If you have been watching the news lately, you have probably seen the word "tariffs" more times than you can count. New proposals, retaliatory measures, shifting trade policies. It feels like the ground is moving under our feet.
But here is the thing most headlines miss: tariffs do not just affect importers and manufacturers. They ripple through every business in America. If you buy supplies, sell products, or employ people, tariffs will touch your bottom line in some way.
We have been fielding calls from clients about this all month, so let us break it down plainly.
What Tariffs Actually Do to Small Businesses
A tariff is essentially a tax on imported goods. When tariffs go up, the companies importing those goods pay more. And that cost gets passed along. Your supplier pays more for raw materials, so they charge you more. You pay more for inventory, so you either raise prices or absorb the hit.
Here is a real example. One of our clients runs a small contracting business. They buy a lot of their materials from distributors who source globally. When tariffs on steel and aluminum went up, their material costs jumped about 8% almost overnight. That does not sound like much until you realize it wiped out the profit margin on three active jobs they had already bid.
Three Things You Should Do Right Now
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1. Review Your Vendor Contracts
If you have fixed-price contracts with customers but floating costs from vendors, you are exposed. Look at your current agreements and see where you have pricing flexibility. Some vendors will negotiate cost-sharing arrangements if you ask.
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2. Update Your Pricing Models
This is not the time to guess. Pull your actual cost data from the last 90 days. Compare it to 6 months ago. If your costs have risen, your pricing needs to reflect that. We have seen too many business owners eat cost increases out of fear of losing customers, only to realize months later they have been working at a loss.
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3. Build a Cash Buffer
Uncertainty is the real enemy here. Tariff policy can change with a single announcement. Having 60 to 90 days of operating expenses in reserve gives you breathing room to adjust without making panic decisions.
The Bigger Picture
Tariffs tend to create a chain reaction. Higher costs lead to higher prices lead to slower consumer spending lead to tighter cash flow. It does not happen all at once, but it builds over quarters.
The business owners who come through these cycles strongest are the ones who stay on top of their numbers. They know their margins. They know their break-even point. They adjust early instead of reacting late.
What We Are Telling Our Clients
Run a sensitivity analysis. What happens to your profitability if costs go up 5%? 10%? 15%? Know your threshold before you hit it.
Talk to your accountant. Seriously. This is exactly the kind of situation where having someone who understands your financial picture can save you from a costly mistake.
If you are not sure where to start, we are happy to walk you through it. No charge for the first conversation.