The Trump Tariffs
Here’s a hot tip for managing the potential impact that President Donald Trump’s tariffs may have on your business.
Last week we were a sponsor of the Global Sources Summit in Hong Kong. Here I am with Meghla Bhardwaj who kept us all on track. One of the speakers spoke about a strategy to manage down the effect of the tariffs on your business.
There are so many politicians scoring points on this topic it is hard to find the facts!
The Wikipedia commentary is a good source of facts and contains many links to related topics. We believe this is a good starting point.
The key for any seller is to work out the likely impact of these tariffs on their supply chain and decide on a course of action. Here’s the strategy one of the speakers spoke of at the Global Sources Summit:
Approach your Supplier with some open questions to try and gauge their level of understanding on these tariffs. Put yourself in their shoes – they are more than likely unwilling to admit to knowing much! Regardless, as in any negotiation, it is always best to set the scene so the other party understands the topic. You are looking for a long-term solution, not to try and ambush them into making a quick decision on what is actually a complex issue.
You should certainly have done some digging as to the likely effect of the tariff on components of your product, if not the whole item. Don’t be casual about this – make sure you really do understand how it relates to your product so you can have a good discussion.
When the time is right, walk your way through these three steps:
You will increase your retail price by 8%
You will reduce your margin by 9%
Ask them to reduce your buy-price by 8%
Importantly, you need to make sure your Supplier understands this is not you just trying to get a better price.
Make it very clear that if the tariffs are wound back, you agree they can increase their price by 8% on their very next order. Who knows, maybe some of these tariffs may not end up in force!
Don’t ignore the issue. If your research indicates your product will be affected, set out the issue in very plain English and explain your solution.
As always, ask us anything. If we don’t know the answer, we’ll know someone who does!
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