Tariff Turbulence: What Shifting Trade Policies Mean for Small and Midsize Businesses

Tariffs have dominated headlines, news alerts and many conversations among business leaders and consumers. While large retailers are vowing to keep prices low despite escalating trade wars, many businesses are scrambling to manage rising costs of goods and raw materials. In fact, in a recent interview with CNBC, Amazon CEO Andy Jassy said that third-party sellers may have to pass higher, tariff-related costs on to consumers. And while the National Retail Federation (NRF) reported that retail sales rose in March, it’s likely a sign that many consumers are preparing to hunker down if there are price hikes – especially on big ticket items like electronics which could be heavily impacted by tariffs on goods coming from China.

As we approach the summer months, a time when businesses typically prepare their inventory for items that drive seasonal sales like apparel and outdoor furnishings, many small and medium-sized businesses (SMBs) are taking stock of more than what’s on trend. They’re looking at the impact of tariffs and what that means for their bottom line. For SMBs, who already operate with slim margins, understanding how tariffs could impact inventory value and supply chain network, and learning how to effectively manage costs, profits and suppliers is critically important.

Reading the procurement tea leaves

SMBs have been navigating supply chain disruptions for years, but the latter half of 2024 showed that many retailers are in survival mode. According to data from Katana Cloud Inventory, cost of goods sold (COGS) rose faster than sales with a 103% increase in Q4 alone. Luxury retailers who sell items like footwear and perfumes raised prices by more than 50% in 2024, but many are questioning how long consumers are willing to pay a premium. The continued uncertainty also caused some businesses to risk overstocking inventory for items that typically sell well in warmer months, such as SMBs that sell sporting goods.

Small and medium-sized retailers have been very reactive to tariff news, as many depend on procurement from overseas suppliers. At the start of 2025, there was three times increase in goods purchases from Canada and Mexico in the week that followed Trump administration’s tariff policy announcement. As of March, purchase prices on goods from the two countries jumped more than 50% from the average unit price in January.

Global supply chains are under stress and many businesses are pivoting to keep operations moving. While there are rumors circulating around large companies moving production and operations to avoid tariffs, it’s clear that even the behemoths are in the midst of weighing strategy and options.

Turn to technology: protecting profits for continued growth

The good news amidst the uncertainty and market volatility is that technology can help businesses navigate the ever-changing marketplace. Innovative software solutions, such as inventory management platforms, can be a gamechanger for retailers - especially when they’re tailored to the needs for SMBs.

First, businesses should look to ensure accurate inventory valuation. Consider existing inventory, which should include any incoming supply from old and new vendors, and then apply up-to-date tariff costs across products to enable the business to effectively protect their profit margins. Managing suppliers in real time is also a necessity, as tariff-initiated reshoring could reshape cost structures entirely. Empowered with the data, SMBs can make any supply chain changes needed to optimize efficiency and maintain cash flow.

Stay ready with sales and stock visibility

Is there a secret to preparing for market turbulence? Other than expecting the unexpected, businesses should look for new ways to forecast, plan and prepare for the road ahead – however rocky it may be. Software solutions that allow businesses to forecast demand and calculate the impact of rising costs can offer real-time visibility into business performance. AI-powered inventory management for stock visibility can help inform pricing strategies that protect sales margins.

While large retailers have ways to manage rising costs, avoid supply chain disruptions or negotiate purchase prices that offset tariffs, most SMBs are being forced to think outside the box as they plan for the year ahead. And while there’s no simple solution to help them navigate turbulence, there are ways to mitigate some of the risk with technology that’s made to support smaller businesses.