Navigating Tariffs: How Small Businesses Can Prepare and Thrive

You’ve heard the news: new tariffs are shaking things up—again. But this time, it feels different. More countries are involved, the tariffs are steeper and uncertainty is higher than ever. That kind of unpredictability can make it hard to plan. So, how should you be thinking about your business strategy right now?

Start with Your Finances: Plan, Forecast and Adjust
Tariffs don’t just make goods more expensive; they affect the whole supply chain. From shipping costs to delays, it all adds up. That’s why your first step should be a fresh look at your financial plans.

• Update Your Forecasts
  Take a good look at your revenue and expense projections for 2025. If revenue feels uncertain, your expenses are where you can make adjustments. Many companies are finding that break-even or a slight decline is more realistic than expecting growth.
• Watch Cash Flow
  Now’s the time to build flexibility into your operations. Look for ways to delay non-essential spending, tighten your cost controls or seek working capital solutions. Some leaders are renegotiating payment terms or seeking temporary increases in lines of credit to maintain liquidity.
• Stay in the Know
  Share your plans and concerns with your banker early, not just when a problem arises. A strong balance sheet and a proactive relationship with your financial advisor can make all the difference.

Rethink Pricing, But Keep It Transparent
With higher costs due to tariffs, businesses often face a tough choice: absorb the cost or raise prices. The key here is timing and communication.

• Be Proactive
  Don’t wait to see what your competitors do. Many successful businesses are implementing small, steady price increases now rather than big jumps later.
• Explain the Why
  Your customers understand that the global economy is complicated. Be honest about the reasons behind any changes. Transparency builds trust.
• Consider Surcharges
  Instead of adjusting your entire pricing structure, a separate “tariff surcharge” can highlight that the increase is temporary and out of your control. It’s a smart move for businesses that want to keep long-term pricing relationships intact.

Look at Your Supply Chain—and Beyond
One of the biggest shifts we’ve seen is in how companies source their products.

• Diversify Suppliers
  If you rely heavily on a single country, like China, now is the time to explore alternatives. One client we spoke with moved their sourcing to India, helping reduce risk and even cut costs over time.
• Increase Inventory Strategically
  Some businesses are stocking up in anticipation of higher future costs. If you go this route, talk to your financial advisor about the right way to finance it.
• Explore New Markets
  Tools like the Market Diversification Tool from the International Trade Administration (ITA) can help you discover new customer bases or international markets that aren’t as affected by tariffs. You might find opportunity in places you haven’t looked yet.

Keep Communication Front and Center
In times of uncertainty, one word matters most: partnership. Your banker, your suppliers and your customers all need to be on the same page.

Bad news today is better than a surprise next week. Keep your bank informed, talk openly with customers and don’t hesitate to lean on your financial advisor for guidance.

Tariffs may be beyond your control, but how you prepare doesn’t have to be. Don’t wait for the dust to settle. Your financial advisor is here to help you build a strategy that strengthens your business for the long haul.

 

Read more about the impact of tariffs in our 1Q25 Economic Overview.

Learn what to do with your personal financial plan through the market ups and downs.

 

Brian Amell is based at Pinnacle’s Riverside office in downtown Jacksonville, FL. He can be reached at 904-892-5089 or Brian.Amell@pnfp.com.

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