Tariff turbulence: How tech hardware companies can adapt at speed

According to the 2025 AlixPartners Disruption Index, 69% of executives in the tech industry say new tariffs are causing them to adjust their growth strategies. The flurry of activity around potential tariffs on Mexico, Canada, and China has jolted the markets—our assessment suggests a 7% impact on average on cost of goods sold (COGS) from currently announced tariffs across the broader technology hardware ecosystem, with possibly more to come. When added to the 9% increase in hardware prices over the last four years from inflation and high interest rates, companies may have less flexibility to raise prices in response, thus eroding the majority of their operating income. 

Gross margins across the broader hardware industry are generally in the 35-50% range, with net margins typically 5-15%. Specifically, personal computer and server manufacturers have a 25-35% gross margin and 5-10% operating margin. A 10% increase in COGS due to tariffs could almost wipe out the full operating income of PC and server vendors—risks are significant across the technology industry, necessitating immediate action to safeguard profitability. 
 

Hardware players facing existing financial challenges will feel further strain given the timeframe needed to reconfigure supply chains and the difficulty of passing on cost increases to customers in an inflationary environment. This underscores the importance of applying tactical changes to weather the tariff impact in the near term, which we believe they can do successfully by setting up the right team and pulling the right levers. 

 
Enacting a “tariff war room” to secure current operating margins 

Our experience suggests that companies have an arsenal of operational levers at their disposal to lessen expected tariff effects while retaining present supply chain networks. These actions, typically implemented over 1-2 quarters, can mitigate 40-80% of tariff impacts on COGS. 

To put these tactics into place, companies must launch cross-functional “tariff war rooms” that review alternatives and quickly make decisions. These teams should be comprised of representatives from manufacturing, engineering, procurement, supply chain, finance, pricing, and potentially other functions. 

Older tariff-mitigation tactics—such as duty drawbacks, de minimis shipping, and HTS code shifts—will not work given the broad nature of potential tariffs here. Nimbler, more complex options are needed given the volatility of the situation across multiple geographies—our war room playbook includes critical levers and tactics that leaders must consider:



 

While tariff structures remain unclear, in our experience it’s critical that companies proactively implement tactics that protect their business and prevent a major dent to operating income. Those that do so effectively will be in position to adapt to whatever changes come next, reducing the impact that tariffs have on their daily operations while still able to innovate and stay ahead of the competition. 

Long-term supply chain reconfigurations that utilize low-tariff countries, along with a real-time view into supply chain operations, remain crucial differentiators for savvy tech players. But to succeed in this climate, we recommend all companies with substantial tariff exposure draw up robust, flexible mitigation plans with teams on call and ready to execute. Decisive, prompt action will separate the companies that navigate the storm from those that fall behind.