US Trade Policies: Tips for Treasury Management for Multinational Corporations

With Donald Trump’s return to the White House, the US economic agenda undergoes a dramatic shift that resonates with a massive echo across the world. The ‘America first’ protectionist approach, changes to trade policies including a spike in tariffs and an increase in domestic manufacturing will all shake up the global economy and alter how multinational businesses approach cash flow and liquidity management as well as risk appetite across their global operations. Finance and treasury leaders need to be prepared for those upcoming changes with a full understanding of potential implications. In this article, we explore in detail the new US Trade Policies, their impact on corporate treasuries and present effective strategies to minimise their negative impact on normal financial operations.

The past decade has not been easy on global trade or the economy- Brexit, the global pandemic, global supply chain disruptions and political conflicts. Treasury and finance departments have faced uncertainty around cross-border transactions and capital flows, currency volatility, deepening regulatory divergence across markets and tariff structures, as well as pressures to improve working capital under strained supply chains.

Trump’s return to office is set to shake things up further as his administration has already declared its intent to implement substantial trade tariffs, with particular focus on trade relationships with China, the European Union, and neighbouring countries like Canada and Mexico. Businesses with global footprints should observe changes to these policies closely as they represent both a challenge and an opportunity.

For multinational corporations with complex global footprints, these policy shifts represent both significant challenges and strategic opportunities. A mix of built-up of nearly a decade of volatility and uncertainty, now fuelled further by the US, has pushed treasury and finance leaders to take a closer look at their response frameworks and approaches to liquidity management, risk mitigation and forecasting to survive and perhaps even thrive in this perfect storm. Both are possible.

1. Tiered Effects of Tariffs Across Industry and Geography

The potential new tariffs will not have the same impact across all regions or sectors – businesses need to therefore conduct a thorough check to understand the exposure levels through their corporate structure. Industries such as automotive, consumer goods and electronics, have long supply chains which may lead to extra complexity in figuring out the tariffs as materials will pass multiple borders before reaching the end consumer.

As an example, for UK-based multinationals with US subsidiaries, the tariff impact creates a multi-layered effect:

Direct tariff costs on imports to US operations

Indirect effects on supplier pricing as supply chains adjust

Competitive implications as market dynamics shift

Secondary impacts from retaliatory tariffs imposed by other nations

While time-consuming, treasury teams should look at each industry individually to develop specific models, quantify exposure at each subsidiary level, and feed into a consolidated view of corporate exposure. This project will require close collaboration with procurement, operations, and sales teams to gather accurate data on sourcing patterns and market dependencies.

2. Cash Flow Forecasting During Policy Transitions

With changes to the trade policies come issues with longer-term forecasts. This is because historical patterns become unreliable or don’t apply anymore, and models need to adjust to new realities as payment terms and supply chains experience shifts. Forecasting is still essential to maintain solid liquidity buffers and optimise working capital so in the midst of the economic whirlwind there are a couple of strategies you can implement:

Shortening periods for forecasts and building re-forecasting cycles to improve accuracy in volatile periods

Using early warning systems and notifications for cash flow disruptions and automatic rebalancing tools

Building more scenarios with different assumptions

Incorporating leading indicators of policy changes into forecasting models

4. Methodologies for Quantifying Tariff Impacts

Measuring the impact of tariffs goes beyond a cost calculation. Finance and treasury departments need to work cross-functionally and develop robust assessments that capture both direct and indirect effects. The methodology of tariff impact should include:

Calculating the direct costs resulting from import volumes and announced rates.
Assessment of the increase in supplier costs as they go through the supply chain

Conducting demand elasticity modelling to test how adjusting pricing in different markets may affect sales. This can be combined with the assessment of competitors’ pricing in different regions.

Measuring the impact of changes to inventory, payment terms and cash conversion cycles on the working capital.

Going back to our example of a UK-based company operating in the US, measuring the impact of the tariffs may include: how much the 25% tariff on European components will increase the cost of products assembled in America and how the European competitors importing to the US may be affected by the same tariffs.

5. Working Capital Requirements in Tariff Transition Period

Changing tariffs are likely to bring major changes to how working capital is managed to ensure ongoing stability. Businesses are likely to have to rely on higher inventory stocks to buffer themselves against any disruptions in the supply chain, even by 20–30%, which will inevitably hit the working capital. Simultaneously, they may also face higher costs of raw materials due to overall volatility. On the operations side, collections will likely be accelerated to improve cash positions while supplier payment terms may be extended, and there will be more letters of credit usage when working with new suppliers to ensure stability.

Working Capital Implications of Supply Chain Restructuring

Changing trade policies will also force a lot of cross-border businesses to re-assess their supply chain networks and restructure, which inevitably will require significant working capital investment. The restructuring may involve reshoring, nearshoring or diversification, and all of those require capital expenditure for equipment, staff and inventory build-up.

Other implications of restructuring are cash flow timing differences as supply lines lengthen or shorten and the impact of changing or terminating relationships with suppliers. In order to smoothly transition, treasury departments need to create dedicated pockets of working capital to fund the supply chain restructuring without compromising day-to-day operations. For example, establishing specific revolving credit facilities earmarked for supply chain transformation ensures operational continuity while enabling strategic flexibility.

Supplier Payment Terms Optimisation

Another consideration on the supplier side is optimising the payment terms. Treasurers need to look at it strategically and consider how new tariffs flow through the entire supply chain.

Here are some steps to improve supplier payment terms:

Segment the suppliers based on their exposure to tariffs and strategic importance

Create payment term transition plans that align with supply chain transformation timelines

Leverage early payment discounts to offset tariff-related cost increases

Where possible, implement dynamic payment terms tied to specific policy triggers

Develop supplier finance programmes that provide liquidity options

Cross-Border Pooling Structures for Policy Flexibility

During the upcoming period of regulatory and economic transitions, traditional liquidity management may not be enough to ensure stability and performance. Treasury departments should look into developing more flexible, cross-border pooling arrangements not only to survive but perhaps, thrive under the uncertain times of policy volatility.

Flexibility should stay at the core of any pooling structure from now onwards to accommodate any policy shifts – this may include creating or maintaining multi-tiered pooling structures involving multiple jurisdictions. Businesses should also consider developing contingency plans for rapid reallocations of funds or alternative funding channels for affected subsidiaries.

A viable solution: In-House Banking

In-house banking solutions are on the upswing to address the new trade and policy realities. These treasury tools are providing businesses with complete visibility into liquidity positions, as well as centralised control over intercompany funding, lending, and risk management. As trade policies impact internal supply chains and intercompany transactions, other useful solutions delivered by in-house banking are hedging tools to minimise FX exposure, automated settlements for cross-border intercompany transactions and internal funding workflows that reduce external borrowing needs.

Liquidity Stress Testing Frameworks

Once new liquidity processes are in place, the last piece of the puzzle is stress-testing them to see how different policy scenarios might impact cash flow, funding requirements, and liquidity positions across the organisation. As part of the stress testing you might want to consider:

Scenario modelling based on tariff changes and their timing

Supply chain disruption simulations and their impact on cash flow

Counterparty risk assessments under different trade policy scenarios

It is also recommended to run a combined stress test that simultaneously layers multiple risk factors, as well as reverse testing to find breaking points in liquidity structures. With adequate testing, treasury departments can adjust liquidity buffers and funding arrangements to maintain adequate flexibility.

How exactly the US trade policies will evolve under the ‘America First’ agenda and their precise impact on the global economy and treasury departments remains to be seen in the next months and years as the tariffs begin their rollout. Organisations will need to adjust their technology, supply chains, liquidity management processes – all of which requires major shifts and capital investments.

Without preparation ahead of time on the treasury side, however, cross-border businesses might experience significant financial losses and operational disruptions. A proactive approach, on the other hand, will allow them to take advantage of the changes as they happen and be more agile in the volatile environment when some of the competitors might not be as prepared.

Modernising treasury technology represents a significant opportunity for multi-subsidiary businesses to enhance efficiency, improve decision-making, and contribute more strategically to wider organisational success. Understanding common barriers and implementing proven strategies to overcome them, will help treasury leaders navigate the implementation journey with more confidence and realise the full potential of the new, powerful tools.

The path to successful treasury technology adoption may not be straightforward, but with careful planning, stakeholder engagement, vendor selection and a phased approach, organisations can transform their treasury functions into strategic assets that drive business value.