Tariffs Shake Up Companies' Transfer Pricing Planning

Tax departments at multinational companies are scrambling to keep up with the Trump administration's tariff announcements as the updates pile in day to day and sudden shifts complicate transfer pricing calculations.

Tariffs raise companies' costs, and those can't always be passed on to consumers—meaning businesses have to choose where to allocate the costs in their supply chains. While the importing entity pays the tariffs, the company can adjust the transfer price to pass that cost to other, related entities.

That can present opportunities to reduce the impact of tariffs—but also may lead to risks of audits from tax and customs agencies.

And with so much unknown, it's become hard for companies to find tax certainty, said Summer Austin, partner at Baker McKenzie.

Austin and Baker McKenzie partner Jennifer Revis talked to Bloomberg Tax reporter Caleb Harshberger about what the tariffs mean for transfer pricing and how companies should respond.

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