Tariffs in effect: what it means for finance and how AP automation helps
Global trade uncertainty is no longer theoretical. With tariffs now taking effect on previously exempted goods, businesses face rising costs, shifting supply chains, and increasing complexity in accounts payable (AP) workflows.
AP automation has emerged as a critical tool for keeping operations efficient, ensuring accurate invoicing, and supporting strategic decision-making in this evolving landscape.
Let’s take a look at what’s happening and how AP is helping finance leaders stay ahead.
Then: before tariffs began
Before tariffs went live, the financial environment had its challenges, but some areas were more stable.
Stable costs and supply chains
Import costs and supplier contracts were largely consistent, enabling more predictable budgeting and cash flow.
Simpler AP processes
Invoices contained fewer line-item complexities, making approval and payment workflows straightforward.
Focused forecasting
Cash flow forecasting was more accurate and less susceptible to sudden changes.
Gradual process improvements
Teams could make incremental changes to AP efficiency without urgent pressure.
Now: tariffs in effect
With tariffs live, the business landscape looks different and is in a constant state of flux:
Rising costs and complexity
As of August 1, the effective U.S. tariff rate stands at 15.8%, up from 2.3% at the end of 2024. New tariffs on Canadian, South African, and Vietnamese goods are set to take effect, with sector-specific tariffs potentially pushing the effective rate closer to 18–20%. Uncertainty is still running high in industries like pharmaceuticals and electronics, where tariff hikes could significantly drive up landed costs.*
More complex AP workflows
Invoices now include duties, taxes, and freight charges. Tariff missteps can delay goods, trigger surprise fees, and strain supplier relationships.
Challenging cash flow forecasting:
Unforeseen fees and delays make it harder to predict cash needs, requiring real-time visibility.
Supply chain reconsiderations
Companies are reevaluating sourcing strategies, exploring alternative suppliers, or shifting production domestically. More businesses are turning to nearshoring or reshoring strategies to reduce risk. Supply chain volatility is causing issues like shipping delays, port congestion, and challenges with managing inventory.
| Metric | Before Tariffs | Now (2025) |
|---|---|---|
| Average effective U.S. tariff rate | 2.3%* | 15.8%* |
| AP invoice complexity | Low | High (duties, taxes, freight) |
| Cash flow forecasting | Predictable | Challenging |
| Supply chain strategies | Stable | Diversifying / nearshoring |
Watch Don Holm, Medius global VP of value consulting, highlight these four key drivers of trade uncertainty:
Reintroduction of tariffs on previously exempt goods
Rising input costs driven by inflation
Major sourcing shifts to avoid trade risk, including domestic production
Slower GDP growth across global markets
Impact on AP workflows:
- Invoices from global vendors are increasingly complex
- Tariff missteps can delay goods or trigger surprise fees
- Cash flow forecasting is more difficult than ever
How AP automation helps finance teams adapt
With tariffs in effect, manual invoice processing and outdated AP systems create real bottlenecks:
- Staff spend excessive time on data entry instead of strategic analysis
- Invoice errors can cause costly delays and strain supplier relationships
- Missed payment discounts and late fees are more common
- Support for diverse invoice formats, tax rules, and local compliance, which is necessary with global suppliers
- Validate line items for duties, taxes, and freight charges automatically
- Reduce labor hours and prevent duplicate payments or fraud
- Strengthen supplier relationships with timely, accurate payments
- Quickly onboard new vendors and adapt sourcing strategies seamlessly
- Gain visibility into global spend for better cash flow management
- Easily connect with procurement and ERP systems for a smooth switch to new sourcing strategies without setbacks
- Real-time tracking of spend across suppliers, regions, and currencies
- Accurate landed-cost insights, including tariffs, duties, and freight
- Better forecasting to optimize working capital and payment timing
- Proactive risk management
By automating these processes, finance teams can shift from reactive problem-solving to proactive decision-making, ensuring that tariffs and trade disruptions don’t derail operations.
Are your AP operations tariff ready?
Looking ahead
Tariffs and trade policies can continually change. Businesses that invest in AP automation can stay agile, reduce risks, and protect their margins. On the other hand, sticking with manual processes could mean more delays, mistakes, and higher costs.
Key takeaways for finance leaders
Visibility is critical
Automation gives detailed insight into AP data for better decision-making.
Adaptability is essential
Automated systems allow quick responses to supplier and sourcing changes.
Supplier relationships matter
On-time, accurate payments and strategic negotiation reduce risk.
AP drives strategy
Beyond efficiency, AP automation empowers finance teams to proactively manage costs, optimize cash flow, and strengthen financial resilience.
With the right AP tools, finance teams can turn tariff uncertainty into a chance to improve operations, gain a strategic edge, and drive long-term growth.
*Source: US Tariffs: What’s the Impact? | J.P. Morgan Global Research
