As the 90-day pause on country-specific tariffs ends in July 2025, a strategic focus on which companies are built for resilience could be more constructive than succumbing to short-term anxieties.

Here, we highlight some characteristics of companies that could be better positioned to weather the shifting tides of trade policy.

1. Pricing power:

    

   There are several factors that can give a company pricing power. It may be because they provide essential goods or have a fiercely loyal customer base due to strong branding or product differentiation.

   Other companies might have pricing power built into their contracts. This is often the case in the defence industry where many contracts are typically on a ‘cost-plus’ basis.

   Supply and demand dynamics will also dictate the level of pricing power. If goods or services are in high demand, prices will adjust to compensate. 

    

2. Cost absorption:

    

   If a company cannot pass on a price rise, they may be able – or choose – to absorb costs. Absorbing costs can help maintain customer loyalty and demand.

   Companies operating in industries with strong and stable margins are typically better placed to absorb cost increases. However, even companies in industries with lower margins may choose to not pass on costs. An example is food chain Chipotle, which announced that it will absorb the higher costs associated with Mexican imports, such as avocados. Its aim is to limit disruption to its customers, defend market share and remain competitive.

    

3. Supply chain adjustment:

    

   Companies that can shift their supply chains in response to higher tariffs may have a strategic advantage. Solutions include sourcing materials from countries with lower tariffs, increasing domestic production or building local manufacturing capabilities to serve their end markets. 

   Multinationals tend to be quite agile at adjusting their supply chains. Often, they function as ‘multi-local’ companies with localised supply chains and manufacturing capabilities within key markets. This means they enjoy the benefits of having global reach – economies of scale, diversified customer bases, global brand recognition – but have the assets and resources to respond to local consumers and regulations.

    

4. Industry dynamics:

    

   The type of industry a company operates in may influence how exposed it is to tariffs. For example, companies in the industrial sector often import low-margin components and add value domestically, and are therefore in a better position to weather tariffs.

   The auto sector, by contrast, appears more vulnerable to tariffs but even within this industry, some companies are better positioned. Tesla has adopted a vertically integrated manufacturing strategy and diversified production capabilities, which potentially helps it navigate some of the tariff headwinds.

The shifting terrain of trade policies underscores the importance of research on a stock-by-stock basis. This enables portfolio managers and analysts to identify fundamentally strong, adaptable enterprises that can navigate challenges in the short-term to prosper in the long term.