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3Tariffs Considerations and Your Pricing

This section offers three ways to solve a problem. See more on Linkedin.com/in/ahern

This week, Trump added 25% tariffs on Canada and Mexico, and another 10% on China. The effects for the short term and the long term are pretty clear. Whether this is the best tool to right America's debt-to-GDP ratio is a moot point for this week. The question is how does this affect your business, and what will you do about it? Here are three considerations.

1. Add A 25% Tariff Fee

   Simply pass on the costs to your customers. I have heard from some companies that are actually adding it as a line item for tariff fees. The reasoning may be to justify the cost or a political protest.

2. Add Less Than 25% Fee
   If your product or service competes with other international companies that do not have 25% tariffs, do you not raise your prices? Companies can not eat 25%. Of course, this depends on whether the 25% is the whole cost of goods or only part of the products’ costs.

3. Eat It!

   For some businesses, this will not be possible. For others where 10% of the product is being taxed or costs more due to Canadian oil, gas, electricity, plastics, lumber… it may be a good option especially if you compete internationally. Of course, you may have different prices for different countries.

One last thought: if everything is going to cost more, estimates are $1600 to $2000 annually per American household. Then do businesses increase prices to keep employees?

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