How Small Businesses Can Prepare for Proposed Overseas Tariffs
As a new presidential term begins, small business owners are paying close attention to promises made on the campaign trail. One item that has businesses owners concerned are the proposed overseas tariffs on items imported from overseas. With so many small business owners contracting their manufacturing outside of the US, this kind of tariff presents some dilemmas. Should they try to find less expensive manufacturing options domestically? Should they wait it out, hoping the tariffs won’t force them to increase their prices too dramatically?
One campaign proposal was a tariff of up to 45 percent on products imported from China. Economists estimate that this move could lead to price increases of ten percent. Without cheaper alternatives, many consumers would likely choose to not buy certain items at all. This could hurt businesses of all sizes. For small business owners, though, it’s important to plan ahead, especially if they’re already manufacturing products overseas. Here are a few things you can do to protect your product-based business.
Although international trade agreements are on the president-elect’s radar, it will take time to legislate and impose overseas tariffs.
Experts stress that under current laws, the administration would not be able to target a specific country with tariffs. Instead, the overseas tariffs will need to target categories of products. If possible, you may want to extend existing agreements, since any laws passed may apply to new contracts, allowing existing relationships to be grandfathered in.
Instead of accepting that an across-the-board price increase may be an inevitable part of your future, begin pricing competing manufacturers. If you’ve worked with the same provider for a considerable period of time, you may be able to strike an agreement that reduces your costs without sacrificing product quality. You may also find that making small changes to the way you manufacture and ship your items can result in a big difference in your annual expenditure.
Even if local manufacturing costs slightly more than what you’d pay overseas, there are many benefits to contracting with nearby manufacturers for your products.
You save on international shipping to get products from the other side of the globe to your local distribution facilities.
You may find moving processes to a nearby warehouse is actually a better business decision than it was several years ago, especially if it means you can take a more hands-on approach to manufacturing.
When you support local businesses, you show your community pride. This incentivizes customers and your local government to make sure you succeed.
While there is inevitable uncertainty surrounding new national leadership, small businesses can always benefit from advance preparation. By reviewing your own manufacturing processes and paying close attention to bills as they make their way through the legislature, your business will be ahead of the game, helping you continue to keep your business’s budget in check.
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