Will Tariffs Make Life Different for the Average Small Business?
As of early August, several new tariffs have been imposed. These could change at any time, but the most significant and wide-reaching are a 25 percent tariff on imported steel and 10 percent on imported aluminum. These new fees have been unwelcome by many in the trade and manufacturing sectors.
How will smaller companies manage?
Tariffs throw a wrench into pricing calculations and eat into profit margins. Some companies worry that parts and materials distributors are using the tariff standoff as an opportunity to raise prices.
Actions a few companies are taking to lessen the impact:
- San Francisco start-up manufacturer is considering shifting to Mexico.
- Colorado aluminum products company is spending more time dealing with late deliveries, quality issues and other supply-chain problems as aluminum producers grapple with increased demand.
- Users of steel and aluminum concerned about the market, started filling orders with domestic producers in anticipation leading up to the tariffs. This has sucked up their capacity.
- Some are considering moving manufacturing offshore, which will cut costs by avoiding steel tariffs. . . and take away U.S. workers jobs. (firstname.lastname@example.org)
*Some larger companies have favored the tariffs because Asia has been exporting 200 million metric tons (50 million sold to US) and not importing enough from us.
What’s the fuss?
Small companies don’t have the same flexibility as bigger ones to course adjust. Small manufacturers and resellers have only so many channels they can go through. If those channels are hiking prices in response to tariffs, it will eventually hit them, and they have little choice in where to bid for steel.
The European Union and other countries are fighting back with tariffs of their own. These new tariffs may already be working, if the end goal is to punish the U.S. by slowing the purchases of products we create. EU members may make the choice to buy locally-made products instead of US-made.
The Future of Business under New Tariffs
Some economists aren’t worried, at all. With the surplus of steel, prices could eventually even out.
What About Small Businesses?
Possible delays: Hiring, new product launches, and ad campaigns to push steel-based product lines. These next few months – and years – have the potential to cause chaos, especially for those serving foreign markets. More tariffs are likely, both from home and abroad, giving many companies a reason to sleep a little less at night. (Adapted from Linsey Knerl, Nav.com – August 7, 2018)
Email me email@example.com to talk about possible strategies to lessen the impact.
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