The True Impact of Tariffs and How to Protect Your Profits

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Tariffs are here to stay, but they are only one element to navigate. While many are scrambling to mitigate immediate cost implications, relying solely on cost concessions and country shifts is like using a garden hose on a wildfire. Tariffs will impact more than just cost – demand and revenue will also be affected. The real challenge companies face is maintaining profitability amid weakening demand and rising costs. A Product Total Cost of Ownership approach will be essential to success in this environment.

As tariffs drive up costs for companies, manufacturers, and consumers, changes in competitor behavior, consumer expectations for value, spending habits, and promotional strategies also occur, which in turn affect both demand and revenue. These are uncontrollable market factors that all companies will face.

To limit tariff impacts, all controllable factors must be in play – from adjusting upstream development by designing for value and reshaping the assortment curve to focusing on downstream cost savings by optimizing logistics and distribution costs. We call this a Product Total Cost of Ownership (TCO) approach, and it is an essential strategy so businesses can offset tariff impacts, preserve profitability, and build financial resilience for the future.

For additional information on a Product TCO approach and how to deploy mitigating strategies, read more and reach out to our team!