Change often brings uncertainty, and it’s natural to wonder: How will it affect your business, your livelihood, and your future? In a democratic society, shifts in government every few years can mean new policies with the power to reshape industries. As Donald Trump embarks on his second term, one key focus is emerging: tariffs.
The administration has proposed tariffs on goods from China, Mexico, and Canada, aiming to boost domestic manufacturing—a move that could significantly impact how businesses operate both at home and across borders.
In a BBC article, Luis Oganes, head of global macro research at investment bank JP Morgan, explained that the biggest difficulty for global growth "is uncertainty, and the uncertainty is coming from what may come out of the U.S. under Trump 2.0. The U.S. is taking a more isolationist policy stance, raising tariffs, and trying to provide more effective protection to U.S. manufacturing."
What does this mean for you and how can you prepare? Let’s break it down.
Lock in U.S.-Based Vendors/Services Now. Laurel Orley, co-founder of Daily Crunch Snacks, explained the increased demand for warehouse space. "As many other companies are buying bulk inventory overseas to get ahead of tariffs, warehouse availability is becoming limited, which will increase costs for everyone," Orley told the AP. She is trying to lock in her warehouse contract for 2025 and find a third-party logistics provider for the year, "to get ahead of what's to come and pre-planning as much as we can," she said.
Look to the Past to Understand the Future. This will not be the first Donald Trump presidency, and companies that existed during his first administration (2017-2021) should review their past financials to understand how tariffs and government policies impacted their business then. From there, they can plan accordingly for the future (factoring in inflation). Yes, there's uncertainty for the second administration, but there's familiarity with the person in charge.
Diversification. According to the Office of the U.S. Trade Representative, the U.S. is the largest goods importer in the world. U.S. goods imports totaled $3.2 trillion in 2022, up 14.6 percent ($413.7 billion) from 2021. China was the top supplier of goods to the United States, accounting for 16.5 percent of total goods imports. The top five suppliers of U.S. goods imports in 2022 were: China ($536.3 billion), Mexico ($454.8 billion), Canada ($436.6 billion), Japan ($148.1 billion), and Germany ($146.6 billion). Companies have already been looking to decrease their reliance on China and find alternative solutions. For example, footwear giant Steve Madden announced its plan to halve Chinese production to avoid Trump's tariffs rapidly. Instead of moving production to the U.S., the company explored options in Cambodia, Vietnam, Mexico, Brazil, and other countries, according to an article on CNN.
Explore Different Pricing Models. If the only option for a specific material or ingredient is from China, the extra costs must come from somewhere. Whether it's reducing the marketing budget, pausing on a product extension line, exploring different fundraising options, or increasing pricing for consumers, there are ways to cut internal costs (not ideal) to make up for the increased tariff.
Seek Guidance from Others. We are all in the same situation, so connecting with other CPG founders to share ideas and best practices can be helpful. StartupCPG, Naturally Network, and Specialty Food Association are excellent resources offering webinars and educational content for emerging CPG brands.
Build a Rainy-Day Fund. Unbudgeted expenses are expected due to possible changes in supply chains and logistics solutions. During uncertainty, having a dedicated emergency fund for shipping-related or last-minute hurdles is crucial.
Bottom Line: As with most things in life, preparation is key when dealing with uncertainty. Rather than wait for tariffs to go into effect, small businesses should have a plan in place for when the laws are implemented. Open communication with vendors, suppliers, financial professionals, and customers will go a long way toward setting up businesses for success during any change of administration.
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