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How Trump Tariffs May Impact Your Business and Where a

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There are a couple of big Ts dominating discussions this week: turnout, Trump, and tariffs. Business owners understandably care the most about that last one; the Trump tariffs will have sweeping effects on businesses that may impact your bottom line. If you haven't made the switch to warehousing with a third-party logistics provider (3PL) like All Points, now is a good time to assess a potential partnership and how it can drive value or offset increasing costs for your company.

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How Trump Tariffs May Impact Your Business

To be clear: we don't yet know what will happen with the Trump tariffs. Trump has expressed an intent to impose a 60% tariff on goods coming from China—higher if they go into Taiwan—and has mentioned tariffs for goods from Mexico that range from 20% to 100% (200% specifically for John Deere if the company were to move production to the U.S.'s Southern neighbor). We, of course, need to wait to see what, if any, official action he takes on tariffs. In the meantime, it's helpful to understand what a tariff could mean, no matter the actual number, for your business.

Higher Product Costs

The Trump tariffs will raise import costs, potentially 60% as he vocalized earlier in the election cycle. If he follows through on other statements and China moves into Taiwan, that will go even higher. As a business getting products or materials from China, you'll pay that cost. What you do after that is up to your business and company priorities. Potentially you'll eat the cost and move forward with lower margins to keep your customer base happier, but you may need to consider potential price increases. Raising the prices of your products maintains your profit margins but may undermine customer satisfaction and loyalty, potentially eating away at the lifetime value (LTV) of your consumer base.

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(Potentially) Shift to Mexican Imports

There's a lot of uncertainty here. If Trump implements the initial tariffs he mentioned on imported good from Mexico, companies are looking at a 20% tariff—that's a significant savings compared to the tariff on China. Businesses may want to shift what they can of their supply chain out of China to Mexico to minimize the tariff they'll pay when they import their products.

On the other hand, if Trump proceeds with the higher tariff he's threatened on goods imported from Mexico, there would be no value in shifting your supply chain since 60% is still lower than 100%.

Competitive Pressure 

Should the 60% tariff on goods from China hold in addition to the 20% tariff on products from Mexico, there will be intense competitive pressure on companies to switch their supply chain to Mexico even if they're theoretically willing to take a wait-and-see approach. Companies with non-China suppliers would gain an edge both short- and long-term: they'd pay less to import their goods and potentially enjoy more customer loyalty for passing less of this cost to the consumer. That edge will push other brands to adapt, either following suit in shifting their supply chain or pivoting to less competitive niches.

Supply Chain Disruptions

The math of this competitive edge may be easy, but the reality isn't quite so cut and dry. Shifting suppliers introduces new risks to a business's supply chain and potential delays in product availability. There's only so much you can know about a new supplier, even if you do your due diligence, compared to the shared history you have with your current, trusted suppliers. Is the new supplier nimble enough to move with you if your demand suddenly sees an upswing, or would your most popular products be on backorder while they ramp up to match this new appetite?

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How Can a 3PL Help?

A 3PL like All Points can help businesses navigate these difficult waters in two ways, depending on their internal priorities. For companies that want to reassess their supply chain to avoid import costs, an experienced 3PL can help advise on making that switch and suggest established partners that have shown reliability with other clients in similar industries. They can also advise on best practices for other inventory management strategies to shield your brand from stockouts or backorders in case you're not able to find a supplier as nimble as your last one and you want to make sure you're protected in the case of demand surges.