How Pricing Leaders Can Turn Geopolitical Tensions Into Strategic Advantages

Geopolitical shifts are reshaping global trade policies, supply chains, and economic perspectives at an unprecedented pace.  

Machine manufacturers, heavily dependent on global supply chains, pricing stability, and international trade agreements, must face these disruptions strategically to maintain success and improve its competitive edge.  Table of Contents:

• Geopolitical Tensions, Trade Policies and Tariffs: A New Era of Uncertainty 
• Challenges and Opportunities for Machine Manufacturers 
• How MARKT-PILOT Supports Pricing Leaders in Managing Geopolitical Disruptions 

Geopolitical Tensions, Trade Policies and Tariffs: A New Era of Uncertainty 

International trade is going through a period of major instability. The United States, China, and the European Union — three of the largest exporters globally — are changing trade policies that affect tariffs, taxes, and supply chains. Since 2017, tariffs on goods between the U.S. and China have increased sixfold, impacting many industries. Changes in economic partnerships, such as stricter trade rules within the EU and tariff updates to the USMCA (formerly NAFTA), could significantly reshape the competitive landscape.  

“Companies need to take a multifaceted approach, keeping an eye not only on the global markets but also on domestic policy and legislative trends. We are living in the most economically disruptive moment since World War II, and I don’t think we stop enough as boards to really process that.” – John Huntsman Jr., Vice Chair Mastercard, 2024 

The latest McKinsey Global Survey on economic conditions reveals that geopolitical tensions remain a major concern for disruption. At the same time, many respondents now expect changes in trade policies and tariffs to have a significant impact on global growth in the next six months.

Supply Chain Disruptions and Market Volatility 

In recent years, the global supply chain has faced major challenges, from COVID-19 disruptions to the Russia-Ukraine conflict. Problems like semiconductor shortages, rising transportation costs, and logistical delays as well as increased energy prices have shown the importance of diversifying supply sources and improving inventory management. Ongoing trade disputes and geopolitical tensions underscore that machine manufacturers need to strengthen their supply chain resilience.  

Meanwhile, policies like India’s “Make in India” campaign and U.S. tax incentives for domestic production bring both challenges and opportunities. These initiatives push companies to rethink their global operations, adapt to changing conditions, reduce tariff risks, and explore new growth opportunities. 

To do this, machine manufacturers must address critical questions:  

• How will tariffs and trade policies affect our production costs?  
• Can our supply chains withstand increasing disruptions?  
• How can pricing strategies be adjusted dynamically to respond to fluctuating costs and market conditions?  

According to EY-Parthenon CEO Outlook, only 30% of CEOs have a clear understanding of their company’s exposure to political risks across operations, markets, and supply chains. This lack of visibility makes it harder for executives to develop strategies that can withstand geopolitical challenges and plan their future with confidence. But those prepared to adapt through innovative pricing models, agile strategies, and data-driven decision-making are well-positioned to answer these questions. They can maintain profitability and drive long-term growth in this volatile environment. Others may need to rethink their strategies to tackle the major challenges of these new market realities. 

Challenges and Opportunities for Machine Manufacturers 

Geopolitical tensions and economic uncertainties not only introduce new challenges but also intensify existing ones, particularly for globally operating machine manufacturers. Below are some of the most critical challenges they face. 

Major Challenges 

• Rising Costs Due to Tariffs and Trade Barriers: Increased duties on essential materials are raising production costs, forcing manufacturers to rethink their pricing strategies. Machine manufacturers need to carefully monitor and analyze changes in tariffs and trade policies to mitigate the impact on their bottom line. 
  
  
• Uncertain Supply Chain Stability: Dependence on a limited number of suppliers increases risk exposure to geopolitical tensions. Machine manufacturers must build resilient supply chains and develop backup plans to manage potential disruptions. 
  
  
• Fluctuating Demand Patterns: Consumer demand is shifting in response to rising inflation and economic instability in key markets. Recessionary pressures, particularly in the German machinery sector, have led to a surge in bankruptcies, further slowing down product demand.
  
  
• Capital Allocation Risks: Volatile trade policies and political tensions create uncertainty in investment planning and manufacturing expansions. While 42% of machine manufacturers in Germany are considering relocating their production, many remain hesitant due to the ongoing geopolitical instability they face. 

New Opportunities 

But challenges and change often bring new opportunities. While geopolitical disruptions present significant risks, they also create room for machine manufacturers to adapt, innovate, and strengthen their revenue security. Let’s look at some of the most promising opportunities. 

• Adapting Pricing Strategies to New Market Realities 
  • Dynamic pricing models based on real-time market intelligence can help market leaders to stay ahead and realize untapped revenue potential. 
  • Moving away from cost-plus pricing and embracing data-driven, market-based pricing strategies can improve profitability, particularly in the high-margin business of spare parts. 
    
    
• Using AI-driven Market Intelligence 
  • Keeping track of tariff changes, supply chain risks, and competitor pricing with AI-driven tools enables pricing leaders to make informed decisions. 
  • Understanding how competitors handle rising costs and adjust their prices can help pricing managers in machine manufacturing to stay competitive without pricing themselves out of the market. 
    
    
• Enhancing Revenue Security Through Parts Business Expansion 
  • The parts business presents an opportunity for machine manufacturers to stabilize revenue streams despite economic fluctuations and declining machinery sales. 
  • Spare parts, often less affected by trade barriers, can serve as a profitable segment. 
    
    
• Strengthening Supply Chain Resilience 
  • Supply Chain pressure also offers the opportunity to overhaul the supply chain structure, diversify suppliers across regions, and reduce reliance on a single source to minimize risks. 
  • Investing in digital supply chain solutions enables real-time tracking and predictive analytics for proactive risk management.
     
• Investments in Diversification and Digitalization 
  • Exploring adjacent markets or expanding into regions with lower tariff exposure can improve growth potential. 
  • Proactive investments in digitalization, automation and localized production can future-proof the business and help leading companies to remain agile in a changing market. 

How MARKT-PILOT Supports Pricing Leaders in Managing Geopolitical Disruptions 

To seize these opportunities, it takes determination and the right tools and partners. By using real-time insights, pricing leaders can optimize their pricing strategies, ensuring competitiveness in dynamic markets. MARKT-PILOT provides machine manufacturers with market intelligence and parts pricing solutions that enable them to make data-driven decisions and turn challenges into opportunities amidst geopolitical uncertainties.  

• Real-Time Price Monitoring: Continuously tracking of competitor pricing and industry trends 
• Market-Based Pricing Optimization: Aligning pricing models with market insights to maximize profitability 
• Supply Chain Intelligence: Providing visibility into lead times, enabling proactive pricing decision-making and supplier diversification 
• Parts Business Growth: Identifying existing and new opportunities in the parts business to create resilient revenue streams 

Future-Proofing the Parts Business in Machine Manufacturing 

In an era of economic volatility and geopolitical tension, market leaders must take a proactive stance. Geopolitical challenges are inevitable, but with the right strategic approach, OEMs can turn these disruptions into competitive advantages. The days of “business as usual” are over, so it’s crucial for machine manufacturers to focus on key strategies: investing in digital infrastructure, diversifying portfolios and supply chains, and using market intelligence to optimize pricing strategies. By prioritizing these steps, manufacturers can turn disruptions into opportunities and gain a competitive edge to secure long-term success. 

Stay ahead with a pricing strategy built for the future. MARKT-PILOT equips enterprises with market-driven insights to handle uncertainty, adapt to changing market dynamics, and achieve sustainable revenue growth. Powered by AI, our platform improves profitability and strengthens your business's resilience. Let our experts help you unlock your full potential.