Being in the middle of a trade war feels a little like being wedged between two toddlers fighting over a favorite toy. “I want it!” “No, I want it!” But, in our case, the toddlers have put themselves in time out.
With Presidents Trump and Jinping agreeing on a 90-day pause where no additional tariffs will be applied, we have a brief reprieve where we may gather our senses and sharpen our strategies – not only as retailers, but as consumers, as well.
After all, understanding the implications of a trade war is overwhelming. Mark Cohen, director of retail studies at Columbia Business School said it best when he said, “Wars have winners and losers – the loser in this case is the American consumer.”
Think about it – the increased price of imported metals is passed down, down, down and you’re paying double for tin of Pringles, a can of green beans and a new bicycle.
Does this mean the tariffs will go into place later than January 1st?
Yes – but they may not be applied at all. During the pause on the 25% increase on $200 million of Chinese goods, the two presidents will renegotiate trade agreements. With a positive outcome, we can return to business as usual. If not, we must tighten our purse strings and get ready for higher prices on consumer goods.
What can I do to further prepare my business during the break?
With an emphatic infomercial tone, “Buy now!!!” According to Mark Rosenbaum, department chair and professor of retailing at the University of South Carolina, “it makes absolute sense to purchase your high-ticket durable item(s) that’s manufactured in China, now.”
Keep in mind that this isn’t limited to fabrics and other textiles you use to create your furnishings or stock your warehouse. This also includes electronics and business equipment that you use to run a better business. So, if you’re in desperate need of an update, you better get moving.
2. Start and finish negotiations with suppliers to lock in your rate. This provides a bit of protection moving forward – especially when it comes to raw materials and routine orders.
3. Invest time researching sourcing alternatives. Other countries, including our own, are stepping up to the plate eager to take a swing at supplying your business with the goods and services you need. Keep an open eye and mind – as these alternatives may prove an even better choice than your original product.
4. Take an honest look at your finances – especially your profit margins. This lets you look at which costs you will absorb and which you will pass to the consumer.
5. Craft your customer message that explains why your prices are getting higher. Help them understand that you’re not making the decision from greed – rather out of necessity to stay afloat in our current economic climate.
If you use your time wisely, you’ll exit this time-out a bit more prepared – not only for the possibility of increased prices, but also for business in general.