NAW Research Shows Tax Increases Could Add to Mounting Financial Pressures

Tariffs are driving cost increases and creating operational challenges across the wholesale distribution industry, according to new survey findings from the National Association of Wholesaler-Distributors (NAW), in collaboration with Modern Distribution Management (MDM) Research.

"The survey indicates that one-third of distributors are already facing price hikes of 25% or more. Though these increases haven’t hit store shelves yet, it’s an indication of where prices are headed," says Eric Hoplin, CEO of NAW. "We urge President Trump to secure trade agreements quickly to restore certainty, help businesses plan, and ease supply chain pressures."

Key takeaways:

·        Survey results highlight nearly two-thirds (62%) of distributors expect their cost of goods sold to rise by 10% or more in 2025. Financial strain is already widespread, with 67% of respondents reporting a negative impact on their businesses, and only 2.5% indicating any positive financial impact.

·        Operational shifts are also underway. Distributors are slowing inventory replenishment (48%), delaying new hiring (44%), cutting capital investments (37%), and reducing discretionary spending (60%).

·        The top concerns are tariffs on China, with 37% reporting more than 20% of their inventory originating in China, and only 17% saying they are able to meaningfully shift sourcing to domestic or non-impacted suppliers.

·        Beyond tariffs, the survey revealed growing concern among distributors about potential tax increases. Preserving key provisions of the 2017 tax reforms, signed into law during President Trump’s first term, such as the 199A deduction for pass-through entities and a globally competitive corporate tax rate, remains a top priority for the industry. Distributors overwhelmingly credit those tax cuts with driving growth: 62% reinvested in their businesses, and 40% increased wages and benefits.