How firms with global exposure are managing uncertainty

Insights from U.S. Bank leaders guiding organizations through a difficult environment 

In today's ever-changing economic landscape, firms that sell their products overseas or import materials can face many challenges, from tariff uncertainty to currency volatility to supply chain disruptions. These issues are compounded by geopolitical tensions and higher interest rates. To survive and thrive, companies are adapting and evolving, using strategies to reduce risk, consolidate liquidity and optimize supply chains.

Key risks facing global companies

Tariff policy has been the major economic story of 2025, as abrupt changes to U.S. tariffs and retaliatory actions from other countries have shaken international trade.

“The average tariff today is roughly 20% across all countries, and the last time U.S. tariffs were this high was 1930, " said Tarek El-Yafi, head of global transaction services U.S. Bank, a newly formed group focused on meeting the growing international banking and payment needs of domestic clients.

Tariff uncertainty makes it challenging for importers and exporters to make longer term decisions and potentially raises expenses, he said.  

One of the foremost concerns for importers and exporters is currency risk, El-Yafi said. With transactions occurring across borders, fluctuations in exchange rates can significantly impact profitability. Compounding this risk is the potential of countries protecting their currency by imposing currency restrictions, trapping cash, increasing risk and driving up costs for global companies.

Another significant challenge is supply chain disruption, he said. The COVID-19 pandemic exposed vulnerabilities in global supply chains, and ongoing geopolitical tensions (such as the wars in Ukraine and the Middle East) continue to generate uncertainty.

“There’s a heightened anxiety in the international space, and there's definitely a feeling that the old global order is being fractured,” El-Yafi said.

Reducing risk

U.S.-based companies that do business overseas are mitigating risk through a number of strategies.

Paula Comings, head of U.S. Bank FX Sales, said one method to potentially get improved pricing is by paying foreign vendors in their local currency. 

A second approach that companies are increasingly adopting is using foreign exchange options to hedge their currency exposures.

“We've seen an uptick in options across our client base, whether it's a small-, mid- or large-cap companies,” said Comings. “By using options, companies can protect themselves from adverse movements in exchange rates, while maintaining the ability to participate in favorable currency movements.” 

El-Yafi added that another primary tactic is consolidating banking with a strong U.S.-based counterparty.

“Even large banks that are very well capitalized may decide to exit certain countries, leaving global clients in a tough situation,” he said. 

Firms are partnering with banks that are well capitalized, have solid credit ratings and offer the international banking solutions global companies require.

Consolidating liquidity

Liquidity is the lifeblood of any business, and global companies have been rethinking their bank account structures to focus on protecting liquidity and their ability to pay foreign suppliers. A relatively new capability is opening a foreign currency account (FCA) in the United States.

An FCA allows businesses to hold and manage funds in foreign currencies, and can be used for sending money abroad, paying international vendors, or managing income from overseas sources. FCAs can be opened in more than 20 currencies. 

“By opening foreign currency accounts in the U.S., companies can have FDIC insurance and repatriate excess cash back to the U.S., while avoiding the need for immediate currency conversion,” El-Yafi said.

Re-envisioning supply chains

Mike Stitt, head of Supply Chain Finance Sales for U.S. Bank, said he sees the current supply chain challenges in the same light as what occurred during COVID.

“There were serious shocks to the physical and financial parts of our clients’ supply chains, and luckily, there was some agility and flexibility that resulted from those experiences that is helping clients today,” he said.

To enhance resilience, companies are diversifying their supply sources. Stitt stressed the importance of having secondary and tertiary supply sources.

“This strategy ensures that businesses are not overly reliant on a single supplier, reducing the risk of disruptions,” Stitt said.

Additionally, nearshoring and reshoring efforts are gaining traction, as companies seek to bring production closer to their customer bases, minimizing logistical challenges, he said. As these actions take significant capital investment and a long time to accomplish, global companies are employing several solutions that can help in the near term.

Some firms are deploying approved payables programs, where a bank funds suppliers upfront, after the invoices are approved, allowing buyers to pay at a later date, Stitt said.

“This improves the buyer’s cash flow situation, and also helps the supplier’s cash flow as they receive payments up front,” he said.

On the other side of the transaction, U.S. companies can sell receivables to a bank, thereby mitigating some risk.

Moving forward in an evolving world

Global companies face a myriad of challenges in today's economic environment, El-Yafi said. However, by employing strategies such as hedging currency risks, diversifying supply chains, and rethinking banking structures, businesses can enhance their resilience and continue to thrive.