Currency volatility driven by US tariffs is taking a visible toll on North American corporates, with nearly 70% reporting a hit to profitability or competitiveness in global markets, according to MillTech’s 2025 North American Corporate FX Report. The research paints a detailed picture of how finance leaders are adapting to an increasingly turbulent trade environment, where hedging costs are rising sharply and manual processes are no longer fit for purpose.

Based on a survey of 250 senior finance decision-makers across the US and Canada, the report finds that 83% of corporates have suffered losses from unhedged foreign exchange (FX) exposure, while 91% are now actively hedging their FX risk. That’s up from 82% in 2024 and 81% the year before, underlining the urgency of protecting margins in an unpredictable pricing environment.

The shift comes despite a sharp rise in hedging costs. Some 94% of respondents said their hedging expenses had increased over the past year, up from 73% in 2024, with an average cost increase of 76%. Nevertheless, many companies are prepared to pay more for protection rather than leave themselves exposed to volatile markets. Tariff-linked FX fluctuations have become one of the most destabilising forces in corporate treasury this year.

Short-term protection, long-term rethink

Faced with elevated market uncertainty, firms are reassessing both their hedging strategies and their underlying FX infrastructure. Average hedge lengths remain at a three-year low of 4.9 months, suggesting caution and a preference for short-term coverage. However, this may be changing: 64% of firms say they plan to extend their hedge tenors, pointing to a possible shift in strategy as companies seek greater stability over time.

FX risk is also increasingly informing wider business decisions. Nearly nine in ten corporates (87%) have changed their sourcing or manufacturing strategies in ways that affect their FX exposure, as tariffs force firms to rethink supply chains and supplier relationships.

Despite these pressures, corporate sentiment remains surprisingly upbeat. A large majority (84%) say they feel optimistic, suggesting confidence that the pain of today’s volatility could give way to long-term structural benefits. Still, the short-term challenges are considerable. The most pressing tariff-related concern is the impact on currency values, cited by 36% of firms, followed by uncertainty holding back major business decisions (34%), and growing concerns about counterparty risk in hedging transactions (33%).

Technology and transformation

This complex risk environment is pushing firms to modernise how they manage currency exposure. Every company surveyed is exploring automation for some part of their FX processes, with price discovery (34%) the most popular application. Manual methods are on the way out: use of the phone to book FX trades has dropped to 29%, down from 35% two years ago, while email-based transactions have fallen to 24%, from 34% over the same period.

Fragmentation remains an obstacle, with 32% citing disconnected FX service provision as a core challenge. Demonstrating best execution (33%) and dealing with outdated manual processes (30%) round out the list of top concerns, highlighting the operational burdens still facing many finance teams.

AI is also moving up the agenda. Every firm surveyed is exploring artificial intelligence in FX, with 43% identifying process automation as the most promising use case. Others are using AI to improve price visibility and reduce the time spent on routine FX tasks.

Infrastructure gaps stall adoption for some

While overall hedging levels are high, a small minority of firms still operate without FX protection. Even here, the tide may be turning: 65% of non-hedging firms now say they are considering hedging in 2025, up from just 51% last year. The main hurdle appears to be infrastructure. A striking 83% of these firms cited burdensome infrastructure as the reason they haven’t implemented hedging, a sharp jump from 20% in 2024. The data suggests the intent to hedge is widespread, but many firms lack the tools to do so effectively.

To navigate this, corporates are increasingly turning to outsourcing. Every firm surveyed outsources at least part of their FX function. The main reasons are access to specialist expertise, operational efficiency through automation, and the flexibility to scale activity up or down as needed.

Options and transparency gain traction

With traditional forwards and swaps still widely used, FX options are now gaining ground as firms seek more tailored protection. A full 86% of respondents say they use options as part of their FX strategy, suggesting a move toward instruments that offer greater flexibility amid unpredictable markets.

Cost transparency is also under greater scrutiny. When asked about their top FX priorities in 2025, 34% of respondents pointed to the need for clearer cost visibility, ahead of automation (32%) and counterparty credit quality (29%). Taken together, the findings reflect a sector that is not only reacting to external volatility but also looking inward to tighten its controls and reduce exposure to hidden inefficiencies.

A defining year for FX in corporate strategy

The data paints a picture of a treasury function that is undergoing a rapid evolution. Currency risk, once treated as a background issue, is moving into the spotlight. With tariffs and geopolitics redrawing the map for cross-border trade, firms are no longer viewing FX as a back-office concern but as a strategic priority.

As volatility remains high, more companies are extending hedge lengths, embedding automation, and reconsidering the structure of their FX operations. In an environment where the next shock could come from policy, markets, or supply chains, the pressure is on to build systems that are not just reactive but resilient.

As MillTech CEO Eric Huttman put it: “For too long, currency risk has been treated as a background issue, quietly managed by treasury teams while broader business priorities took centre stage. But in an era where currency swings can erase quarterly gains, proactive FX risk management is essential. Businesses can no longer afford to ignore the duck. It's time to listen, prepare and build smarter, more resilient FX strategies."