Will Tariffs Impact Your Resiliency? 

I don’t think there’s been a bigger topic in the news in the past few months than tariffs. No matter what your opinion might be about them, I think everybody agrees that they have the potential to change the way everybody does business. 

History tells us that tariffs have the potential to help profits for some businesses, and they might hurt profits for others.  Business models might need to be updated, or even new ones developed.  Even if your particular business is largely unaffected by tariffs, there’s a pretty good chance that your suppliers, business partners, and customers will be affected in some way. 

So what can you do to help prepare your business to stay resilient in this dynamic environment? I certainly can’t speak for every situation in every industry, but here’s a few specific areas of focus that I think definitely deserve your attention in this changing economic climate. 

• Secure your supply chain – Even if your business is unaffected by tariffs directly, you want to make sure that your suppliers (and their suppliers, and their suppliers) will still be able to provide the goods and services you need to keep your business running.  (It’s worth mentioning that 90% of goods worldwide get shipped in some kind of container to get to its destination, so there’s a good chance your supply chain is international, even if you don’t realize it.)  Don’t be part of the 94% of companies that don’t have full visibility to their supply chains. You should already be monitoring suppliers as a part of due diligence, and with potential cost changes on the horizon due to tariffs, now is a great time to go through and reevaluate.  If things look really bad for some people in your supply chain, now might be a good time to renegotiate terms. 

• Don’t scrimp on the fundamentals – When companies decide to “run lean” (which many do when costs go up and they need to minimize waste), they tend to push off expenses and delay projects they consider non-essential.  Given the nature of cybercrime these days, I would contend that any project involving cybersecurity is still essential.  Traditionally cyber criminals become more active during hard economic times, and they are always on the lookout for companies with weak security and they can infiltrate and exploit.  Keep your systems up-to-date, and keep upgrading your security.  Stay vigilant, even if it feels expensive, because it’s worth it.  You don’t want to be a victim, now or ever. 

• Be on the lookout for mergers and acquisitions – This is true at any time, but it’s particularly true when stress is being put on some sectors of the economy.  When companies are bought and sold, there tends to be a chaotic period as resources are reallocated and combined between the two entities. (I’ve written about this before.) be vigilant and frank with key vendors and suppliers so you stay informed about potential changes in ownership or management.  A buyout may look like an opportunity to cancel or renegotiate contracts that your business depends on. 

• Expect things to take a little longer – It’s not uncommon for there to be new bureaucratic processes created whenever there’s a change in national trade policy.  New forms, new fees, and new lists of regulations are practically a given.  Expect your vendors and suppliers to experience delays from time to time, which in turn may delay their ability to deliver goods and services to you.

• Keep your business resiliency plans up-to-date – I’ve written before about planning and why both planning and resiliency strategies are important, but if there’s a possibility of a permanent supply chain interruption, then you need to be prepared. Update that Business Impact Analysis data, and make sure your response plans meet the needs of your business. Yes, I know, best practices say you should be doing this whenever there’s big changes to your business anyway, but it’s even more important now. 

Bonus tip – There’s been rumblings from several IT vendors that they will need to increase lead times and prices in response to changes in their respective supply chains. If you’ve got a contract coming up for renewal in the next 12 months, I would recommend getting that renewal signed right away to lock in pricing. 

Still unsure how tariffs might affect the resiliency of your business? Got some specific questions you need help figuring out the answers to? Sayers is here to help.  Sayers has over 40 years of experience in helping companies like yours weather the storms of uncertainty that blow through the business world from time to time, and we’d be happy to help you out too.