06 Jun How to mitigate the impact of global tariffs on the profitability of an international subsidiary
A volatile and structurally uncertain tariff environment
Since early 2025, international trade policy has become markedly more protectionist, with significantly higher levels of instability than those seen in 2018–2019.
The re-election of Donald Trump as President of the United States has reignited an economic agenda focused on protecting the domestic market through import tax pressures:
- On April 2, 2025, the new administration announced a general 10% tariff on all imports, with additional percentages based on country of origin. Subsequently, a specific 145% tariff was imposed on Chinese-origin products, particularly targeting strategic sectors like electric vehicles and electronics.
- China responded with a retaliatory tariff package of 125% and new restrictions on critical tech exports, including rare earth minerals.
This scenario has created constant volatility: announcements, moratoriums, changing percentages, and even retroactive tariff applications. As a result, international companies are facing an unprecedented level of legal and operational uncertainty.
How do tariffs affect operational profitability?
Tariffs impact more than just customs costs. They directly threaten margin structures and operational continuity:
- Increased procurement costs:For example, a subsidiary in Spain importing parts from Asia may face additional tariff costs ranging from 12% to 18%, depending on the TARIC classification (Integrated Tariff of the European Communities).
- Erosion of operating margins (EBIT): An industrial SME may see a worrying contraction in its operating margin due to tariffs on Chinese electronic components (as documented by the Cambra de Comerç de Barcelona)
- Loss of relative competitiveness: Companies based in free trade zones or with optimized logistics structures maintain more stable pricing, displacing those still operating with traditional supply flows.
Effective strategies to mitigate tariff risk
Tariff risk mitigation is not just a fiscal issue, it’s a key component of operational design. A successful response requires a mix of customs tactics, logistical redesign, and strategic vision.
1. Supply chain redesign
- Implement models such as “China+1” or “China+LatAm” to diversify country risk while identifying other competitive markets that meet quality and production standards.
- Use intermediary logistics hubs in countries with preferential trade agreements (e.g., Mexico – USMCA, Morocco – Euro-Mediterranean Agreement).
- Outsource assembly to destinations with bilateral agreements with the EU or the US.
2. Aplicación de tratados comerciales multilaterales
- Leverage agreements such as UE-MERCOSUR, EU-Singapore, or EU-South Korea to reconfigure import routes without tariffs.
- Manage EUR.1 certificates more efficiently to certify preferential origin and avoid extra tariff burdens.
3. Free Trade Zones
Use infrastructures like the Barcelona Free Trade Zone or Montevideo Free Trade Zone to defer or eliminate tariff obligations until final distribution.
4. Optimized tariff classification
- Conduct expert analysis of product TARIC/HTS codes:
- Example: A particular industrial subcomponent may go from a 12.5% to a 4.5% tariff with a well-reasoned reclassification.
- Example: A particular industrial subcomponent may go from a 12.5% to a 4.5% tariff with a well-reasoned reclassification.
What does Biznelp offer in this context?
Biznelp works with international companies operating in Spain and Latin America, helping them optimize costs by delegating operations.
In the current context of tariff pressure and global commercial reconfiguration, we serve as an operational structure that enables companies to quickly and efficiently implement their strategic decisions.
Additionally, when needed, and thanks to our local network, we can connect you with specialized experts to assist or guide the decision-making process.
Speed of implementation and confidence in proper control and oversight are key success factors.
Having a trusted partner in the market where the subsidiary operates can make a significant difference in terms of flexibility, adding local know-how to execute under a delegated management framework.
Conclusion: In times of tariff pressure, operational agility is key
In an environment where regulatory changes are implemented with little notice, the difference lies not just in analysis, but in the ability to act swiftly and flawlessly.
Biznelp specializes in execution.
We act as your delegated team on the ground, putting necessary measures in place efficiently and under direct control.
Because today, mitigating risk is not enough. You need to react with agility, structure, and local expertise.
👉 If your subsidiary needs to adapt to new trade challenges, trust Biznelp to optimize your operational management. Contact us!
No Comments