The continued back-and-forth of the ongoing tariff battles that have dominated the headlines since January is a logistical challenge for many American businesses, regardless of industry, geography, or size. A tariff, a tax imposed on imported items when they arrive in a country, can impact everything from supply chains and revenue flow to how prices are defined and profitability is estimated. Tariffs are paid by the companies that import the goods and/or materials. Often, these companies raise prices in response to higher import charges, which can frustrate even the loyalist of customers.
Business owners must get strategic, reevaluating everything from suppliers to overall operations cost efficiencies all while maintaining customer satisfaction with quality products, customer service and loyalty perks.
The impact of tariffs on local businesses
- Prices go up
To mitigate the higher cost of goods and products, many mom-and-pop shops will raise prices. This can upset relationships that have been built with loyal / returning customers. - Exporting challenges
Tariffs often go both ways, i.e., other countries respond by levying their own tariffs on exports. Some countries have imposed high percentage tariffs that affect American export businesses. - Goods get costlier
Local businesses accustomed to providing a particular imported product or goods now face finding workarounds as increased costs can reduce money flow and profit margins. - Supply chain disturbance
Similar to how the pandemic caused major bottlenecking at global ports, tariffs make it increasingly difficult for smaller businesses to receive materials.
5 ways local businesses are responding
- Price transparency
Nobody likes high-price surprises when they hit the aisles. It’s best to tell your customers the why behind a price increase. Remind them that their satisfaction and the quality of items are top priorities, which separates your business from competitors, and that you appreciate their support. - Continued advertising
Whether opening a new business, expanding, or promoting a new product, advertising through the proper channels to get your brand out there is paramount to success. When times are good, advertise. When times are bad, advertise even more. It projects stability and keeps the noise level up—rather than an expense, think of it as an investment in the future of your business. - Process improvements
Take a step back, investigate, and locate any areas that can be streamlined for further efficiency and improvement. There may be overlooked components to revisit and tweak to cut costs. Lessening the impact of overhead can relieve some of the higher charges on goods and services, too. - Seeking alternatives
Is the same product available elsewhere for less money? Some countries aren’t getting hit as severely by tariffs, or perhaps a closer, possibly domestic solution may be viable. If an alternative supplier isn’t an option, use a “we’re all in the same boat” mindset to renegotiate agreements and pricing. And look into savings by purchasing in bulk. - Asking for help
A financial advisor or accountant can help you strategize a plan to deal with potential tariff fallout. Resources such as SCORE are also available to help small businesses with valuable advice at a lower cost or even free, and the U.S. Small Business Administration operates local business development centers that can help, too.
When will things get better?
We watch the headlines and listen to the views, all the while hoping the political climate will soften and the international trade negotiations will settle (positively). At the moment, things seem to be changing overnight, like the weather is unpredictable. Tariffs are bothersome and create a litany of problems. Still, on the flip side, they can stress test a small business to be more robust, resilient, and ready for anything—adaptability is key to the longevity of a smooth operation.
A smart, cost-effective move is to seek out an experienced advertising partner who can help you identify what is happening and follow the policy changes to understand how tariffs will impact your business—diversify, look for financing, and discover ways to adjust your cash flow. Knowing how to read the writing on the wall is just as important as the writing when navigating your company through to the next level. Proven advertising solutions, data-driven insights, and a local marketing expert who lives and works in your neighborhood—there’s every reason to partner with Valpak Clipp on marketing!