trade volatility.
And yet, many enterprises don’t have a plan to adjust their systems or strategies to reflect this risk-off environment.
Too often, compliance is treated as a quarterly audit concern rather than a day-to-day business enabler. Procurement still makes sourcing decisions without full landed cost visibility. Finance teams still model margin based on pre-FTA baselines. ERP systems remain disconnected from trade documentation workflows and the native capabilities of these systems go unimplemented often due to lack of a functional skillset necessary to implement and effectively utilize.
The organizations that thrive in this environment aren’t the ones that try to predict every policy change. They’re the ones that build adaptive infrastructure (systems, processes, and cross-functional teams) designed to withstand the rapid and dynamic changing requirements of cross border trade.
For these reasons, leading enterprises are shifting their mindset and focus from compliance as a burden, to compliance as a competitive differentiator and level for improved profitability.
Non-Compliance Is No Longer a Back Office Problem
Compliance has long been seen as the cost of doing business and an oversight requirement with no additive value to the product or service a company delivered. The requirement is considered a back-office checklist to satisfy regulators with the artifacts ultimately filed away after quarterly audits. Non-compliance can shut companies down and rapid change in rules and expectations have only increased the risk of potential violation. We’ve moved past hypothetical risks and are now witnessing firsthand how companies with household names and global operations are on the receiving end of these tariffs.
In 2023, a multinational electronics firm faced over $200 million in penalties after a U.S. Customs and Border Protection (CBP) audit found discrepancies in their origin documentation and product classifications. The goods weren’t illegal. The paperwork was outdated. That’s all it took.
And it’s not just about fines. Poor compliance can trigger:
- Seizures or detainment of goods at ports
- Lengthy customs audits and escalated scrutiny
- Loss of preferential trade treatment under FTAs
- Reputational damage that impacts shareholder trust and customer relationships
The truth is, many enterprises still rely on manual trade workflows, disconnected spreadsheets, or ERP modules that haven’t been updated since the last major policy shift. That leaves them vulnerable to misclassifications, expired certificates, and non-compliant documentation. Worse, it means compliance teams are reactive, not proactive. They scramble to solve issues after shipments are delayed or a fine is issued.
According to Gartner, more than 60% of organizations surveyed admitted to poor visibility across their cross-border compliance operations. And yet, compliance teams are expected to keep up with dynamic HS code changes, origin transformation rules, and real-time documentation. All without modern tools or automation.
The reality is this: every container, every PO, every vendor decision carries compliance risk. When those risks aren’t surfaced, measured, or managed, the exposure and cumulative risk compound..
Companies are increasingly becoming aware of how important it is to invest in compliance teams and systems that empower them to succeed. Systems that connect procurement with tax, logistics with legal, and ERP data with trade documentation. Systems that make compliance visible, automated, and audit-ready before it becomes a fire drill. Systems that protect the company from loss of brain trust are critical in this business climate.
Compliance is a cost center that is largely underfunded and understaffed. When processes are not canonized in code the rules for operating the business and addressing reporting requirements are uncontrolled. Losing key compliance resources is devastating, documentation can be lost and adaptation to changing requirements can be unmet. These risks impact a company’s total revenue and profitability in a multitude of ways. Factors range from lower customer retention, slower throughput and delivery, higher cost of audits and even complete loss of import privileges.
In a nutshell, trade compliance is a higher risk part of globalization. Visibility and the potential competitive leverage needs to extend beyond compliance to the C-Suite and boards of directors for the foreseeable future.
So, Who Owns Tariff Risk?
If you asked most enterprises five years ago who owned tariff compliance, the answer would’ve probably pointed straight to legal or tax. Today, that answer would be dangerously incomplete.
The truth is, tariff risk is now enterprise-wide and importers are bearing more responsibility than ever before. It’s not just about filing the right forms. It’s about proving eligibility and origin, often in real time.
At the heart of this accountability shift is the Substantial Transformation test. Under current U.S. law, importers must be able to demonstrate that a product has undergone a meaningful transformation that changes its name, character, or use. If you get that wrong (or can’t prove it) your goods could be reclassified at a higher duty rate, flagged for non-compliance, or held at the border in a bonded warehouse.
This is why importers can no longer afford to outsource or defer origin compliance. It’s on you. And the smartest companies are mitigating that risk by investing in Advanced Rulings with U.S. Customs and Border Protection (CBP).
An Advanced Ruling is essentially a pre-clearance mechanism: you submit documentation proving the origin and transformation of your goods, and CBP issues a formal determination before your shipment even arrives. This process dramatically reduces the likelihood of detainment, reclassification, or audit escalation while also speeding up customs clearance. Some enterprise software systems are directly integrated into the CBP for management of documentation, reporting and advanced rulings on products to be imported.
When your ERP and trade systems are integrated with CBP workflows, your team can automate classification, validate supplier data, and attach ruling references to customs entries, all in real time.
That’s why compliance now touches sales and order entry, procurement, finance, logistics, and IT. Every team involved in sourcing, pricing, selling, shipping, or reporting plays a role in reducing tariff exposure.
As Gartner emphasizes, companies that align trade risk planning across procurement, compliance, IT, and finance are 46% more likely to avoid regulatory penalties during tariff shifts.
The bottom line? If you’re an importer, you own the risk. And the fastest way to reduce it is through research, documentation, and proactive action, starting with Advanced Rulings. The key objective of these is to provide decisions on the classification, origin and valuation and disposition of commodities, assemblies or components prior to their importation or exportation, thus adding certainty and predictability to international trade and helping traders make informed decisions based on legally binding rulings.
What Proactive Companies Are Doing Now
While many organizations are still watching trade headlines and hoping for clarity, the most resilient ones aren’t waiting. They’re already acting.
They know the cost of hesitation:
- goods delayed in customs
- missed duty recovery opportunities
- mounting fines
Instead, they’re choosing to shift from reactive compliance to proactive control. Namely, they’re getting ahead in five key ways:
First, they’re investing in landed cost modeling. Not in spreadsheets, but in systems that simulate tariff changes by SKU, supplier, and region, giving CFOs and sourcing leads real-time visibility into how duties affect margin and total cost of ownership. It’s a strategic edge when every percentage point counts.
Second, they’re reassessing sourcing and supplier decisions with compliance in mind. Instead of chasing the lowest cost, they’re evaluating whether goods qualify under trade agreements, whether suppliers can provide valid origin documentation, and whether transformation criteria can be verified with confidence.
Third, they’re taking the guesswork out of customs classification through Advanced Ruling Requests with CBP. By proactively submitting documentation before the shipment is en route, companies are dramatically reducing processing time and avoiding penalties if CBP disputes the declared origin after the shipment has landed.
As more goods face scrutiny under Substantial Transformation requirements, importers are learning the hard way that the cost of not filing an advanced ruling is often higher than the duty itself.
Fourth, they’re equipping their compliance and trade teams with connected systems, especially platforms like Oracle Fusion GTM. These systems can validate certificates of origin, integrate with customs platforms, and support real-time audit trails. More importantly, they create a digital foundation that unifies procurement, legal, finance, and logistics around the same data.
Finally, and perhaps most critically, they’re changing the mindset. These companies treat compliance as a shared responsibility and a strategic enabler. They’re embedding compliance logic into sourcing decisions, into contract terms, into product development.
Prepare for What’s Coming
If you’ve made it this far, you already know the stakes.
Tariff volatility isn’t slowing down. Enforcement is ramping up. And compliance can be a strategic advantage (or a glaring liability) depending on how you handle it.
What you do in the next 90 days matters but this is only the start. This isn’t the time for a wait-and-see approach. It’s the time to evaluate your risk exposure, assess your systems, and take tangible steps toward resilience.
Start by asking:
- Can we confidently defend the country of origin and classification of our top-imported goods?
- Are our ERP and trade systems equipped to support CBP integration and advanced rulings?
- Do procurement and compliance work from the same data and assumptions?
- If a shipment were flagged tomorrow, how prepared would we be?
If the answer to any of those gives you pause, well, now’s the time to act.
At IT Convergence (ITC), we help enterprises modernize their global trade strategy by integrating Oracle Fusion GTM, automating tariff logic, and enabling end-to-end audit readiness across procurement, tax, and compliance teams. We help clients build infrastructure for smarter decisions and faster responses.
You don’t need to overhaul everything overnight. But you do need to move.
Start small. Get visibility. File an advanced ruling. Automate one risk-prone workflow. Begin.
Because in a world where customs decisions can shift in a headline, waiting to act means choosing to react. And by the time your goods are in a bonded warehouse waiting for clearance, it’s already too late.
Want to know where your organization stands?
Download our free “The 2025 Trade Compliance Playbook” eBook or book a strategy session with ITC’s experts.