Introduction
Import tariffs have become an increasingly important tool in global economic strategy, particularly amid rising geopolitical tensions. While traditionally used to protect domestic industries, tariffs are now employed as leverage in broader policy negotiations. The recent re-emergence of tariff policies may have long-lasting effects on global value chains, consumer and industrial confidence, and economic growth, significantly impacting how businesses operate and how they are valued.

Tariff escalation: a new reality for business valuation
Indeed, the recent announcements regarding global import tariffs are disrupting financial markets. Market indexes have declined, the US dollar has weakened, and commodity prices—particularly gold and oil—have reacted with volatility. In this climate, investors show more risk-aversion, while uncertainty shows no sign of easing.

Valuation models must reflect today’s uncertainty
Therefore, businesses and investors must reassess their valuation frameworks. Traditional models that rely on stable assumptions may no longer be sufficient. The financial projections underpinning a company’s valuation must now include the potential impacts of tariff escalation. Incorporating diverse trade and macroeconomic scenarios helps decision-makers better anticipate risks and build resilience in their pricing strategies.

Navigating valuations in a turbulent world means:

understanding the bigger economic picture,
scrutinizing whether the business plan is up to date and addresses the uncertainties,
making sure to apply multiple scenarios,
adjust the discount rate when inputs are weak; and
address long term uncertainty in your terminal value assumption.

Not all sectors are affected equally
The impact of tariffs on sectors is uneven and wide dispersion exists. For instance, the industrials sector is the best performing sector year-to-day, driven by infrastructure investment and supply chain diversification. In contrast, healthcare and consumer discretionary businesses, especially those sustained by cross-border sourcing, are under pressure. Global trade and supply chain disruptions, lower demand in some subsectors, and rising input costs lead to potential for shrinking margins.

How Eight Advisory can support you
Our professionals use sophisticated financial modelling tools and scenario planning techniques to assess the impact of tariff changes on valuations and guide clients through these complex dynamics.

Download our whitepaper to explore our insights and practical guidances.