Navigating the Escalating Trade War: Advanced Pricing Strategies

Last month, we explored the initial impact of the new U.S. tariffs in our post, “Navigating Tariff Increases: Future-Proof Your Pricing Strategy“. Since then, the situation has evolved into a broader trade war, with President Trump’s administration implementing a 25% tariff on imports from Canada and Mexico, a 10% tariff on energy resources from Canada, and an additional 10% tariff on Chinese imports as of February 2025.

These measures, aimed at protecting domestic industries, have triggered retaliatory actions and heightened economic uncertainty. For businesses caught in this storm, adapting swiftly and strategically is no longer optional—it’s essential.

In this follow-up, we dive deeper into advanced strategies to thrive amid escalating trade tensions, spotlighting how PROS Smart Price Optimization and Management software can be your compass in these choppy waters.

The Trade War Intensifies: A Pricing Wake-Up Call

The latest tariffs amplify the challenges we outlined previously: rising costs, disrupted supply chains, and shifting competitive dynamics. Canada and Mexico, key U.S. trading partners, now face steep duties, while China’s additional tariffs compound existing pressures from prior Section 301 measures. Retaliatory tariffs from affected nations are already emerging, squeezing margins further and threatening market share.

For industries like manufacturing, automotive, and retail—where import reliance is high—the stakes are even higher. Manual pricing adjustments or static strategies simply can’t keep pace with this level of volatility. This is where PROS steps in, offering AI-driven tools to transform chaos into opportunity.

Advanced Strategies to Counter the Trade War

Building on our earlier advice—such as leveraging real-time pricing and scenario planning—here are three additional strategies to stay ahead, all empowered by PROS cutting-edge solutions:

1. Dynamic Cost Pass-Through with Precision
   As tariffs pile on costs, deciding how much to pass through to customers is a delicate balance. Pass too little, and margins erode; pass too much, and you risk losing price-sensitive buyers. PROS Smart Price Optimization and Management uses real-time data and AI to analyze cost changes and price elasticity.

2. Segmented Pricing for Strategic Resilience
   Not all customers feel tariff impacts equally. Long-term contracts, strategic partnerships, or regional differences demand tailored approaches. The PROS Platform enables granular responses—increasing prices where there is less risk while absorbing costs for price-sensitive segments.
   Imagine an electronics distributor hit by Chinese tariffs: PROS can help maintain aggressive pricing on popular models to retain market share, while subtly increasing prices on premium lines where demand is inelastic. This flexibility turns a blunt cost challenge into a nuanced growth strategy.
3. Predictive Analytics to Anticipate Retaliation
   Trade wars are tit-for-tat by nature. As Canada, Mexico, and China respond with their own tariffs, new cost pressures and market shifts will emerge. PROS AI-driven solutions predict these ripple effects, letting you proactively adjust pricing and sourcing.
   For instance, if Canada retaliates with tariffs on U.S. agricultural exports, a food supplier can use PROS to simulate the impact on raw material costs and preemptively optimize prices before competitors react. Staying one step ahead is how leaders win in uncertainty.

How PROS Can Help

The common thread in these strategies? Speed, accuracy, and adaptability—qualities manual processes can’t deliver in a trade war. PROS price management and optimization solution is purpose-built for this moment:

• Real-Time Agility: Instantly reflect tariff-driven cost changes across thousands of SKUs, ensuring your pricing stays market-relevant.
• AI-Powered Insights with Forecasting: Unlike static segmentation tools that rely solely on historical data, PROS integrates predictive forecasting into its optimization engine. This proven capability anticipates market movements—think tariff retaliations or supply chain shifts—enabling smarter, proactive pricing that outperforms traditional history-based methods.
• Scalable Execution: Harmonize pricing across channels—eCommerce, B2B sales, and beyond—so your strategy holds firm as trade policies shift.

We have a long history of helping our companies deal with volatility. Take it from Darius Adamczyk, Chairman and CEO of Honeywell, who faced similar cost volatility during the pandemic. In their Q3 2020 earnings call, he noted,

Honeywell’s success with PROS pricing software underscores their power to turn cost chaos into control—a lesson that applies directly to today’s tariff-driven challenges. Other clients see similar results: a food ingredients manufacturer achieved a 2% margin improvement amid volatile commodity prices, while an office supply distributor leveraged PROS for a $74M revenue uplift. In a trade war, the right technology doesn’t just mitigate risk—it creates advantage.

Future-Proofing Beyond the Horizon

The current trade war may escalate further or pivot unpredictably. What’s certain is that businesses relying on outdated pricing methods will struggle to keep up. PROS equips you not just to survive today’s tariffs, but to thrive through whatever comes next—be it new trade barriers, supply chain shocks, or shifting buyer behaviors.

By embedding AI-driven price optimization into your strategy, you’re not reacting to the trade war—you’re redefining how to win it.

Frequently Asked Questions