There’s more beneath the surface of the Trump Administration’s tariffs than the obvious cost increase, according to experts at EY.

“What I think companies are just now starting to realize is that there is actually a ripple effect to this,” Al Paul, EY Americas operating model effectiveness leader, said during a recent briefing with reporters. The tariff itself, he said, is like “the pebble that’s thrown into the pond, and then it starts to ripple out and impact the rest of the organization.”

That first ripple hits an organization’s treasury function, and that could impact an organization's ability to grow. Less cash circulating inside the company could mean less ability to internally finance things like research and development.

“Tariffs are costs; they’re cash. Somebody has to pay it,” Paul said.

Above and below. In a follow-up interview with CFO Brew, Paul separated the impacts between above- and below-the-line costs. Tariffs are above the line because “they hit directly to [the] cost of goods sold,” he explained. Farther down the path are costs associated with adjusting supply chains, which may mean hiring more people who are skilled in procurement, distribution, logistics, or related areas.

For more on the internal costs of tariffs, click here.—AZ

A thorough risk manager can be a CFO’s best friend, as evidence suggests that most CFOs are finding themselves leading enterprise risk management (ERM) initiatives in their organizations.

Accounting for numerous business risk scenarios may come in handy when, say, a semiconductor manufacturer suddenly finds its industry in the midst of a trade war between global powers.

CFO Brew recently spoke with Michael Zuraw, senior director of global enterprise risk management at semiconductor manufacturer Onsemi, about planning for the unlikely, incorporating risk management into strategy planning, and how he works with the CFO and finance team to identify and monitor risks.

This interview has been edited for length and clarity.

How does Onsemi incorporate risk management into its overall strategy planning?

If you’re trying to get to a strategic objective, there is more than one way to get there. The question is, why do you choose the path you choose? To me, that’s all about decision-making and risk, because if there’s only one path there’d be no choice to make. The idea here is there are lots of key assumptions that cause you to pick the strategic path you choose, because there are uncertainties and unknowns and there always will be, and I think one of the biggest risks in strategy is denying that—the idea that things will go the way I want them to go, and therefore this strategy is perfect.

Click here to keep reading how Onsemi plans for risk.—AZ

“Uncertainty” might be executives’ new favorite word as they scramble to respond to tariffs and potential regulatory changes and forecast the Fed’s next move. But it looks like everyday Americans are having qualms about the economy as well.

US consumer confidence dropped 7 points in February, the Conference Board reported, the largest one-month dip in three and a half years. The decline was consistent across all age groups and most income levels. Confidence has been dropping for three consecutive months.

Consumer pessimism is being driven, in part, by inflation fears. Consumers’ expectations that inflation would rise in the next 12 months rose from 5.2% to 6.0%, reaching a high last seen in May 2023.

The University of Michigan’s consumer sentiment index showed a similar turn toward pessimism, with consumer confidence dropping 9.8% over last month. According to that index, this month consumers’ 5-year inflation outlook reached its highest level since 1995.

Is the Trump bump over? Uncertainty around tariffs and federal layoffs is also keeping people from opening their wallets. In write-in responses to its consumer confidence survey, the Conference Board saw a “sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” Stephanie Guichard, senior economist of global indicators at the Conference Board, said in a press release.

Click here for more on the drop in consumer confidence.—CV