This article is part of a multi-part series designed to help business leaders navigate the evolving tariff landscape with strategic clarity and operational resilience.
Tariffs are no longer short-term tactics—they’re structural features of the trade landscape. And while political headlines dominate the conversation, business leaders need a clearer lens: What do higher tariffs really mean for your bottom line and competitive position?
Let’s cut through the noise and look at both sides of the equation.
The Upside: When Tariffs Work for Business
Protection for Domestic Manufacturers
Higher tariffs can create real breathing room:
- Level the playing field against subsidized or under-regulated imports
- Restore price stability in industries impacted by dumping
Example: A U.S. steel manufacturer reported a 22% increase in orders after tariffs on Chinese imports, allowing long-delayed investments in automation and capacity.
Job Stability & Wage Pressure Relief
Tariffs can give U.S. manufacturers an edge in workforce planning:
- Reduce the pressure to outsource
- Ease wage competition with lower-cost regions
Many mid-sized manufacturers say they’ve been able to reduce turnover and fill open roles faster when shielded from low-cost foreign competition.
Supply Chain Security & Regionalization
Beyond cost, tariffs drive resilience:
- Reduce reliance on politically volatile suppliers
- Incentivize nearshoring and supplier diversification
Example: A medical device company credits tariffs with accelerating a multi-region sourcing strategy that protected them during COVID-19-related supply shocks.
The Downside: When Tariffs Hurt the Business
Higher Input Costs
If you rely on imported components, tariffs hit hard:
- Squeeze margins when price increases can’t be passed on
- Redirect capital away from innovation or growth
Example: A furniture maker saw total cost increases of 14% due to Chinese component tariffs, delaying an expansion project by 12 months.
Customer Price Sensitivity
Tariffs don’t land evenly—especially in consumer markets:
- Sensitive customers may delay or cancel purchases
- Competitors with different sourcing can suddenly undercut you
Example: An electronics retailer lost 8% market share when a competitor’s lower-tariff supply chain allowed them to hold prices steady.
Retaliation Hits Exporters
What comes around often goes around:
- Retaliatory tariffs make U.S. goods less competitive abroad
- Rivals from other countries step into your market share
Example: A U.S. agricultural exporter lost 80% of their China volume when retaliatory tariffs made their products less competitive than Australian alternatives.
Operational & Compliance Drag
Tariffs bring paperwork and unpredictability:
- Classification, documentation, and audits add new overhead
- Constant policy changes force regular supply chain tweaks
One mid-sized manufacturer estimated over $200,000 in annual administrative costs just to manage tariff compliance—without creating a penny of product value.
Finding the Balance: Framework for Smart Assessment
It’s not about whether tariffs are “good” or “bad.” It’s about understanding your specific exposure and turning insight into strategy.
Start by asking:
- Are we a net winner or loser from current tariff structures?
- Do tariffs hit us and our competitors equally, or unevenly?
- How fast can we adjust sourcing or pricing if policies shift again?
- Can we raise prices without losing share in key markets?
The Bottom Line
As Milton Friedman once said: “The benefits of a tariff are visible. Union workers can see they are ‘protected.’ The harm which a tariff does is invisible. It’s spread widely.”
Tariffs create both winners and losers—and sometimes, those outcomes exist inside the same business.
Understanding your unique position is critical. That clarity lets you move beyond reacting and start managing tariffs as a core part of business strategy.
In our next article we will update the trade doctrine and my hypothesis on where this is all going…stay tuned!
Where do you see the trade-offs in your industry? Are tariffs protecting you—or forcing your hand?
