Tariff Survival Strategies

While each industry's impact varies, tariffs affect and concern every business decision-maker today. Tariffs will affect every American to some degree or another, with business owners being hit doubly on the work and home front. Luckily, Mark Manning's decades in supply chain management gives him (and you) an advantage in the market. So here are some of his thoughts on tariff strategies.

How Do Tariffs Affect You?

Tariffs affect us all, even if our products don't come from overseas. There are a couple of reasons for that.

First, no company is an island; chances are someone, somewhere in your supply chain You're likely dealing with companies whose products come from China or another affected country.

Whether it's a supplier who builds in the US with a part from China or a service provider who can't make repairs without a particular widget, it will affect you if their price goes up.

Secondly, the cost of living is going up. Inflation will get worse, so that means some combination of you, your customers, or your employees will be hurting.

In addition, the uncertainty in the economy due to the whiplash of policy decisions makes people more hesitant to spend, and that can include your customers.

Finally, if you deal in supply chains that are directly affected, tariff strategies can have a significant effect on how well you and your business weather the storm.

Tariff Survival Strategies

Depending on how strongly the tariffs are affecting you and your business, there are several tariff survival strategies to utilize to lessen the impact and roll with the changing economy. Here are some of our tariff strategies and our suggestions.

Passing on the Cost

One of the most common ways to deal with tariffs is to pass on the cost. Naturally, this is a risky strategy, though one whose simplicity is appealing! When you pass on the price of goods, your customers will absorb it, giving you the same profit you're used to.

There are places where this tariff survival strategy makes sense. We have a customer importance a relatively inexpensive item whose price went up 125%. The item cost about $5, now about $12. Because the item is in high demand, and $7 is unlikely to eat into their customers' budgets significantly, we recommended passing on the cost, and it's been successful.

The problem here is that customers can be reactive to that and buy less. That's especially true if they don't see your company as one that has been directly impacted.

The economy and interactivity between sectors are complex, and not every consumer can be expected to understand it.

Absorbing the Cost

If you have room in your budget to absorb the cost, that's another tariff survival strategy that can be appealing in its simplicity. However, most business owners can't afford to do it, particularly when there is no clear end date on site.

Meeting Halfway

Many business owners will choose something between the two above extremes, absorbing some of the cost as a business expense while raising their customers as much as they believe the market will bear.

This strategy depends on following market trends and knowing your customer base. This is one area where Ollie and Associates' business strategy can come in handy. We'll forecast prices and give you the best tariff strategy for you.

Stockpiling Where Possible

Depending on your space and the size of your items, you may want to take advantage of pauses in tariffs to get as many of an essential item as you can afford.

Obviously, this doesn't work for every business, and it's one place where large companies have an advantage over the little guy.

Finding Other Sources and Other Clever Tariff Survival Strategies

Business Law isn't always black and white. Sometimes, there are places where we can categorize an item multiple ways, and with the help of a supply chain specialist, we can recategorize an essential product so that you have a lower tariff.

Other times, negotiating with your vendors can bring your costs down. They are experiencing the same hardships as you are, and it's better for them to have a lower profit margin but still make a sale.

Finally, as supply chain experts, we know the business and may be able to find you a similar product from another supplier at a better price.

Tariff Survival Strategy Engaged!

Uncertainty is tough on us all. That's why having a supply chain expert on your team to help with your business strategy is exactly what you need to initiate the best tariff strategy for your company.

Every company is different. Ollie and Assoicates is here to understand yours and implement the best tariff survival strategy to get you through this uncertain time.