Tariffs and trade: Preparing for the unpredictable

In this episode of The McKinsey Podcast, Lucia Rahilly and Roberta Fasaro host Cindy Levy and Shubham Singhal to discuss strategies for business leaders to respond to ongoing volatility in light of current tariff negotiations and broader macroeconomic factors. The discussion covers the impact of tariffs on business cost structures and demand patterns, emphasizing the importance of understanding relative competitive advantage. Cindy and Shubham suggest scenario planning, linking tariff scenarios to macro scenarios, and closely monitoring trade patterns and supply chain adjustments. They advise leaders to focus on protecting against downside risks, preparing for no-regret moves, and propelling growth by identifying new market opportunities and optimizing operational efficiency. The podcast also explores investable themes arising from policy tailwinds and value chain shifts, and the practical organization of "nerve centers" to facilitate fast decision-making in response to geopolitical trends.