Introduction: The New Trade Landscape

President-elect Trump's recent victory has sent ripples through the business world, especially for small and medium-sized businesses (SMBs). According to Trump's campaign promises and post-election statements, his administration plans to implement new tariffs ranging from 10-20% on all imports and up to 60-100% on Chinese goods. These dramatic changes have already impacted global markets, with ocean shipping stocks dropping significantly as traders anticipate lower trade volumes according to Flexport. If you're running a small business, these changes could significantly impact your operations, costs, and planning for 2025 and beyond.

What Are the New Tariffs, Really?

Think of tariffs like a tax on imported goods. When you buy products from another country, these taxes get added to your cost. Former U.S. Trade Representative Robert Lighthizer has indicated that if Trump was reelected, he could start implementing his sweeping tariff proposals quickly after taking office. The proposed Trump tariffs come in two main categories. First, there's a general tariff of 10-20% on all imports into the United States. Second, there's a special tariff of 60-100% specifically on goods from China.

To put this in real terms, imagine you're importing $10,000 worth of general merchandise. Under the new tariffs, you might soon need to pay an additional $1,000-$2,000. If those same goods are from China, that extra cost could jump to $6,000-$10,000. This dramatic increase is forcing many businesses to rethink their entire supply chain strategy.

Direct Impacts on Your Small Business

The effects of these tariffs will vary depending on your business type, but several common themes are emerging. According to data from ocean and air freight intelligence platform Xeneta, the last time Trump imposed significant tariffs on Chinese imports in 2018, ocean container shipping freight rates spiked by more than 70%. Not only will direct import costs increase, but domestic suppliers might raise their prices to match import prices. We're already seeing shipping and freight costs spike as companies rush to import goods before the tariffs take effect.

Supply chain disruptions are another major concern. According to Paul Brashier, vice president of global supply chain for ITS Logistics while speaking with CNBC, "This is 2018 all over again. The calls expand beyond shippers who have Chinese imports. The global tariff threat is fueling calls for frontloading from all around the globe". Many businesses are reporting longer lead times for inventory, as suppliers and shipping companies struggle to keep up with the surge in pre-tariff orders.

Industry-Specific Effects

For retail businesses, the impact will be particularly noticeable in day-to-day operations. The National Retail Federation has warned that "the adoption of across-the-board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families. It will drive inflation and price increases and will result in job losses".

Manufacturing businesses face a different set of challenges. The increased cost of raw materials is forcing many to reconsider their production processes. However, the National Association of Manufacturers notes that while sector optimism is at its lowest levels in years, there may be opportunities to "build on the successes of our previous work together to roll back burdensome regulations".

E-commerce businesses are finding themselves caught in the middle. Through September 2024, year-to-date cross-border trade between Mexico and the U.S. rose around 52%, a record. However, this growth could be threatened by new tariff policies and USMCA renegotiations planned for 2026.

Preparing Your Business for Change

Smart business owners are already taking action. According to Lars Jensen, CEO of Vespucci Maritime, there will likely be "a surge in import demand for containerized goods as U.S. companies stock up ahead of any new tariffs". Understanding exactly which products come from China and calculating potential cost increases is crucial. Many businesses are finding that what seemed like a good margin six months ago might not be sustainable under the new tariff structure.

Planning your inventory strategy is equally important. The American Apparel & Footwear Association warns that while bringing in product before the inauguration is one approach, it only provides temporary relief. The import surge this will create is further complicated by upcoming freight issues, including the threat of another labor strike at East Coast ports, and the Lunar New Year, both in the second half of January.

Working with Freight Forwarders

Freight forwarders have become essential partners in navigating the new tariff landscape. According to Jordan Dewart, CEO of Redwood Mexico when speaking to CNBC, even a short-term change in tariffs would have huge repercussions, with over $2 billion crossing the border daily. These experts do more than just arrange shipping - they can help you understand the timing of tariff implementation, find alternative shipping routes, and even provide temporary warehousing solutions.

Action Steps for Your Business

As a small business owner, your first priority should be conducting a comprehensive supply chain review. Don't just look at your direct suppliers - examine your entire network to understand exactly where tariffs might impact your costs. While many businesses are rushing to import goods before the tariffs hit, this strategy needs careful consideration. Stockpiling inventory might save on tariff costs, but you'll need to weigh this against increased storage expenses, warehouse capacity limits, and the impact on your cash flow.

The key to surviving these changes is smart diversification. Start building relationships with suppliers in multiple countries now, before you're forced to make quick decisions under pressure. Mexico might be an particularly attractive option for U.S. businesses right now, especially since many transactions are handled in U.S. dollars. However, keep in mind that trade agreements can change quickly in the current political climate, so maintain flexibility in your sourcing strategy.

Here are some specific steps you should take:

• Review your current supplier contracts and explore flexibility in payment terms

• Investigate domestic sourcing options where feasible

• Consider working with freight forwarders who can help optimize shipping timing and costs

• Develop a pricing strategy that can absorb some increased costs while maintaining competitiveness

• Build relationships with multiple warehousing options to handle potential inventory increases

• Create a cash flow management plan that accounts for higher upfront inventory costs

Remember, the goal isn't just to avoid tariffs - it's to build a more resilient business that can adapt to changing trade conditions. Take time to develop a comprehensive strategy rather than making reactive decisions based on immediate cost concerns.

Conclusion: Staying Ahead of Changes

While the new Trump tariffs present significant challenges for small businesses, proper planning and adaptation can help minimize their impact. The key is to start preparing now, before the changes take effect.

Need help navigating these changes? Contact a qualified freight forwarder or business advisor to discuss your specific situation and develop a plan that works for your business.