Tariffs: Protect Your Company with These Six Strategies

Many manufacturers are facing increasing costs due to imported materials tariffs. If you’re importing and affected by these changes, below are six ways to help evaluate and manage how they impact your business.

1. Scrutinize your supply chain. Determine whether tariffs affect you and how. Identify the countries from which materials and components originate by analyzing your supply chain. If you buy materials from distributors or service centers, this may not always be immediately apparent.
2. Identify alternative sources. If you determine that your costs are subject to tariffs, consider alternative material sources. Don’t switch unless these sources can supply you with comparable quality materials in the quantities you need on a timely basis.
3. Buy in advance. If possible, stock up on materials before tariffs take effect.
4. Increase prices. Some manufacturers are taking a wait-and-see approach by absorbing increased costs in the hope that the “trade wars” will dissipate. Others are increasing their prices and passing these costs on to their customers. Research what your competitors are doing and review your options. Communicate with your customers before imposing increased costs.
5. Reduce costs. Examine cost-cutting strategies. Implementing just-in-time inventory or lean manufacturing techniques, redesigning products or packaging, or reducing overhead and administrative costs are a few examples.
6. Use contract manufacturing. By partnering with contract manufacturers in other countries, you may be able to avoid or reduce tariffs, and avoid importing affected raw materials or components.

Avoid Spur of the Moment Reactions

These are just a few of the possible approaches to mitigating tariff effects. To avoid hasty reactions, contact us and we will carefully evaluate each option’s potential benefits and risks.

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