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How the Trump Administration’s Tariffs Are Shaking Up SMBs—and What You Can Do About It
Tariffs aren’t just numbers on a spreadsheet anymore. They’re eating into your profit margins, creating supplier drama, and forcing you to rework your entire budget. If you’re an SMB owner or financial manager, you’re probably wondering how to navigate this new normal—especially when these U.S. trade policies keep shifting.
Let’s pull back the curtain on tariffs, their direct impact on your bottom line, and the practical steps you can take right now to protect your business.
Tariffs 101: A Quick Refresher
Think of a tariff as a tax on imported goods. According to the Tax Foundation, these costs often get passed on to the businesses and consumers, not necessarily absorbed by foreign exporters. The Trump administration has imposed tariffs on goods from Canada, Mexico, and China, as noted in this White House Fact Sheet.
When you bring products into the U.S., customs officials collect tariffs at the border. If you’re not monitoring these extra fees, they can quietly bloat your cost of goods, making your once-stable budget feel more like a moving target.
The Domino Effect on Your SMB
Budget & Forecasting Turbulence
○ Unpredictable Rates: With changing tariff policies, you might need multiple budgeting scenarios to cover best-, mid-, and worst-case rates.
○ Profit Margin Pressure: Every extra fee to import materials chips away at your bottom line, which can mean less cash flow and tighter profit margins.Supply Chain Dilemmas
○ Stick with Your Current Suppliers: Accepting tariff costs might be simpler in the short term, but it’s risky if rates spike again.
○ Move to Other Countries: Lower or no tariffs can stabilize costs, but vetting new suppliers takes time (and trust).
○ Source Domestically: You might avoid tariffs, yet domestic production often has higher labor costs—so you’ll want to weigh shipping savings against those increased expenses.Impact on Tax Returns & Liability
○ Tariffs as ‘Extra’ Costs: Tariffs get baked into your import invoices, so they’re not a line item on your tax return. But they do affect the cost of goods sold, which in turn affects your taxable income.
○ Accounting Complexity: Keeping clear records of tariff expenses is crucial for accurately predicting tax liabilities and ensuring you don’t miss out on deductions or overstate your expenses.
Planning Ahead: A Blueprint for SMBs
Map Your Supply Chain
Document every supplier, the percentage of inventory each source provides, and where they ship from. This snapshot will help you see where the highest tariff risks lie.Run Multiple Scenarios
Build a few “What if?” budgets. For instance:
○ Current Tariff Rates: Your baseline budget.
○ Higher Tariff Rates: If tensions escalate, can you still maintain profitability?
○ Lower Tariff Rates: If negotiations ease, do you allocate that extra margin to growth?Reassess Your Pricing Strategy
With higher import costs, you may need to adjust your prices to maintain margins. Communicate any increases transparently to customers—especially if you serve the B2B market.Optimize Tax and Accounting Approaches
○ Track tariff expenses separately to see how they affect your overall financial performance.
○ Consult with tax professionals (that’s us!) to ensure you’re taking advantage of every deduction or tax credit that offsets additional tariff costs.Stay Nimble
Tariffs aren’t set in stone. Keeping a close eye on policy shifts allows you to pivot quickly, renegotiate supplier contracts, or even pursue new markets.
How We Can Help
Wading through policy updates and crunching numbers can be time-consuming—especially when you’ve got a business to run. We’re here to take the guesswork out of tariffs and help you:
Plan Better Budgets: We’ll create multiple forecast models so you can be ready no matter how the tariff landscape evolves.
Find Supply Chain Savings: Our team can help you weigh the costs and benefits of shifting suppliers, whether that’s moving to other countries or going domestic.
Simplify Your Accounting: From categorizing tariff expenses correctly to optimizing your tax strategy, we’ll make sure every penny is accounted for.
Ready to steer your SMB through uncertain times? Contact us today to schedule a planning session that puts you in control of your financial future.
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Securities offered through PFS Investments Inc., member FINRA & SIPC. Investment advisory services may be offered through PFS Investments Inc. or, where applicable, through a separately registered investment adviser. Paul D. Diaz is an IRS Enrolled Agent & IRS Certifying Acceptance Agent and provides ITIN/W-7, tax preparation, tax resolution, and tax advisory services through THE TAX CUTTERY®, an independent firm. Tax services are not offered through PFS Investments Inc. or its affiliates and are solely the responsibility of THE TAX CUTTERY®. This message is not intended as an offer or solicitation in any jurisdiction where such offer or solicitation would be unauthorized. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results.
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