Corporate Management

Between geopolitics and tariffs, how companies prepare for a future of instability

With a fragmented world order and growing economic tensions, companies must adapt strategies and supply chains to deal with increasing risks and volatility

by Massimo Donaddio

12 March 2026

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

Geopolitical instability, social polarisation and increasing fragmentation and conflict between states are profoundly changing the way public and private organisations manage risk, while technological acceleration is redefining economic balances at an ever-increasing speed. According to the 21st edition of the Global Risks Report, published by the World Economic Forum in collaboration with Boston Consulting Group (BCG) 50% of global leaders surveyed (1.300 personalities from the fields of business, finance, governments, international institutions) expect a "turbulent" or "stormy" scenario in the next two years, a share that rises to 57% on a ten-year horizon, while only 1% of respondents expect a calm scenario, in both time perspectives.

Overall, as many as 68% of the leaders of business, finance, governments and international institutions surveyed envisage a multipolar or fragmented global order within ten years, while only 6% envisage a revitalisation of the US-led multilateral order.

In the short term, however, the number one global risk is 'geo-economic confrontation', i.e. the strategic use of economic instruments such as sanctions, tariffs and investment screening to pursue geopolitical objectives, indicated by 18% of respondents, followed by armed conflict between states at 14%. In a context already marked by trade tensions, sanctions, investment screening and the strategic use of supply chains, economic competition is asserting itself as the main factor of instability: it is no longer a consequence of political tensions, but becomes a ground for confrontation.

Unsurprisingly, therefore, economic recession and inflation also rise rapidly in the global risk ranking, respectively in 11th and 21st place, both up eight places from 2025, while the risk of a speculative bubble bursting rises seven places to 18th place. These signals reflect a financial system exposed to sudden corrections, especially in the presence of geopolitical shocks or sudden changes in rate expectations.

Companies, therefore, are increasingly called upon to realign strategies and positioning, knowing that every choice - from market to ethical ones - can have significant consequences, including reputational ones.

The costs of instability

"Trade instability generates an immediate economic cost for companies, but above all a cost related to the volatility of the regulatory framework. After the US Supreme Court ruling overturning the use of the IEEPA (International Emergency Economic Powers Act) to impose tariffs, 'reciprocal' tariffs were replaced by a10% ad valorem global duty for 150 days under Section 122, reducing the weighted average tariff from 15% to around 12%," explains Mattia Rodriquez, Managing Director and Partner at BCG. 'The effects are very different for countries and sectors, for example, for the European Union the impact is limited: the average effective tariff goes from around 12% to around 11%, while the UK remains stable at around 8%. However, the possibility of a new increase remains open with the study of further measures under Section 301 and 232. "The cost of instability, therefore," Rodriquez continues, "does not end with tariffs, but in the need for companies to strengthen their planning capabilities by scenarios, assess their exposure by product and supply chain with respect to competitors, and prepare structural responses on an industrial and commercial footprint. Where I buy, where I produce and where I sell become increasingly geopolitical choices, regardless of the sector'.

How to defend yourself

It therefore becomes crucial for companies and management to take the right steps to defend themselves against this dangerous instability. How to do this? "With the level of instability set to remain high, leaders are shifting their focus from emergency management to long-term competitive resilience," warns Lorenzo Capucci, Project Leader at BCG. "With this in mind, the first step is to proceed by scenario planning, updating and refining tariff assumptions to test profit and loss accounts and supply chains, including by setting up internal teams dedicated to tariffs management. It is then essential to conduct exposure and impact analyses at the product level, in light of changes to exemptions and carve-outs under Section 122 and possible new investigations under Sections 301 and 232. The possible refund of IEEPA tariffs already paid may be a potential benefit to be evaluated. In parallel, trade compliance needs to be strengthened, exposure to tariff measures structurally reduced through supplier diversification and near- or re-shoring strategies, and investment in domestic geopolitical expertise to guide strategic and capital decisions.

Looking at the reality around us, it might seem that the era of free trade is over forever and an era of geo-economic confrontation/clash is opening up. In this scenario, the challenge for companies is how best to position themselves to stay in the markets, realigning strategies and knowing that every choice - from market to ethical ones - can have consequences - including reputational ones - that are significant.

The new scenario

"It has to be recognised that geo-economic competition has become structural and is destined to last," Mattia Rodriquez further notes. "In this context, geopolitics is not just a risk factor: it can affect reputation, competitive positioning, market access and the ability to influence the regulatory framework." "To remain competitive in international markets," the expert continues, "organisations need to develop what we call the 'geopolitical muscle', i.e. structured forecasting and planning capabilities based on geopolitical dynamics, to translate political signals into operational and strategic decisions. The most 'trained' companies do not just ask themselves what is happening, but assess when and how to act, turning geopolitical analysis into concrete choices on investments, markets and value chains. The advantage arises precisely from the ability to link political signals to measurable economic variables and to permanently integrate this reading into decision-making processes'. 'It is therefore not a question of abandoning global markets,' Rodriquez concludes, 'but of stably integrating a geopolitical reading into them. Companies that know how to link political signals to measurable economic variables and incorporate this analysis into their decision-making processes will have a structural competitive advantage'.