The Trump administration’s upending of international trade with sweeping tariffs on American imports has sent financial markets into a tailspin. For treasury, resilient cash flow and effective working capital management to ensure enough money is on hand to support day to day operations is more essential than ever.

Treasury experts say tariffs will affect the cost of capital, but working capital solutions like supply chain finance, dynamic discounting and receivables finance can help mitigate the effect, as well as strategies to optimise inventory and strengthen collections.

As companies face less money on hand, many will try to hold on to their cash as long as they can, often resulting in payment delays. Days sales outstanding (how long it takes a company to collect payments) and days beyond term, which tracks how late a company pays its bills, are now key metrics treasurers will watch as tariffsn kick in.

Inventory has already started to move higher since automakers, industrial firms and retailers started to stockpile key products and components to get ahead of tariffs last year.

Other strategies include mapping supply chains including suppliers’ suppliers to reveal potential risk exposure to tariffs and retaliatory measures. Here firms can leverage data to track tariff changes and their immediate impact on costs, supply chains and sourcing strategies.

Still, changing suppliers is difficult as MNCs with supply chains in Vietnam, which has been slapped with 46% tariffs, know all too well.

“While the President touts ‘America First’ policies, this tariff plan overlooks its destructive impact it will have on the US manufacturers in our industry,” reflects Steve Lamar, President and CEO of America Apparel and Footwear Association which represents companies with operations in Vietnam like Nike. “These American companies depend on foreign inputs which have no, or very few, American substitutes. Tariffs will significantly increase the cost of manufacturing in the US, and, when paired with the retaliatory tariffs that will surely come, will undermine US export opportunities as well.”

Elsewhere treasury teams are weighing up the feasibility of passing costs onto customers through price adjustments all the while ensuring demand remains steady. It’s a trade-off between absorbing costs to support competitiveness and customer relationships or shifting costs along the value chain and risking potential volume loss.

MMFs offer liquidity in chaos

The ability to tap liquidity is an argument for investing in MMFs, suggests Deborah Cunningham, Executive Vice President, Chief Investment Officer, Global Liquidity Markets at Federated Hermes.

“The tariff-related market upheaval of recent weeks highlights the necessity for treasurers to consider carefully an allocation to money market funds as part of their cash management strategy. With same day liquidity, these products provide treasurers with the ability to access and deploy their cash during periods of considerable market volatility.”

Treasury experts also advocate the importance of proactive FX hedging, and access to multiple currencies to help firms navigate shifting trade conditions with greater flexibility.

“At a time when trade barriers can extend inventory cycles and tie up working capital, fast and cost-effective cross-border payments are critical to maintaining liquidity and reinvesting in growth,” argues Laurent Descout, CEO and co-founder at Neo, the next-generation digital bank.

Longer-term implications

Trump’s tariffs have thrown a spanner into the machinery of global M&A, with instability surrounding company valuations and numerous other factors causing deal flow to stagnate as the market continues to slump.

Expect new trading partnerships to emerge. Canada is seeking to trade more with Mexico and with Europe. Europe is looking for ways to trade more with other countries, particularly with China, for example. More open economies that depend on trade for growth (Ireland and Switzerland for example) will see growth rates hit but larger economies such as the eurozone are likely to see smaller adjustments to their growth rates. Europe will also still see upside from higher infrastructure and defence spending from 2026. APAC economies will also be supported by domestic demand momentum.

Goldman Sachs has raised the probability of a US recession from 35 per cent to 45 per cent and US inflation forecasts have spiked. “The impact on inflation in the near term will be significant,” write S&P Global.

Although China has retaliated with an additional 34% tariff on all US imports along with other measures, other countries are less inclined to retaliate so far.

Vietnam has offered to cut its import tariffs on the US to zero. Indonesian President Prabowo Subianto has also instructed his cabinet to look into reducing trade barriers to the US, and India has emphasised its focus on negotiations for a bilateral trade agreement with the US.

Taiwan’s presidential office released a statement saying it does not plan to retaliate and will be negotiating, emphasising the investments that its firms such as TSMC have already pledged to make in the US.

Neither will Singapore retaliate, and Malaysia has also opted not to retaliate and has called for a collective response from the regional bloc.

With an implementation schedule staggered throughout April and beyond, expect negotiations and uncertainty to continue.