Because you’re probably digging out from under a heap of emails and half-finished to-do’s after the long weekend, I’ll get straight to it: There was quite a bit of tariff movement that happened over the weekend.
The U.S. and E.U. are accelerating trade talks, especially around chips and auto parts. And then, there’s the potential for a 25 percent tariff on iPhones manufactured outside the US.
Now, you might be thinking: I don’t sell smartphones… so why should I care?
Fair question – this matters because these tariff ripples don’t tend to stay in their lane. If Apple ends up eating higher import costs, that impacts a slew of things that trickle down to you: digital operations, device costs, employee perks, communication tools… even your expense ratios if you buy tech for your team.
Another headline-crowning topic that trickles down to you? President Trump’s tax bill (which the House just passed). It’s not a done deal yet – it still needs to get through the Senate and across the President’s desk – but clearing the House is no small thing.
So, while you shouldn’t adjust your payroll or P&L just yet (or get too excited about the re-introduction of the QBI), it’s worth being aware of what’s likely coming down the pipe. Tax code changes could be coming the next few months — some good for you, some maybe not (depending on where you stand).
Changes that, along with shifting tariff legislation, mean one thing for sure: You must be proactive NOW if you want to protect the financial well-being of your Monmouth Beach business.
And one way you can do that? Strategic supply chain sourcing. I gave you two strategies for this last week, and I’ve got a few more for you today…
“Victory comes from finding opportunities in problems.” —Sun Tzu
You’ve worked hard to build a profitable business – and when tariffs start eating into your margins, it’s frustrating. Every dollar spent on unexpected import costs is a dollar you can’t put toward the things that matter: Your growth. Team development. Reinvesting in your next big move.
Which is why it’s critical to practice strategic sourcing for your supply chain. Because with the right sourcing structure in place, your business CAN weather trade volatility—and even turn it to your advantage.
In last week’s strategy note, I gave two strategies to lay the foundation of strategic sourcing in your business. Quick recap: 1) Diversify your suppliers and 2) adapt your vendor contracts. (I suggest giving that article a quick glance before moving on to today’s strategies.)
Today, we’re building on that groundwork – I’ve got some slightly more advanced (but still practical) strategies to help soften the impact of tariffs in your business. So, let’s dive into strategies 3 through 5 – the advanced playbook, if you will.
You’ve probably heard that Free Trade Zones (FTZs) are for the big dogs – multinational corporations with entire compliance teams and shipping departments. Not true. In actuality, small businesses with consistent import volume can absolutely benefit from FTZs.
An FTZ is a designated area that’s outside of U.S. Customs territory for duty purposes. So, when your goods arrive in an FTZ, they’re not in the U.S. from a tariff standpoint.
This gives you options: Goods stored or manipulated (in other words, assembled, repackaged, relabeled) in an FTZ don’t incur duties or import taxes until they officially “enter” U.S. commerce. If you re-export them? No duties at all.
Here’s where it gets interesting: If you import components or raw materials with high tariffs, but finish assembly in the FTZ – and your final product has a lower duty rate – you can elect to pay the lower rate. The savings on Merchandise Processing Fees (MPFs) alone can make it worthwhile. (MPFs are charged per customs entry, and using an FTZ lets you consolidate entries – cutting down significantly on those fees.)
Think of it like consolidating your shipping paperwork – rather than filing every time a box arrives, you submit one summary for the week. That alone can slash your processing fees.
Of course, there’s paperwork. The compliance burden isn’t light – Customs requires meticulous inventory tracking, and you’ll need to file a weekly entry summary for anything entering U.S. commerce. But you don’t have to figure it out alone. Many third-party logistics firms operate FTZs and can handle compliance for you, and a customs broker or trade attorney can help with the setup process.
You’ve got two main shoring strategies: reshoring and nearshoring.
Reshoring means bringing the manufacturing, assembly, or even packaging back to the U.S.
If you’re currently importing fully assembled goods from high-tariff regions, you might be able to save by importing raw materials or components (often at a lower duty rate or duty-free) and finishing production domestically.
Yes – labor is more expensive here. But once you factor in duties, global freight (especially for less-than-container-load shipments), and risk exposure, it can come out cheaper. Bonus: You may qualify for “Made in USA” branding, which can command higher prices and customer trust.
Nearshoring, on the other hand, involves moving production or assembly to a country closer to the U.S. with better trade terms.
Nearshoring (especially to Mexico or Canada under the United States-Mexico-Canada Agreement, or USMCA) can hugely reduce your tariff exposure, provided you meet the origin and documentation rules. You’ll also get faster turnaround times, lower shipping costs, tighter quality control, and reduced currency and trade risk.
Of course, trade agreements like USMCA could very well shift. It’s something to certainly keep an eye on as you’re practicing strategic sourcing – but overall, the cost savings and faster lead times from nearshoring are worth it (especially as part of your diversification strategy).
Visibility into your real product costs. Automated complex tariff calculations. The ability to respond faster to changing trade conditions – all outcomes you’ll see by using technology to handle tariffs.
Consider tools like…
Yes, these strategies are a bit more nitty gritty than those I highlighted last week – and if that has you overwhelmed, you’re not alone. My team and I are here to help you process the hit of tariffs on your Jersey Shore business and plan what your next best step is. So let’s look at your supply chain from a tax-smart AND business-savvy perspective, together:
calendly.com/shorefinancialplanning/the-first-step
To sourcing smarter,
Joseph Vecchio