The Tariff Volatility Headache for the C-Suites in 2025
Global trade is undergoing a seismic shift. What was once a manageable, back-office function is now a board-level concern, as companies face unprecedented complexity in complying with evolving tariffs and cross-border regulations. According to Gartner, 75% of organizations will experience increased trade compliance risk due to volatile tariffs, regionalization of supply chains, and reactive regulatory policies by 2026.
But it’s not just about the tariffs. Jurisdictional tax reform, such as Brazil’s overhaul of its consumption tax system, adds another layer of complexity, with implications that ripple across sourcing, finance, and IT. For organizations still relying on manual compliance processes, the convergence of trade and tax reform is not only unsustainable, it’s risky and expensive. As the tariff landscape continues to evolve, more countries will need to adopt alternative sources of revenue, such as new tax schemes.
The true cost of manual tariff compliance isn’t always obvious. It hides in IT maintenance budgets, in hours spent recalculating origin thresholds, in delayed shipments due to missed advanced rulings, and in sleepless nights before audits. In this article, we break down the silent IT and operational costs of manual trade compliance and explain why now is the time to modernize.
Hidden Cost #1: Fragmented Systems, Disconnected Compliance, and Tax Risk
Global enterprises often manage trade compliance with a scattered toolkit: outdated ERP modules, spreadsheets, email-based workflows, and disconnected databases. This patchwork makes it nearly impossible to maintain synchronized compliance logic across sourcing, tax, and regulatory frameworks, especially when tariff schemes and tax codes are shifting beneath your feet.
Take Brazil’s sweeping tax reform, for example. It aims to simplify the tax code by consolidating several federal and state-level taxes into a dual VAT system (CBS and IBS), but in the near term, it’s introducing a flood of new reporting and calculation requirements that must align with customs and tariff documentation. For IT teams, this means reconfiguring logic across multiple platforms to match jurisdictional rules without breaking existing trade workflows. Dynamic change challenges the ability of disparate systems to maintain compliance and auditability.
Companies using legacy systems like Oracle E-Business Suite’s International Trade Management (EBS ITM) are particularly vulnerable. These systems require manual updates, high cost upgrades to capture new functions and features, making it nearly impossible to keep up with ongoing changes. They also lack the automation needed to align trade compliance with global tax exposure models or simulate the cost implications of new sourcing decisions in real time.
When data lives in silos, compliance suffers. According to a recent EY study, 66% of global companies say their trade and tax functions are not well integrated, leading to duplicated effort, inconsistent reporting, and missed risk signals. Worse, these manual gaps open the door to audit exposure, delayed clearances, and in extreme cases, blocked shipments or revoked trade privileges. Fortunately, Oracle’s Global Trade Management tool has integrations directly with many tier ERP systems in the market today. This helps to overcome these challenges and keeps your compliance team on a single platform regardless of the number and brand of ERP systems your departments or portfolio of companies is operating.
Hidden Cost #2: Excessive Time Spent on Origin Determination and Value-Add Calculations
For global organizations, proving the country of origin isn’t as simple as pointing to a label. Under today’s preferential and non-preferential trade agreements, determining origin involves a sophisticated analysis of where goods were transformed, how much value was added, and whether the transformation meets substantial legal thresholds.
The issue? Most companies are still calculating this manually, using spreadsheets and siloed supplier records that lack traceability. For businesses with complex multi-tier supply chains, this creates not only an enormous operational burden, but also a compliance liability.
Why Rules of Origin Are So Hard (And Getting Harder)
Regulators like U.S. Customs and Border Protection (CBP) and the EU Commission require detailed documentation proving “substantial transformation” or meeting minimum local content thresholds. Depending on the agreement, businesses must apply specific valuation methods such as the Net Cost Method, Build-Up, or Build-Down approaches to determine if the value-added portion qualifies the product under trade agreements.
For example:
- Manufacturers assembling components from multiple countries need to calculate whether transformation occurred in a way that meets regulatory thresholds.
- Automotive companies might have different rules depending on the part’s origin, function, and end-market.
- Pharma and life sciences firms must adhere to sector-specific thresholds in highly regulated jurisdictions.
This process becomes even more complicated when supply chains shift frequently in response to tariffs, availability, or geopolitical conditions, as we’ve seen with reshoring trends and nearshoring strategies across LATAM and APAC.
Manual ≠ Scalable
Calculating these origin metrics manually can take days, if not weeks, for a single product line. It also introduces risk of human error, inconsistent interpretation of rules, and incomplete audit trails. Worse, many companies don’t know that origin documentation must be retained and traceable across years in some jurisdictions.
According to Gartner, “most enterprises underestimate the risk exposure from misclassifying origin or misreporting value-add, both of which can lead to fines, shipment holds, or even criminal penalties” (Gartner, G00826687).
And the moment you factor in sector-specific configurations and frequent supply changes, manual methods fall apart.
Hidden Cost #3: Missed Opportunities from Lack of Advanced Rulings
When businesses delay or overlook the process of securing advanced rulings for customs classification, valuation, or origin determination, they risk more than regulatory headaches…they jeopardize operational continuity.
An advanced ruling is a binding decision from customs authorities (like CBP in the U.S.) that provides legal clarity before goods arrive. These rulings are vital for reducing tariff exposure, avoiding shipment delays, and ensuring predictable landed costs. But when pursued manually, or worse, not at all, companies open the door to last-minute rejections, penalty reclassification, or even seizure of goods at the border and, in the worst case, lost import privileges.
Let’s say your procurement team sources a critical component from a new supplier in Southeast Asia. Without an advanced ruling validating its country of origin or tariff classification, customs may dispute your declared status upon entry. That dispute can result in:
- Immediate reclassification to a higher-duty item
- Retroactive tariff charges
- Costly warehousing while the issue is resolved
- Potential damage to supplier relationships and production schedules
According to recent research, advanced rulings are among the most underutilized trade tools, despite offering protection against costly misinterpretations and audit penalties. For companies operating in fast-moving sectors like electronics or life sciences, these delays can cascade into millions in opportunity cost.
The manual nature of submitting, tracking, and following up on advanced rulings through traditional channels (paper forms, email, or disconnected legal teams) makes it easy for key filings to fall through the cracks and not be effectively used across complex enterprises or portfolio, growth through acquisition, based companies.
A missed advanced ruling doesn’t just cost time. It can double your duty rate on sensitive goods, introduce regulatory friction at a time when agility is critical, or delay delivery to key markets. The knock on effects and cost of compliance can include missed delivery commitments, damage to reputation with customers and loss of preferred vendor status with your most strategic business partners.
Further, in jurisdictions where goods can’t legally enter without compliance documentation, such as Brazil or Mexico, failure to obtain proper rulings can halt business altogether.
Hidden Cost #4: IT Burden of Maintaining Outdated Trade Modules
For too many global organizations, tariff compliance still lives in legacy ERP modules, isolated trade databases, and highly customized, but poorly integrated, on-prem systems. While these tools may have worked in a more stable trade environment, they were never designed for the speed, frequency, and complexity of today’s regulatory landscape and evolving geopolitical climate.
Now, IT teams are being asked to take responsibility for a whole new level of complexity. Organization cost centers, such as IT, logistics and compliance, need to stretch already limited resources with the added responsibility for manually updating classification rules, coding exceptions for every new jurisdictional requirement, and reacting to compliance changes after the fact. The cost isn’t always measured in dollars. It’s measured in diverted development time, delayed upgrades, frustrated users, mounting technical debt and the lost focus and execution of the business’ core competency and value proposition.
Gartner estimates that by 2026, more than 60% of enterprises will need to modify or re-architect their existing ERP trade compliance configurations to keep up with jurisdictional complexity and real-time reporting expectations. For companies running on EBS ITM, this is particularly concerning:
- No quarterly innovation updates
- No native integration with customs authorities
- No automation for advanced ruling, origin logic, or certificate management
- Extensive manual configuration for each new agreement or policy shift
In other words, legacy systems don’t evolve. They get heavier.
Every new trade regulation, whether it’s a bilateral tariff, a value-add threshold, or a tax reform like Brazil’s, requires manual reengineering of rules, reports, and workflows. This burden falls on already stretched IT resources, who are pulled away from strategic initiatives to patch old code for compliance.
Hidden Cost #5: Increased Audit Risk and Regulatory Exposure
If there’s one thing global compliance leaders lose sleep over, it is audits. Whether triggered by internal review, regulatory scrutiny, or a shift in trade law, audits can unravel the seams of a company’s supply chain if documentation is missing, inconsistent, or siloed. And in an era of growing geopolitical risk, regulatory enforcement is only tightening.
Manual compliance systems make it nearly impossible to respond with speed or certainty.
Across industries, whether you’re sourcing components from Asia, assembling in LATAM, or distributing into the EU, your audit readiness depends on your ability to track and report:
- Rules of origin and transformation thresholds
- Supplier certificates of origin
- Transaction-level tariff exposure
- Advanced ruling submissions and decisions
- Country-specific tax and compliance documentation
Most legacy ERP trade modules were never designed to support this level of granularity and jurisdictional nuance. As a result, businesses resort to patchwork solutions: downloading reports, reconciling data in spreadsheets, and manually stitching together a paper trail.
The Risks Multiply Fast
In today’s compliance landscape, these gaps come with serious consequences:
- Regulatory audits triggered by misclassification or origin ambiguity
- Fines of up to $10 million per violation, plus criminal liability for recurring offenses
- Business disruptions, delays at port, and withheld shipments
- Loss of preferential trade status or exclusion from trade programs (e.g., USMCA, Mercosur, EU FTAs)
The indirect costs may be even worse: brand damage, increased scrutiny from authorities, and loss of trust from partners and stakeholders.
As Gartner notes, “organizations relying on manual systems are five times more likely to experience audit delays and unplanned compliance costs” due to limited visibility and inconsistent data structures (Gartner G00826687).
Manual Compliance Management Is No Longer a Safe Bet
IT Convergence has helped global enterprises modernize their trade operations by cutting costs, reducing risk, and building the resilience they need to scale into uncertain futures. And we can help you do the same.
If your organization is still navigating tariff compliance with spreadsheets, legacy trade modules, or disconnected workflows, it’s time to modernize.
Also, connect directly with our experts at IT Convergence to explore how we can help you:
- Map your current risk and cost exposure
- Build an automated, audit-ready compliance architecture
- Future-proof your operations for whatever comes next
The next wave of global trade disruption is already here. Let’s make sure you’re ready.
