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Recent tariff threats and escalating trade tensions are forcing technology firms to rethink cost structures, pricing strategies, and long-term investment plans. According to the KPMG Tariff Business Impact survey, a large majority of companies face direct hits to profitability and shifting consumer demand as a result of tariff pressure.
Amid these challenges, Andrew Siciliano, Leader of the U.S. and Global Trade & Customs Practice at KPMG, notes that while companies cannot control policy shifts, they can strengthen resilience through strategic scenario planning and cross-functional coordination.
Tech Firms Face Deepening Cost Pressures
The survey shows that technology firms are among the most exposed to rising tariff costs, particularly in categories such as semiconductors and products containing chips like smartphones and laptops. Roughly 32% of all surveyed companies report gross margins declining by 1–5%, and another 22% have seen margins decrease by 6–10%.
Siciliano highlights why this matters: semiconductors remain central not just to finished products but to supply chains themselves, making them especially vulnerable to new tariffs under the Section 232 investigation, which could be implemented in early August.
Passing Costs vs. Protecting Demand
The KPMG survey report shows that more than 80% of companies anticipate price increases over the next six months, driven by rising input costs. However, passing costs to customers is proving increasingly difficult: while firms have passed up to 50% of tariff costs to date, 73% cite customer pushback and sales declines as a major challenge. Sales in foreign markets, particularly China, have also fallen sharply, with 83% of firms reporting lower sales there.
Adding context to these figures, Siciliano explains, “Many tariffs are expected to be passed on, but how much and which products will depend on many factors including competition and price elasticity.” For many tech companies, this means balancing selective price increases on high-margin products with absorbing or negotiating costs elsewhere.
Scenario Planning and Cross-Functional Modeling
The survey data identifies trade scenario planning as a top priority for CFOs and finance teams seeking to understand potential exposure. Companies are increasingly running multi-jurisdictional models to forecast the combined impact of tariffs, tax, VAT, and transfer pricing.
As Siciliano describes it, “Trade vs. Tax scenario planning is a major topic as companies are exploring moving IP, software, R&D and other areas.” In some cases, firms are prioritizing tariff mitigation over traditional tax optimization, recognizing that tariff costs can outweigh tax savings when policy changes happen quickly.
Delays in Investment and Supply Chain Shifts
One of the most striking survey findings is that over half of companies have postponed major capital investments by up to a year due to tariff uncertainty. This includes delaying upgrades to manufacturing, R&D, and market expansion efforts.
While 69% believe reshoring production to the U.S. is feasible, most estimate it would take at least one to two years, this is largely due to higher labor costs, operating expenses, and necessary capital investment. Even when companies want to pivot quickly, 46% say significant supply chain changes require 7–12 months to implement.
Leveraging Data and Automation Instead of Cuts
Rather than relying on immediate cost-cutting through workforce reductions, many companies are investing in automation and data-driven tools to protect margins. The survey shows strong adoption of AI-driven demand forecasting, inventory optimization, and customs analytics as part of this strategy. By improving accuracy in demand planning and reducing overpayments in customs processes, firms can buffer against unpredictable tariff costs.
Looking Ahead
For business leaders and strategists, the KPMG Tariff Business Impact survey offers a insights on how tariffs have become a multi-dimensional risk shaping everything from pricing and supply chains to capital allocation. The data underscores the importance of cross-functional planning and a measured approach to price increases, combined with long-term digital investment.
As Siciliano adds, “CFOs are continuously modeling the expected tariff costs and scenario planning based on the potential tariff increases by country and/or sector.” This alignment of trade, tax, and operational strategy is what will ultimately help businesses navigate an increasingly volatile policy landscape.