Tips to Reduce the Impacts of Tariffs on Your Small Business

What is a tariff? A tariff is a tax levied on imported goods when they enter the country. When the U.S. government imposes tariffs, they’re paid by the domestic companies that import the affected goods or materials. To cover the higher import costs, domestic companies typically raise prices — which then impacts the consumer.

Here are some actions small businesses can take to try to reduce possible impacts of tariffs on their small business operations:

1. Communicate with your customers

If you have to raise prices to combat the higher cost of goods, be upfront with your customers and explain why the change is occurring. You can emphasize the quality, uniqueness or other differentiating features of your products to help justify increasing prices and thank customers for their loyalty.

2. Re-evaluate your supply chain

If possible, determine if you can purchase your goods or materials from other suppliers. Look for suppliers in countries that aren’t receiving tariffs — or see if you can work with a local goods provider. If you can’t diversify your supply chain, try to negotiate with your suppliers on prices or contracts. They may be able to offer you a discount for ordering a certain number of products, for example.

3. Streamline operations

Review your current operations and identify any areas where efficiency can be improved. Look for opportunities to streamline processes and cut costs. Saving on overhead costs may lessen the impact of increased prices on goods and services.

4. Seek professional assistance

Financial advisors or accountants can help you create a personalized plan to combat potential tariff effects. Business mentors from an organization like SCORE or your local Small Business Development Center can also offer free or low-cost advice.

5. Consider taking out a business line of credit

A business line of credit can serve as an emergency fund — allowing you to draw funds as needed and only pay interest on the money you borrow. If you experience cash flow interruptions or an increase in costs as a result of tariffs, a business line of credit can be a helpful tool. Plus, with the recent Federal Reserve interest rate cuts, rates may be lower than they have been previously.

Author:  Randa Kriss, Lead Writer and NerdWallet authority on small business, March 6, 2025

______________________________________________________________________