The three biggest tariffs that US businesses are concerned about right now are against China, Canada, and Mexico. What are tariffs, and should your small business be worried about them? Fyresite has written this guide to help small businesses navigate this uncertain time.

What is a Tariff?

A tariff is a tax that a country puts in place against goods imported from other countries.

There are three types of tariffs – ad valorem, specific, and compound.

Ad valorem tariffs are a percentage of the value of the goods. ‘Ad valorem’ is Latin for ‘according to value’.

Specific tariffs are a fixed, specific amount per unit of the good.

Compound tariffs are a combination of ad valorem and specific tariffs.

Tariffs Put in Place by the US

In February, the US put a 10% tariff on China, followed by another 10% in March. This is a total 20% tariff on goods imported from China. China has imposed counter-tariffs, not a flat percentage, but varying percentages depending on

A 25% tariff on Canada and Mexico was imposed in March, but has been put on pause until April 2nd, 2025. Both Canada and Mexico have declared their intent to impose counter-tariffs if/when these tariffs go into effect.

Do Tariffs Impact My Business?

While there is no special way to see what specific impacts tariffs will have on your business, these are some of the most common and widespread ways that small businesses are impacted.

Increased Prices of Supplies

Many small businesses source their goods and/or supplies from other countries. When tariffs go into place, this will make these supplies go up, so the profit margin of the import remains the same.

This increase in price will make it more expensive to obtain the materials needed, and will bite into profit margins.

Supply Chain Issues

It’s no secret that the supply chain still hasn’t made a full recovery since the COVID-19 pandemic. And tariffs are known to disturb the global supply chain. Higher tariffs make suppliers lose margins, which in turn can force them to either increase the price of their goods, or to stop trading specific products altogether.

Up and down the supply chain, there will be businesses trying to see if they can change the technologies or the imports used with their products. This will be time consuming, and can lead to more hold ups in the supply chain.

Change in Customer Demographics

Small businesses should expect to see a shift in demographics. While tariffs are expected to encourage US-based customers to shop locally, reverse tariffs make it likely that customers from other countries are less likely to purchase your products.

On top of this, the rising costs make it likely that customers will be turning to bigger brands with cheaper prices, rather than shopping locally or with small businesses.

How Small Businesses Can Prepare for Tariffs

The best thing that any small business can do is prepare. Here are some actions that every small business can and should take to prepare for the changing landscape.

Keep a Line of Communication With Your Customers

One of the most important things that any business should do is be open and honest with their customers. 82% of customers expect an immediate problem resolution from customer service agents, and 78% expect more personalized interactions than they ever had before.

Customers care, and so should businesses. If your business is seeing or expects to see longer turnaround times, higher prices, and/or variations or changes within your products, your customers should be the first to know. Email marketing, social media posts, and announcements on your storefront are all good ways to share the message.

Make Contingency Plans and Diversify

To combat the uncertainty of the supply chain, businesses should be making contingency plans and diversifying their suppliers.

This may look like finding local suppliers, ordering the same material from more than one supplier, or even changing what supplies are used in your business. The most important thing is to make these plans sooner rather than later. It takes time to adjust, and the sooner these plans are formed, the less time they will take to enact when and if you need them.

Review All Supplier Contracts

With the changes to the supply chain, small businesses should be reviewing all of their supplier contracts. Review contracts to make sure they’re still a good fit for your budget. Are you still getting the best deal, or should you renegotiate?

Review Your ECommerce Platform

With so many things in flux, it’s more important than ever to make sure your eCommerce platform is giving you the best benefits at the best cost. If you are looking to migrate to Shopify, Fyresite’s favorite eCommerce platform, then reach out to us today!