How Trump tariffs could alter transfer pricing strategies

On Feb. 1, President Donald Trump announced new, wide-ranging tariffs on the U.S.’s leading trading partners, Mexico, Canada and China, though the tariffs on the first two are paused pending negotiations. Trade experts have speculated how affected companies should respond, but little has been written on how these tariffs would affect the ways multinational corporations should approach the uncertainties raised by them.

Steven Wrappe, Grant Thornton National Technical Leader for Transfer Pricing, and Glen Marku, Grant Thornton Principal, Transfer Pricing, discuss how multinational businesses should model and plan for the effect of the new tariffs in a recent article for Bloomberg Tax called, “Trump Tariffs 2.0: Don’t Forget the Transfer Pricing.”

In the article, Wrappe and Marku first discuss how tariffs quickly become a factor in a multinational’s transfer pricing decisions. From there, Wrappe and Marku describe how the Trump administration tariff proposals will affect transfer pricing decisions in three ways: their impact on tested party results, their impact on comparables results and the government’s likely reaction to post-importation adjustments. Wrappe and Marku conclude the article by offering some key considerations multinationals should heed to adopt strategies that help mitigate the risks involved. 

Read the Bloomberg Tax article here.