Economists predict businesses will have little choice but to pass the cost of proposed tariffs on to customers for anything from clothing, food, automobiles, energy, and more. Enterprise businesses may be able to absorb some of tariff-related costs to limit their impact, but small to mid-sized businesses risk losing customers altogether if prices spike too high too fast even despite easing inflation.
Here are five key strategies to consider as you look to safeguard your supply chains.
Diversify sources across your supply chain
One way to minimize the impact of proposed tariffs is to diversity your supply chain sources. By relying too heavily on suppliers from countries subject to high tariffs, you leave your business vulnerable to cost spikes and supply chain disruptions. You can reduce any market dependent exposure you might have by sourcing goods and materials from multiple places, such as domestic suppliers and a variety of countries globally.
Negotiate with suppliers
Talk with your current suppliers about tariff-related costs, consider renegotiating contract terms, and look for discounts if possible. There may be mutually beneficial solutions that you and your suppliers can employ to alleviate financial impact, such as preferred pricing and flexible terms. You should also consider collaborating with other businesses to amplify your negotiating power.
Building strong relationships could help you find collaborative solutions to common challenges as well as share resources so you can more quickly achieve economies of scale and reduce costs.
Optimize inventory management in your supply chain
You should assess your inventory practices to avoid unnecessary costs. Stockpiling critical materials before tariffs increase, when feasible, can save money in the short term. Implementing just-in-time (JIT) inventory systems can also help reduce carrying costs and improve cash flow, though this approach requires careful coordination to avoid disruptions.
To understand what the best approach for your business might be, OpenText offers our Trading Grid Command Center, giving you visibility into logistics flows and helping you monitor B2B transactions so you can better understand the day-to-day health of your supply chain and inform how you respond to emerging issues like tariffs.
Invest in supply chain technology
Digitizing your supply chain can make it easier to adapt to evolving global trade conditions while also safeguarding your business long-term. Supply chain management solutions like OpenText B2B Integration Essentials help you to manage EDI relationships and understand what’s happening in real-time so you can adapt and evolve your business more easily. Our Trading Grid can help you reduce costs, drive time to revenue, and modernize how you integrate with trading partners so you can future proof your business.
Leverage trade programs and tariff exemptions
Knowledge is power. Staying informed about trade programs and tariff exemptions can help you reduce your business exposure. Trade policies can change rapidly, so consider subscribing to industry newsletters, join trade associations, and working with trade consultants. The United States government offers programs like the Generalized System of Preferences (GSP) or the Foreign-Trade Zone (FTZ) program that might let you import goods at reduced or zero tariffs under certain conditions.
Are you ready? Plan ahead to protect your business
Inflation has already created trust issues with many customers, simply passing on the cost of tariffs, will only exacerbate problems. Whether due to geopolitical tensions, trade disputes, or policy changes, tariffs can significantly impact costs, profit margins, and overall competitiveness. Tariffs can impact any business no matter their size, but with proactive planning and strategic changes, mid-sized and small businesses, can better navigate trade environment complexities and continue to grow.
Ready to see what OpenText supply chain technologies can do for you? Check us out.
