A Tariff Is Not Just a Government Decision. It Can Rewrite a Company's Growth Strategy

Most founders treat tariffs as background noise: something governments negotiate, journalists report, and economists argue about. Until a single announcement changes the price of their product in their biggest market overnight.

The last eighteen months have shown, as clearly as any period I can remember, that a tariff is not only a policy decision. For a company that sells across borders, it can rewrite pricing, margins, customer relationships and even which markets are worth pursuing. This article is not a judgement on any government's trade policy. It is about what businesses can learn from the volatility.

What actually happened: the facts

The most dramatic recent example for Indian exporters is the United States. According to a PTI timeline published by The Hindu BusinessLine:

• On 2 April 2025, the US announced a 26% additional tariff on Indian goods (a 10% baseline plus 16% "reciprocal"); the reciprocal part was suspended a week later, leaving 10%.
• From 7 August 2025, a 25% duty applied, and an additional 25% was announced on 6 August 2025, taking the additional duty on most Indian goods to 50% by 27 August 2025.
• In February 2026, the two countries announced a framework for a first-phase trade agreement, the US rescinded the additional 25%, and on 20 February the US Supreme Court struck down the reciprocal-tariff system.
• A temporary 10% global tariff followed from 24 February 2026, and when it expired on 24 July 2026 the US imposed a 10% tariff on India under Section 301. Sector-specific duties, such as 50% on steel and aluminium, continue separately.

As of mid-October 2026, The Hindu reported that the first tranche of a bilateral trade deal had been described by India's Commerce Minister as "finalised" but not yet implemented, and that a separate US investigation could lead to further tariffs.

Tariffs are also moving in the other direction, and in other forms:

• The UK government's summary of the India–UK trade agreement says tariffs will be eliminated on 99% of Indian goods entering the UK; the agreement entered into force on 15 July 2026.
• The EU's Carbon Border Adjustment Mechanism (CBAM) entered its definitive regime on 1 January 2026. EU importers of covered goods such as steel, aluminium and cement must now be authorised, account for the emissions embedded in those goods and, from 2027, buy and surrender certificates to cover them. It is not called a tariff, but for an exporter it behaves like a cost at the border.

Why this matters for strategy: my view

What follows is analysis and opinion.

1. A tariff changes who wins, not just what things cost. When an extra duty applies to one country's goods but not to a competitor's, the buyer's decision changes. A product that was competitive at one rate may be uncompetitive at another, regardless of its quality. Exporters are not only competing with each other; they are competing within the tariff schedule.

2. The cost of a tariff is rarely shared evenly. Someone absorbs it: the exporter through lower margins, the importer, or the end customer through higher prices. Which of these happens depends on bargaining power. Businesses with a differentiated product and loyal buyers tend to pass on more of it. Businesses selling commodities usually absorb it.

3. Volatility can be more damaging than the rate itself. A predictable 10% tariff can be planned around. A rate that moves from 10% to 50% and back within a year makes buyers hesitate, delays orders and pushes customers to look for "safer" suppliers. Uncertainty is a cost in its own right.

4. Market concentration is a strategic risk. A company that earns most of its export revenue from one country has, in effect, made a bet on that country's trade policy. That may be a reasonable bet, but it should be a conscious one.

5. Non-tariff measures are becoming the new tariffs. Carbon reporting, product standards, labour-related rules and origin requirements increasingly decide market access. Companies that can document their supply chains will have an advantage over those that cannot.

Five ways to build a tariff-resilient business

These are strategic ideas to discuss with your team and advisers, not legal, tax or investment advice.

1. Run scenarios before you need them. Model your margins at different tariff levels in each major market. Know in advance at what rate a market stops being profitable, and what you would do then.
2. Diversify deliberately. Trade agreements now in force with the UAE, the UK and the EFTA countries, among others, create alternatives. A second or third market will not replace a large one overnight, but it reduces the damage when one door narrows.
3. Master rules of origin. Preferential tariffs under trade agreements apply only to goods that qualify as "originating". Understanding these rules, and documenting compliance, is where much of the real benefit of an agreement sits.
4. Write tariff risk into contracts. Agree with buyers, using standard ICC Incoterms rules and explicit clauses, who carries import duties and what happens if they change. Ambiguity here turns policy shocks into disputes.
5. Invest in data about your own supply chain. Measure emissions, map suppliers and keep origin records. CBAM is a signal that this information is becoming part of the price of entry to some markets.

The bigger point

For a long time, Indian founders could think of trade policy as something that happened to large exporters and industrial groups. That is no longer true. A software company with hardware components, a food brand selling to the diaspora, or a manufacturer supplying a European customer can all find their economics changed by decisions made in other capitals.

The founders who handle this best will not be the ones who predict every policy move. Nobody can. They will be the ones who build businesses with enough options, diversification and information to adapt quickly when the rules change.

A tariff is a government decision. How a company responds to it is a strategic one.

This article reflects my personal views and is not investment, legal or tax advice. Tariff rates and trade arrangements change frequently; always check current official sources before making decisions.