Trump tariffs are a huge deal for average businesses

Trump tariffs didn’t take long to surge back to the political agenda. 

It’s still early days, and – as with all things Donald Trump-related – we do have to wait to see the actual boundary between action and rhetoric, but for the moment, let’s just assume that the President-elect will follow through on his latest threats in some form. They were a cornerstone of his election campaign, after all. 

The bottom line for businesses is that they need to understand the intense conveyor belt of knock-on effects that tariff increases can bring. Adapting to manage them is a huge deal, requiring the right expertise and viewpoints to manage risk.

In November 2024, Donald Trump outlined an aggressive tariff policy targeting Canada, Mexico, and China. 

He announced that Canada and Mexico would be hit with a 25% tariff on all imports as a means of deterring illegal immigration and drug trafficking. China, he said, was in line for a lower tariff of 10%. This was also in response to drug trafficking concerns and to address his perceived general trade imbalance between the two economic powerhouses. 

None of these tariffs are confirmed yet. Having been announced on social media before he takes office, there could still be a lot of wiggle room and negotiating before he makes a final decision. However, while rates could change, the Trumpist principle of tariffs will likely stay the same, so there will be an increase in costs somewhere.

Tariffs—or taxes on imported goods—are usually championed to protect a country’s internal economy. Businesses importing the goods pay the tariffs, but that’s the beginning of a chain reaction affecting many more stakeholders. 

Within supply chains, companies usually pass the costs to one stage after another, eventually reaching the consumer.

It depends on the industry and the leaders of the business in question. 

Many critics will emerge over the next four years, focusing on the inflation ripple effect of higher costs making things less affordable in a globalised economy. Many businesses will be unhappy with the supply chain disruption that can arise and the competitive disadvantages that US businesses might have as a result, especially if Trump’s target countries increase tariffs in a tit-for-tat escalation. 

These impacts are particularly acute for small and medium-sized enterprises (SMEs), which often lack the resources to adapt quickly to such significant changes in global markets.

Domestic US industries like agriculture and steel will likely feel the positives. These kinds of industries have easily been outbid and outdone by foreign equivalents over the years, as lower tariffs allowed more competition.

Trump has repeatedly vowed to defend these industries, which may see spikes in business if important become more expensive.

In a statement, Nasdaq said it wants to “work with our companies to implement this new listing rule and set a new standard for corporate governance.”

“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity,” said SEC chair Gary Gensler in a statement.

Make no mistake: for many companies whose business extends into or outside the US, Trump’s tariff plan should be a cause for worry. Not because things will get worse but because they will need to adapt. 

And when it comes to leading that adaption, all eyes will immediately turn to the board and executives. Here are some things they may need to address: 

• Supply chains will need analysis. How many components are inside the US? How many are outside? If higher tariffs mean higher costs, could the company consider diversifying supply chains?
• If higher costs from tariffs are unavoidable, are there other areas of the business where it might benefit to do some cost analysis? This might offset any losses. 
• Product pricing should be considered. It’s very difficult when consumers feel the pinch of higher costs, so you need qualified experts within your ranks to ensure you get the balance right. 
• Consider advocacy. It’s not for every company; it can risk getting political, but if you find the right corporate network that can exert some influence, it may help get your message across.

The future of tariffs in US foreign policy still has many unknowns. How much they’ll really cost and what countries will be impacted are still firmly in the air. For example, the UK and EU haven’t been mentioned so far, but this could all change quickly. 

What is clear is that the negative impact of new costs on businesses will require firm leadership and apparent alternatives for corporate strategy. Do you have this on your board and among your executives? Because this is where crucial decision-making expertise will be required.