What will the new tariffs do to your business' bottom line?
There's a word that's striking fear into the hearts of business people around the world: tariffs. With the Trump administration's focus on putting American businesses first, there has been a number of tariffs being put into place on a wide range of products and materials coming into our country. But what impact are these tariffs going to have on your company?
Here's a quick look to help you form a strategy to deal with these issues.
With the hysteria on tariffs, it can be difficult to predict the actual impact. A few weeks ago, the Fed's Beige Book reported that they had anecdotal reports on the rise in cost of steel, aluminum, drywall, concrete and lumber, blaming the change in cost on the steel and aluminum tariffs, but drywall, concrete and lumber are typically sourced within the US, and wouldn't be impacted by the tariff. Further analysis showed that the increase in steel prices had to do with businesses stocking up prior to the tariff going into effect, along with increased construction activity.
But what about other industries? A 25% tariff on Chinese goods may cause a serious hit to American wallets in the short term, but this could prove a boon to manufacturers large and small in the US. If these companies are able to receive a larger market share due to the tariff, they can expand their operations, providing more opportunities for employment for those who are still underemployed or had left the job market during the recession.
One solid approach to consider is taking a look at where your business spending is going and try to find comparable American companies to do business with. If the American company can provide items of similar quality for less than 25% above the cost of similar goods from overseas, you'll want to explore making the switch to cut your losses due to the tariffs.
Though tariffs may impact businesses in a wide range of industries, the true impact they'll have on our economy has yet to be determined. Is your business positioned to take advantage of the new tariffs? If not, our professional business associates may be able to help. Please feel free to contact us today and see what the AccountRely difference can make in your business.