Throughout the industry, tariffs and trade shifts have gone beyond the areas of abstract policy debate and become existing challenges for businesses of all sizes. The economic landscape in 2025 presents unprecedented complexity: the universal 10% import tax coverage of all punitive commodities with a punitive rate of up to 54%, targeting members of China, Mexico and the EU and creating a maze of regulatory barriers.
As retailers struggle to stock up on shelves, restaurants fight food costs inflation, CPG manufacturers’ watch-style packaging costs soar, while direct-to-consumer brand viewing margins range from Razor-thin thin to non-existence, these trade actions are more than just headlines; they are profitable reality. The ripple effect touches on everything from food nails to clothes to equipment, fundamentally changing the cost structure of business in the United States.
Leadership teams must face a range of trade-offs: raising prices and risk in price-sensitive markets for customers; absorbing installation costs internally, observing profit margin evaporating; or finding operational trade-offs that could result in quality, service or employee well-being. None of these options is an easy way forward.
This high-risk complexity represents a new normal for executive leadership, which is just the latest opportunity to turn to generate AI to seek answers. In this uncertainty, applying generative AI presents a strategic advantage that may ultimately distinguish market leaders from those left behind.
Beyond the buzzword: AI is a strategic thinking partner
Generative AI is often downgraded to areas of technological novelty: smarter search engines, writing assistants for marketing teams or technical experiments to soothe boards eager for innovation. But at this moment (leaders face stress every day, defined decisions – AI may be more valuable: a true partner of thought can change the decision itself.
Tariff-driven damage is fundamentally multifaceted. It will not only affect the cost of the item you sell. It also forms a long-standing procurement relationship, creates operational bottlenecks, rattles customer expectations for pricing and availability, and tests team adaptability and resilience. The challenges to be solved are not singular, they are systematic.
Therefore, the generated AI is much more effective than traditional analytics browsing at this moment. Although traditional analytics provide backward insights, the generated AI simulates complex tradeoffs, predicts cascading effects across business units, and adjusts strategies in real time as conditions develop. It doesn’t just process data; it processes possibilities. Meaning: Leaders can think faster, see farther and be more confident.
Advantages of AI: Four key functions
- Precise pricing intelligence
The general reaction to tariff hiking – the overall price increase – has become dangerously obsolete. Today, AI-powered pricing engines, such as those deployed by leaders working with companies like Palantir, leverage multidimensional data models including historical sales patterns, granular demand elastic metrics, and competitive benchmarks to recommend super-target pricing adjustments.
This surgical approach allows companies to implement price increases and selectively increase profit margins while maintaining price stability in traffic driving products or particularly competitive categories, while market conditions allow. Furthermore, related to this, leaders can use AI to help them formulate when to share price increases, when to pass or use in conjunction.
- Reconfigure the supply chain
In procurement and supply chain strategies, perhaps nothing is more valuable than the impact of AI. Generative AI systems can simultaneously analyze hundreds of supplier records and complex global tariff tables and model shipping schedules and logistics costs to propose the best procurement actions and complete the procurement team’s weeks in minutes.
Major retailers have begun shifting procurement from low-key alternatives in tariff-bearing regions such as China and Latin America with AI-driven forecasting models. These models are more than just identifying the lowest reduction options – they balance tax impacts with quality consistency, production capacity, logistics reliability and long-term relationship potential.
Similarly, when specialty oil prices in seafood or specialty countries rise, restaurant groups also use AI to map potential ingredient alternatives, allowing menu engineering teams to maintain food costs without damaging signature dishes. A fast-casual credit chain modeled through AI-driven alternatives that retains its target 28% of food costs despite absorbing more than $2.3 million in tariff-related increases on imported ingredients.
- Smell out the low operational efficiency
As tariff pressures compress profits, operating waste becomes unbearable. Predictive analytics and machine learning models can reduce inventory errors by up to 50%, while improving demand forecast accuracy by 25-35%.
Whether it’s optimizing a workforce schedule at a retail chain to match revised customer transportation, or recalibrating kitchen preparation levels in fast service restaurants, AI-driven forecasting helps companies avoid over-stop and over-sorting and minimize spoiling. This tightening of operations leads to increased efficiency, which greatly offsets the tariff-driven increase in costs.
- Retain customers through behavioral intelligence
During economic pressures, consumer behavior is predictable, but complex – widespread tariffs are exacerbating widespread price increases in groceries, catering, clothing and electronics. AI enables businesses to accurately predict these changes and adapt accordingly.
For example, platforms like Brizo Foodmetrics now allow restaurant operators to simulate specific price shocks (e.g., a 20% increase in avocado costs) and visualize the ripple effects of menu items profitability, ordering patterns and even possible customer alternative behaviors. Retailers use similar simulations to evaluate how price sensitivity evolves across different customer bases and adjust promotions and loyalty incentives accordingly.
Leadership must
Historically, businesses viewed tariffs as temporary obstacles to deal with through short-term adjustments and financial buffers. But with the average U.S. tariff rate now hitting 22.5%, the highest level since 1909, the leadership team must see it as a structural, rather than a cyclical shift. Inadequate solutions and financial engineering; what is needed is system-level adaptation powered by real-time intelligence.
AI is perfect for managing this level of complexity. It not only automates existing processes, it also simulates scenarios, iterates rapidly across possibilities, and suggests strategies for integration. Perhaps most importantly, it expands, from procurement decisions to pricing strategies to customer engagement programs, providing enterprise-wide visibility.
The tariffs are here. The technology is ready. The question is not whether your organization will adapt – it is whether you can adapt with the most powerful intelligence tools available.
