Navigate Tariff Exposure and Inflation in Procurement with Contract Visibility

Tariffs, taxes imposed on imported goods, have a direct impact on procurement strategies and bottom-line costs. As new tariffs are introduced and more are expected, procurement teams are facing rising cost pressures. Combined with rising inflation, many teams are forced into reactive decisions just to find short-term savings.

While these external risks are outside your team’s control, understanding the potential impact is not. Oftentimes contracts will include language tied to the Consumer Price Index (CPI) or inflation-related adjustments. These terms often go unnoticed until costs start rising. With Levelpath, procurement leaders can use Optical Character Recognition (OCR) and intelligent search to uncover these risks before they become budget problems.

Tariffs can raise the price of imported goods unexpectedly, creating a ripple effect across your procurement plans. They can also lead to one-time inflation spikes, driven by higher consumer prices overall.

Many suppliers include an inflation clause in their contract that allows them to raise prices in response to CPI changes. If those terms are embedded in your contracts, increased consumer prices can impact both your budget and the relationship you have with those suppliers. Procurement leaders need to be prepared to identify these risks ahead of time and address them when possible. 

Recent U.S. tariff activity has introduced multiple rounds of increased import costs, with signs of more to come. While no one can predict the exact timing or scope of future changes, it is clear that tariff and inflation exposure are not short-term concerns. They require long-term planning and contract insight.

If your contracts are stored across fragmented or non-searchable repositories, reviewing them for tariff or inflation risk becomes a manual, error-prone process. Pricing adjustment clauses are often buried deep within documents and can be time consuming to surface without the right tools.

The lack of visibility into every existing contract could lead to missed information when determining potential tariff exposure. This decreases awareness of your overall project pipeline and can result in higher rates, supplier complications, or the urgent need to find replacements. 

During disruptions, your list of critical suppliers can change quickly. Teams often engage these key partners first to secure essential goods or services and reduce risk. For non-critical suppliers, procurement may issue a company-wide policy rejecting tariff-related price increases and ask stakeholders to find alternatives. Once you identify contracts with tariff or inflation risks, you can plan to renegotiate terms and better prioritize your project budgets.

Levelpath centralizes contracts into one unified platform and applies built-in intelligence to scan and index all contracts. Our front-door-to-procure platform uses OCR to scan all contracts upon upload, making them easy to access and search from one place. Teams can then search for keywords like “inflation,” “CPI,” “tariff,” “adjustment,” or any other specific criteria to find impacted clauses across their entire contract repository. 

In a notable case study, Levelpath’s AI platform transformed contract analysis at scale, enabling a customer to identify agreements potentially affected by tariffs across 30,000 documents. Instead of assigning a team to sift through mountains of unstructured data, Levelpath’s AI functionality scanned every contract, and identified relevant results tied to keywords like “inflation” and “CPI”. This approach enabled the customer to immediately identify at-risk contracts and act quickly while saving their organization over 3,350 hours of tedious manual work.

Turning Tariff and Inflation Insights into Action

Once you identify the right contracts, you can prioritize next steps: renegotiate, flag for renewal, or monitor for price changes. Want to share your findings with legal, finance, and operations teams? Use Levelpath’s collaboration tools to comment on relevant projects and loop in the right teams. 

In addition to making changes to the current contracts to help mitigate tariff exposure, you can also use Levelpath to create a contract review workflow and flag future exposure. Your procurement team can build a repeatable process to evaluate contracts for risk before they are signed or renewed.

Tariffs and inflation are two of the most unpredictable forces impacting procurement. Both can shift quickly, sometimes from quarter to quarter, creating sudden cost increases and contract complications. When pricing terms tied to tariffs or the CPI are buried in agreements, teams can be caught off guard, which is why contract visibility is critical. 

Procurement teams need to know which agreements contain inflation-related clauses before those costs hit the bottom line. Levelpath makes this possible by using OCR and smart search tools to scan contracts for keywords so what used to take days can now happen in minutes.

By uncovering risks early, procurement teams can operate more strategically without adding headcount. The organizations that prepare for economic changes now are better equipped to respond to market volatility and avoid unnecessary surprises.

-Rose

Learn how Levelpath’s OCR and search capabilities can help your team stay ahead. Request a demo today or join one of our monthly sessions to see how Levelpath can make procurement a delight.