Global businesses face a perfect storm of geopolitical and economic volatility in 2025. Escalating trade tensions, aggressive tariff policies, and sudden regulatory shifts have created unprecedented uncertainty for companies expanding internationally.
The International Monetary Fund (IMF) recently slashed its global growth forecast to 2.8%—a sharp downgrade from 3.3% in 2024—citing trade policy disruptions and “historic levels of uncertainty” as primary drivers. In the U.S., the IMF’s growth projections fell nearly a full percentage point to 1.8%, with retaliatory tariffs and supply chain realignments compounding risks for multinational firms.
This instability is forcing organizations to rethink traditional expansion models. Supply chains built for efficiency now grapple with delayed investments, abrupt tariff hikes exceeding 140% on critical imports, and unpredictable compliance demands. The World Trade Organization (WTO) warns that prolonged trade policy uncertainty could reduce global merchandise trade growth by 1.5% in 2025—a contraction that would disproportionately impact businesses reliant on cross-border operations.
Navigating this landscape requires agile strategies that prioritize compliance, flexibility, and risk diversification. Forward-thinking companies are adopting innovative approaches to maintain global competitiveness while minimizing exposure to volatile markets. In addition to exploring the risks and mitigation strategies businesses are using to succeed in today’s volatile market, we also discuss how Employer of Record (EOR) solutions have become a pivotal tool for businesses to hire talent worldwide while mitigating regulatory and financial risks.
The Challenge: How trade uncertainty disrupts business strategy
Global companies face mounting pressure as shifting trade policies upend long-term planning. With tariffs evolving from temporary measures to entrenched economic weapons, businesses must navigate a landscape where regulatory stability has become the exception rather than the norm.
The return of aggressive tariff policy
Recent measures have revived and expanded the Trump-era Section 232 steel/aluminum tariffs and Section 301 China tariffs, which now cover $380 billion in imports. While the tariffs have been in place for over six years, incurring ongoing updates, “many companies that import from China are still unsure how the tariffs can affect their bottom line and what options are available for reducing the impact of potentially costly sanctions,” reports Jay Cho, an attorney and international trade advisor.
The 2025 policy updates include spikes on Chinese goods and tariffs on EU automotive components, which disproportionately impact the manufacturing, mining, and automotive sectors. These tariffs—framed initially as national security measures—now serve as broader economic leverage, with downstream industries absorbing cost increases on critical materials. Over 50% of manufacturing firms report accelerated supply chain diversification efforts as direct responses.
Policy volatility increases business risk
Trade interventions have quadrupled since 2018, creating a whiplash effect for multinationals. The April 2025 tariff rollout exemplifies this instability: 50% rates on consumer goods were abruptly paused for most countries—except China—within 90 days.
This unpredictability forces 30% of firms to deprioritize hiring and delay capital expenditures, while others face costly reclassification of goods to navigate evolving tariff codes. “Like it or not, we are well into a transition—not just away from the economic interdependence and value chain integration, but potentially, a disorderly transition away from the principles, or rules-based economic order, that we have known for three generations,” warns Navin Girishankar, President at the Economic Security and Technology Department.
Global supply chain impact
Tariffs have triggered a $3.4 billion annual production loss in steel/aluminum-reliant industries, pushing manufacturers to reshore or nearshore operations. However, alternatives like “connector” countries (Vietnam, India) introduce new risks, as seen when India imposed retaliatory steel tariffs to block Chinese transshipments.
“Already, some companies are significantly re-evaluating their processes and making significant changes to their supply chain strategies ... but not necessarily by moving production to the United States as is the stated goal of the Trump Administration,” reports Bryce Engelland, an industry analyst at Thomson Reuters. “As Trump’s trade wars continue to escalate ... the entire global economy is basically in stand-by mode, watching to see what the Trump Administration does next and how other countries respond,” he adds.
Risk mitigation strategies for trade-affected businesses
As trade barriers reshape global commerce, businesses are adopting proactive measures to insulate operations from volatility. These strategies balance compliance, cost efficiency, and market access while maintaining workforce flexibility.
Diversify supply chains and workforce locations
Shifting production and sourcing away from tariff-heavy regions reduces exposure to sudden policy changes. Companies are expanding into markets like Vietnam (electronics), India (pharmaceuticals), and Eastern Europe (automotive components), where trade agreements or lower tariffs enhance cost predictability.
For example, Vietnam’s network of free trade agreements with the EU and ASEAN makes it a strategic bridge for tariff-free exports. Dual-sourcing critical materials and establishing regional hubs also minimizes single-point failures, ensuring continuity even during geopolitical disruptions.
Workforce diversification complements this approach, with firms leveraging remote teams and satellite offices to align talent pools with production centers. This dual strategy not only mitigates tariff risks but also strengthens resilience against local labor shortages or political instability.
Monitor trade agreements and regulatory trends
Staying ahead of evolving frameworks, such as the USMCA’s auto rules of origin or the digital trade provisions of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), helps businesses align their operations with preferential terms. Proactive firms use regulatory tracking tools to anticipate shifts in customs procedures, sustainability mandates, or export controls, thereby adjusting logistics and supplier contracts in advance of changes taking effect.
For instance, companies sourcing textiles now prioritize suppliers in CPTPP member countries to avoid tariffs on synthetic fibers under new environmental regulations. Building relationships with local trade associations or legal experts can provide early warnings about policy shifts, enabling faster adaptation to emerging compliance requirements.
Optimize tariff engineering and cost planning
Strategic adjustments to product design, shipping routes, or component sourcing can shift goods into lower-duty classifications. For example, modifying a product’s material composition or assembly sequence might qualify it for duty exemptions under regional trade pacts.
Businesses are also renegotiating terms with suppliers to share tariff-related costs and exploring the use of bonded warehouses to defer duties until products reach their end markets. Advanced analytics now play a key role, with AI-driven tools identifying optimal shipping lanes or component substitutions that reduce landed costs. Regular audits of Harmonized System (HS) codes further ensure accurate classification, avoiding costly penalties from mislabeled shipments.
Adopt demand-driven and localized hiring models
Centralized hiring strategies struggle to keep pace with rapid shifts in trade policy. Instead, companies are partnering with global EOR providers to build decentralized teams in target markets. This model allows businesses to scale region-specific talent, such as compliance experts in Vietnam or customs brokers in Mexico, without incurring the costs associated with establishing local entities.
Localized hiring also improves responsiveness to sudden demand changes, as teams embedded in-market can pivot operations faster than distant headquarters. For example, a manufacturer facing EU retaliatory tariffs might quickly reallocate production to Eastern Europe using local teams familiar with regional labor laws and supplier networks. This approach not only reduces overhead but also fosters cultural alignment, which is critical for navigating complex regulatory environments.
The Velocity Global advantage: Built for global agility
Velocity Global’s EOR solution equips businesses to navigate trade volatility while maintaining compliance and operational flexibility. Here’s how the platform streamlines global expansion:
- Localized onboarding, payroll, and benefits management. The platform handles country-specific employment contracts, payroll processing in over 100 currencies, and localized benefits packages—from healthcare to retirement plans—ensuring global compliance with regional norms.
- Expertise in labor law and tax compliance. In-country legal teams monitor evolving regulations across 185+ jurisdictions, managing tax filings, statutory benefits, and adherence to employment regulations. This includes navigating complex frameworks like Japan’s Haken licensing and EU data privacy mandates.
- Rapid market entry without entity setup. Companies bypass months-long entity establishment processes, deploying talent in new markets within days. This agility is critical for responding to sudden tariff changes or supply chain shifts.
- Cost-efficient operational model. By eliminating entity setup fees, legal retainers, and in-country HR infrastructure, businesses reduce overhead by up to 70% compared to traditional expansion methods.
- Centralized workforce visibility. A unified dashboard provides real-time insights into global payroll, compliance status, and employee records, all integrated with existing HR tools such as BambooHR and Workday.
Partnering with Velocity Global transforms global hiring from a regulatory burden into a strategic advantage, allowing businesses to scale operations agilely while mitigating trade-related risks.
FAQs: Trade uncertainty, tariffs, and EORs
Companies navigating trade volatility often question how EORs address tariff shifts and policy changes. Below are answers to common concerns about how to strategically plan a workforce amid the uncertainty of unstable markets.
Q: Can EORs help companies shift operations due to new tariffs?
Yes. EORs enable rapid workforce redeployment to low-tariff regions without entity setup delays. For example, businesses facing sudden commodity tariffs can pivot to other countries within days, leveraging existing EOR infrastructure to onboard local teams and maintain production continuity. This agility minimizes disruptions while ensuring compliance with regional labor laws and tax requirements.
Q: Is EOR a temporary solution or a long-term strategy?
Both. Companies use EORs for short-term market testing—hiring talent in a new country to validate demand before committing to entity formation. Conversely, firms in volatile regions rely on EORs as a permanent solution to avoid long-term legal commitments, benefiting from ongoing payroll, benefits, and compliance management.
Q: What if policies change again after expansion?
EORs like Velocity Global provide geographic flexibility, allowing businesses to scale their operations up or down as trade dynamics evolve. If tariffs render a market unsustainable, companies can exit without entity dissolution costs or penalties, reallocating resources to more stable regions via the same EOR platform. Real-time compliance updates and centralized dashboards further simplify adaptation to regulatory shifts.
Stay resilient, agile, and compliant with Velocity Global
In a time of escalating trade volatility, Velocity Global’s EOR services provide the agility to hire, manage, and pay global teams seamlessly—bypassing costly legal entities and complex compliance hurdles. With expertise in 185+ countries, the platform ensures localized compliance, rapid talent deployment, and real-time visibility into global operations. Businesses gain the flexibility to pivot swiftly amid policy shifts, maintaining competitiveness while preserving stability and operational efficiency. Contact us to learn more.
Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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