Will New Tariffs Affect Smaller Businesses?

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With the modern political climate, there is a lot of media noise that doesn’t necessarily make sense for business owners to pay attention to. However, there are certain decisions by the administration that can have a direct impact. A recent example of this is multiple announcements surrounding tariffs.

To help cut through all the speculation and focus on what direct impact these tariffs may have on SMBs, we want to share a quick primer on this topic, followed by an analysis of its impact:

Understanding the New Tariffs

A tariff is a tax on a specific class or exports or imports. There are multiple types of tariffs, including a fixed dollar amount on a specific item and a proportional tariff based on value.

The tariffs making lots of news were first announced at the end of May. The initial announcement was focused on aluminum and steel exports, specifically coming from Mexico, the EU, and Canada. Then in the middle of July, a new set of tariffs were announced that target a wide range of Chinese goods.

The list of Chinese tariffs was so large that the country responded by placing tariffs on over $30 billion worth of American goods, including electric vehicles and soybeans. Based on these rapid developments, it’s possible that additional tariffs may be announced over the coming months.

The Potential Impact

Now that we’ve covered what the tariffs are all about, it’s time to determine if they could impact your business. Even though these tariffs aren’t aimed at small businesses, most experts agree that a ripple effect is likely to affect SMBs.

For example, let’s say that your business regularly buys supplies made from aluminum or steel. As the price of those metals goes up, the cost of your supplies may rise as well. Depending on the quantities you’re purchasing, it’s possible for these increases to cut into your profit margin.

Because there’s not much you can do to control these increases, the best course of action you can follow is to keep a close eye on your margins. In the event they start to get squeezed, you may need to make a change like raising prices or finding other options for reducing costs.

At the end of the day, there are certain elements that can impact your business but aren’t within your control. Although that can be frustrating, the silver lining is that there are plenty of elements that you can control. Credit card processing is a great example.

If you have any reason to believe that you may be paying too much for processing credit card transactions, there’s a simple way to find out. Simply go to our list of the industry leading credit card processing companies and see how your current provider compares. In the event you are paying too much, you can easily make the switch to one of those companies.

Posted on Friday, September 14th, 2018