For multinational enterprises (MNEs), new U.S. tariffs announced and adjusted throughout 2025 created unusual tax compliance issues. The additional duties, which range from 10% on most imported goods to as high as 100% on branded pharmaceuticals, are reshaping transfer pricing calculations and creating ripple effects across profit margins and compliance strategies.
As Grant Thornton’s Steven Wrappe, Justin Grocock, and Glen Marku explain in an article they co-authored for Bloomberg Tax’s Tax Management International Journal, tariffs can alter the arm’s-length profitability ranges used in transfer pricing. When tariffs inflate inventory costs and reduce operating income, companies may need to adjust the prices they pay related entities abroad to stay within IRS expectations. That could mean year-end “true-up” adjustments, sometimes potentially significant ones.
The challenge, as the authors note, lies in timing. Many companies are still selling pre-tariff inventory or passing partial costs onto customers, while others are absorbing losses until comparables data become available. These moving pieces complicate compliance and raise the problem of double taxation if tax authorities in different countries disagree on adjustments.
In the article (PDF - 298KB), “MNEs Face Transfer Pricing True-Up Challenges in Time of Tariffs,” Grant Thornton advisors illustrate how proactively modeling tariff impacts can reduce compliance risks, strengthen documentation and set the stage for smoother audits and bilateral negotiations later. The advisors outline practical steps for navigating tariffs’ tax implications before they disrupt year-end reporting or next year’s profitability.
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