Small Business Strategies for Rising Tariffs
Tariff hikes, GDP swings, and rising costs—here’s what your business needs to know and how to prepare.
If you’ve been following recent economic news, you may have noticed a sharp uptick in reciprocal tariffs, ranging from 11% to 50% on imports from various countries. From penguin-inhabited regions to Switzerland, these changes are sending ripples through supply chains. Even if you’re not in manufacturing, this could have a big impact on your bottom line. We’ve got small business strategies for rising tariffs, so stay tuned!
Why Tariffs Matter to Small Businesses
You might be thinking, “I’m not importing anything. This doesn’t apply to me.” But if your business orders supplies, parts, or equipment—especially anything with international origins—you could see rising costs in the near future.
This matters for anyone who relies on products that cross borders at some point in their journey. Even if you’re not the direct importer, your suppliers likely are—and those added costs will trickle down to you.
U.S. GDP: From Growth to Contraction
In late January, the Atlanta Fed forecasted a +3.8% GDP growth—a promising sign for the economy. But as of April 3, that same forecast swung to a -2.8% contraction, marking a 5-point shift in just a few months. While many of my clients haven’t felt the hit yet, this economic shift is one to watch closely.
What Is a Tariff? A Quick Refresher
A tariff is a tax placed on goods imported from another country. It increases the total cost of importing that product.
For example:
Let’s say you import a t-shirt from Lesotho—a country known for textiles. If that shirt costs $7 to import, a 50% tariff bumps the price up to $10.50. To maintain your profit margin, your retail price might need to rise from $15.99 to $19.49. If customers resist that increase, you’re either stuck with inventory—or forced to sell at a loss.
“Just Buy American!” Isn’t Always a Solution
Buying from U.S.-based manufacturers sounds ideal, but it’s not always possible. If there’s no domestic infrastructure to produce what you need, or if constant tariff changes make it impossible for producers to price competitively, your options are limited. In many cases, pivoting quickly is your only path forward.
Real-World Example: The Rising Cost of Almond Milk
One of my clients experienced this firsthand. In November, a case of almond milk cost them $26.29. By March, the price had climbed to $29.98—an increase of over 14%. While this specific spike wasn’t solely due to tariffs (weather events like droughts and supply shortages played a role), it shows how quickly prices can shift.
If you don’t track those changes and adjust pricing or sourcing, your margins can quietly vanish.
6 Strategies to Prepare for Tariff-Driven Price Increases
Here are some proactive ways to help small businesses create strategies for rising tariffs:
1. Communicate Price Changes Clearly
Include tariff-related increases as separate line items on your invoices. Be aware, though—tariffs are typically subject to sales tax, even when broken out.
2. Build Up a Cash Reserve
Unexpected costs hurt more when cash flow is tight. Try pre-paying rent, buying supplies ahead of time, or setting aside a percentage of income to help absorb surprises.
3. Audit Your Supply Chain
Explore domestic alternatives where possible. Even small shifts—like sourcing U.S.-made flour for your bakery—can help offset higher costs for items like imported bananas.
4. Renegotiate Contracts
Secure long-term agreements or require deposits on large jobs. Ask about volume discounts or bundled shipping to help control costs.
5. Educate Customers
If your costs are rising, your customers need to know why. Transparency builds trust and helps them understand any price adjustments.
6. Shop Local Whenever Possible
Shopping locally helps everyone. For every $1 spent at a local business, about 70¢ stays in your community, compared to only 30¢ at big box stores. Local spending supports jobs, services, and your neighbors’ livelihoods.
Final Thoughts: Stay Calm and Plan Smart
This isn’t the first time we’ve weathered economic uncertainty, and it won’t be the last. While tariffs and GDP drops sound scary, your response can make all the difference. With smart planning, strategic sourcing, and open communication, your business can come through stronger on the other side.
And remember—you don’t have to go it alone. Whether it’s reviewing your margins or restructuring cash flow, I’m here to help you make confident, informed decisions.
