Turning Tariffs and Other Cost Increases into an Opportunity

Tariffs will undoubtedly force you to reevaluate your pricing and profitability. Trade agreements have historically remained stable and predictable, but recent volatility has created substantial uncertainty. The distribution industry faces particular vulnerability due to razor-thin profit margins that leave no room for error.

Multiple factors compound this pressure:

• Finding economically attractive international suppliers becomes increasingly difficult
• Distributors serving emerging markets face additional tariff impacts
• Intellectual property protections, environmental regulations, and labor costs create competitive disadvantages

The National Association of Wholesalers reports that distribution comprises 29% of GDP while experiencing declining growth rates, particularly in durable goods sectors.

Four Profit Strategies

1. Data-Driven Pricing Decisions

Fear-based reactions to tariffs often produce poor pricing choices. Without analytical support, competitive responses become a race to the bottom. Optimized pricing maintains profitability through informed decisions.

2. Correct Broader Pricing Issues

Tariff increases provide justification for addressing underpriced product lines across entire portfolios without comprehensive profitability understanding.

3. Maintain Long-Term Profit Advantages

When economic conditions improve and costs decline, strategic analysis ensures sustained profit levels rather than automatic price reductions.

4. Understand Customer Share of Wallet

Segmentation analysis reveals cross-selling opportunities with key customers as competitors struggle financially.