Tariffs. Just the word can send a chill down the spine of procurement teams, supply chain managers, and CFOs alike. These unexpected costs can eat into margins, disrupt budgets, and challenge even the most robust supply chains. Since liberation day, I’ve written and spoken extensively about strategies to address tariffs, but over coffee recently, I had an “aha” moment that brought everything into sharp focus.
Let me set the stage: I was meeting with a colleague over coffee when the topic turned–unexpectedly–to tariffs. During our discussion, they shared an invoice they’d seen from the coffee shop owner. On it, their coffee supplier–a local roaster–had included a “tariff surcharge.” If you’re wondering it didn’t look like 100% pass through and who knows what they were doing upstream…
This transparency served as a reminder and a question I ask my clients: If you’re the one paying the tariff as the importer, have you asked your suppliers for a price reduction to help offset the burden…often the companies I talk to are either paralyzed or too inwardly focused.
The Reality of Tariff Costs
Tariffs are an import tax paid by the importer–period. Your supplier doesn’t pay them; you do. But here’s what many companies miss: your suppliers still have a vested interest in keeping your respective businesses viable.
Factories want to keep their production lines running. They need to maintain employment. They want to preserve long-term customer relationships. And in many cases, they have margin flexibility that allows them to reduce prices when necessary to keep orders flowing. Some can even benefit from government subsidies and currency changes.
The question is: Have you asked your suppliers to share the pain?
Why Price Reductions Make Sense for Both Parties
When tariffs hit, your landed cost increases immediately. Without any adjustment, you’re absorbing 100% of that impact. But consider your supplier’s position:
- They Need Your Orders Losing your business to a competitor in a lower-tariffed country–or seeing your orders shrink because you can’t remain competitive–hurts them too.
- They Often Have Margin to Work With Many suppliers build cushion into their pricing. When faced with the prospect of losing business, they may prefer to reduce margins rather than lose the account entirely.
- The Alternative May Be Worse An idle factory is expensive. Fixed costs continue whether production runs or not. A price reduction that keeps orders flowing can be better than no orders at all.
How to Ask for Price Relief
The challenge is approaching this conversation strategically. You need to be direct about your needs while maintaining the relationship. Here’s how:
1. Be Transparent About the Impact
Share the specific impact of tariffs on your business. Use real numbers. Example:
- “The 25% tariff has increased our landed cost by $X per unit. At current pricing, this makes us uncompetitive in our market.”
2. Make It About Survival, Not Negotiation
This isn’t a typical price negotiation–it’s about keeping the business relationship viable. Example:
- “We need to find a way to offset these tariff costs to continue our partnership. Can you help with a price reduction?”
3. Be Specific About What You Need
Don’t leave it open-ended. Calculate what you need and ask for it. Example:
- “To remain competitive, we need a 10% price reduction. This would allow us to split the tariff burden and keep orders flowing.”
4. Emphasize the Alternative
Be honest about what happens if you can’t reach an agreement–whether that’s sourcing elsewhere, reducing orders, or potentially ending the relationship.
When Suppliers Push Back
Not every supplier will immediately agree to price reductions. They may claim tight margins or point out that the tariff isn’t their responsibility. That’s when you need to:
- Remind them of the long-term relationship value
- Discuss the volume at risk
- Explore phased reductions or temporary adjustments
- Consider other cost-saving measures they might offer
Remember: they want to keep their factory running. There’s almost always room for negotiation and tariffs have created an environment where the shared pain discussion is primary and should not be viewed as a huge negative based on what is going on globally.
The Bottom Line
As the importer, you’re paying the tariff. But that doesn’t mean you have to absorb the entire cost. Your suppliers have a vested interest in keeping your business healthy and orders flowing. The only way they can share the tariff burden is through price reductions–and many will, if you ask the right way.
The mistake too many companies make is assuming they have no leverage. They do. Your orders keep factories running, people employed, and businesses viable.
The next time tariffs hit, don’t just absorb the cost. Have the conversation. Ask for the price reduction.
Because as I was reminded of over coffee, sometimes the most obvious solution is the one we overlook: just ask!
Have you had success asking suppliers for price reductions to offset tariffs? Let’s discuss your specific situation–call me or take the free assessment here:
