Navigating the Upcoming Tariffs as a Small Business Owner

President Trump recently signed executive orders imposing a 25% tariff on imports from Canada and Mexico, as well as a 10% tariff on imports from China. For now, the Canadian and Mexican tariffs have been paused for 30 days and could be put on hold indefinitely if a deal is reached.

The President has also imposed a 25% tariff on all steel and aluminum imports. These moves could have far-reaching impacts on small businesses across the U.S. in the coming months.

Whether you run a physical shop or an eCommerce business, understanding how tariffs work and how they can impact your operations is key to staying ahead of the curve. Let’s break it all down.

 

What is a Tariff?

A tariff is essentially a tax imposed by a government on either imported or exported goods. When a country imposes a tariff on incoming products, it generally results in foreign-made goods becoming more expensive.

• • Pros of Tariffs: Tariffs may boost domestic businesses by encouraging customers to buy locally produced goods, reducing competition from abroad.

• • Cons of Tariffs: However, tariffs often lead to higher prices for all kinds of products both businesses and customers buy – and this can limit people’s options.

 

How Tariffs Can Impact Small Businesses

Typically, the importer is responsible for paying the tariff. For example, if your business imports materials or goods from overseas, you’ll need to absorb the cost. Here are 5 potential challenges you may face as a result of these tariffs.

• • Increased Costs: Tariffs drive up the price of imported goods, but that’s not where it ends. Supply chain costs – everything from raw materials to transportation – can spike too. These higher costs can add up quickly, and may impact your bottom line.

• • Supply Chain Delays: Waiting on any essential goods? Tariffs don’t just hike costs in money, but also time. They can cause delays, as suppliers and distributors adjust to new pricing and logistical challenges. Supply may also become scarce and you might struggle to get the materials you need, leaving you unable to fulfill customer orders.

• • Higher Prices for Customers: To offset your new expenses, you might need to raise your prices. While this is often necessary, few things are as sensitive as price changes when it comes to customer satisfaction.

• • Demand Volatility: Higher prices can also lead to unpredictable fluctuations in demand. Some customers may decide to shop with bigger brands, which have the ability to offer lower prices – while others could substitute the goods or services you provide for something different.

• • Counter-Tariffs: The affected countries may retaliate with tariffs on U.S. goods. This would make American exports more expensive overseas, potentially leading international customers to seek alternatives.

What You Can Do

While the potential impacts of tariffs may sound daunting, there are steps you can take to prepare for them, and minimize any negative effects.

• • Communicate with Your Customers. If you have to raise prices, be upfront with your customers. Let them know how tariffs are affecting your costs. Honesty and openness can help maintain trust and loyalty through difficult times.

• • Reassess Your Supply Chain. Look for alternatives to importing goods from the affected countries. Can you source your materials locally? Work with regional providers? If it isn’t possible, then try negotiating with your current suppliers – they might offer you discounts for bulk orders or extended partnerships.

• • Evaluate Your Inventory. Figure out how long your current stock will last and plan ahead for future orders. Early prep can go a long way in managing changes and surprises of any kind.

• • Streamline Your Operations. Cutting costs in areas like utilities, software subscriptions, or labor can offset the financial burden tariffs may place on your business.

• • Talk to Your Accountant. Create a strategy for managing any cash flow disruptions or higher expenses. They may recommend options like opening a business line of credit to serve as a financial safety net during uncertain times.

 

Tariffs and Modern Business Challenges

If there’s one thing to keep in mind about today’s business landscape, it’s that things are always changing. While tariffs may bring new challenges, small business owners like you have the creativity and resourcefulness to adapt and thrive – this shift may encourage businesses and customers to shop locally, and that’s where the team members of Smart Link Solutions can help!

We’re here to support you through all the curveballs life can throw at your business. Whether you need local search optimization, reputation management, or responsive web design, we can help elevate your online presence and connect you with more customers.

For more information, call (866) 757 – 5100 or visit Smart Link Solutions today!

Disclaimer: The content of this blog is intended for informational purposes only and should not be interpreted as financial or legal advice. Before making any decisions or taking action based on the information provided, we strongly recommend consulting a qualified professional.