Planning for 2027: which decisions to fix now and which to hold as options

Most 2027 budgets now being drafted rest on assumptions set before the summer. Several of them no longer hold.

The United States changed the legal basis of its import duties twice in five months. On 20 February 2026 the Supreme Court held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. A temporary 10% surcharge under Section 122 of the Trade Act of 1974 took effect on 24 February and lapsed on 24 July, because Section 122 limits such a surcharge to 150 days unless Congress extends it, and Congress did not. New Section 301 duties replaced it the same day: 10% on imports from the United Kingdom, the European Union and a group of other economies, and 12.5% on most others, including China. The US Trade Representative estimated that they cover 99% of imports. Goods covered by the Section 232 metals tariffs are exempt.

Interest rates turned. The European Central Bank raised its deposit rate to 2.25% in June 2026 and to 2.50% from 16 September, after eight cuts had taken it down to 2.00%. The Bank of England held Bank Rate at 3.75% in September, with three of the nine members of its Monetary Policy Committee voting to raise it to 4%. UK CPI inflation reached 3.1% in August, and the Bank expects it to rise further as energy prices, raised by the conflict in the Middle East, feed through.

A financing assumption written when the euro deposit rate stood at 2.00% is now half a percentage point out, and the next moves are open.

Most plans carry one blended tariff assumption per market. That hides the property that matters most for a sourcing, pricing or capacity decision, which is how long a given duty is likely to last and what could end it.

Each US instrument runs on its own clock. A Section 122 surcharge is capped by statute at 15% and 150 days. Section 301 duties rest on investigation findings by the Trade Representative and can be challenged in court; the group that won the challenge to the IEEPA tariffs filed suit against the new duties within hours of their taking effect. Section 232 duties follow a national security determination by the Commerce Department and have been adjusted repeatedly by proclamation, including a June 2026 change that widened the list of products on lower rates through 2027. A margin exposed to a duty on a 150-day clock calls for a different response from one exposed to a duty with no end date and a live court case.

The exposure model should therefore hold the instrument beside the rate, line by line: tariff code, origin, the instrument that applies, the rate, the date the rate last changed and the event that could change it next. Built from customs entries and the purchase ledger, it shows a board whether most of its landed-cost risk sits on one instrument facing one challenge.

The same discipline applies to money already paid. US Customs and Border Protection opened the third phase of its refund process for IEEPA duties on 6 October 2026, and on 8 October the Court of International Trade granted class certification in the lead refund case, a ruling that can still be appealed. Trade lawyers read the limitation period for the earliest duties as two years, which closes in early 2027. A refund follows the importer of record. A business that bought on delivered-duty-paid terms carried the duty inside its purchase price, sits outside the class, and can recover only what its supplier contract provides for. Establishing which side of that line you are on, with customs and legal advisers, decides whether 2027 holds a cash inflow or nothing.

A commitment is a decision whose value does not depend much on which scenario arrives, or whose cost rises the longer it waits. Rebuilding landed cost and contribution by product and market from the order system and the ledger is a commitment, because every later decision needs it. So is a hedging policy that states what share of next year's foreign-currency purchases is fixed and when, and supplier terms that say who carries a tariff change.

An option is a decision that becomes cheaper and better informed with time, provided something is paid to keep it open. For most firms in late 2026, moving production to a second country, opening a US warehouse, repricing a US list or entering a new market are options. The useful question about each is what it costs to keep open: qualifying a second supplier, holding a lease with a break clause, carrying extra stock, running a small test market. That cost is the option premium. It belongs in the budget as a line of its own, so the board can see what flexibility it is paying for.

Most plans we read mix the two. They commit to a sourcing move on the strength of a single tariff forecast and defer the data work that would have shown whether the move pays. Reversing that order is the main change we would make to a 2027 plan.

An option without a trigger tends to be exercised late or not at all. For each one, the plan should name the observable event that will inform it, the threshold at which the business acts and the latest date for a decision.

The UK Budget on 28 October sets the tax assumptions for the UK plan. The Bank of England announces on 5 November, with its Monetary Policy Report, and again on 17 December. The court cases on the Section 301 duties and on the IEEPA refund class will produce rulings on dates nobody controls, so those triggers are better written as outcomes than as dates. The lower Section 232 rates for some products run through 2027, which gives any metal-intensive sourcing decision a natural review point.

A trigger can be as plain as this. If the Section 301 rate on our main US-bound category is still in force on 31 March 2027 and no court has suspended it, we exercise the second-supplier option for that category; if it has been suspended, we hold. The board approves the rule in November, and management executes it in March without reopening the strategy.

Currency exposure is usually handled by applying a budget rate to a plan built in the reporting currency. That hides where margin is earned. A business that buys in US dollars, sells in sterling and euros and reports in sterling has three exposures, and a single budget rate can show contribution rising while the euro-denominated part of the book loses money.

We start by restating contribution by market in the currency in which each sale and each cost is incurred, from the order system and the purchase ledger, before translating anything. Two figures come out of that. The first separates natural hedges, where revenue and cost sit in the same currency, from open exposures. The second is the rate move that would turn each market's contribution negative. That second figure becomes the threshold for the currency triggers in the plan.

We work with organizations in the United Kingdom, Türkiye, the Gulf, Australia and the United States. The exposure that is easiest to miss sits in a cost assumed to be domestic, such as a freight contract, a software license or a marketplace fee billed in dollars.

By the end of November 2026, rebuild landed cost and contribution by product and market from customs entries, the order system and the ledger, with the tariff instrument recorded against each line. Confirm with advisers whether the business was importer of record for any IEEPA duties and, if it was, which recovery route it will use before the early-2027 limitation date.

At the December board, approve the plan in two parts: the commitments, funded in full, and the options, each with its holding cost, trigger, threshold and decision date. Fix the hedging policy for 2027 purchases and record, per market, the rate at which contribution turns negative.

In January and February 2027, rewrite the supplier and customer terms that come up for renewal so that tariff changes are allocated by clause rather than negotiated after the event.

By 31 March 2027, take the first option decisions against the triggers set in November, using the rates and rulings actually in force.

In June 2027, review which options were exercised, which lapsed and what each cost to hold, and reset the triggers for the second half of the year.