Tariff Talk: Negative Tariff Impacts and Possible Solutions

In the last post in this series, we covered the recent news regarding commodities and tariffs. More specifically, we looked at the commodities targeted by the Trump administration, and the retaliatory tariffs other countries imposed on goods from the United States. We also highlighted negative tariff impacts on three key industries including auto parts manufacturers, agriculture and construction. While there are companies benefiting from these tariffs, and some companies that are doing well despite them, these three industries face generally negative impacts. But auto parts manufacturers, agriculture and construction are not the only industries impacted negatively. The tariffs most negatively impact the food and beverage industry and small and mid-sized businesses. Here’s how:

Food and beverage industry

There’s a lot to unpack with this one. First, these companies will be paying more for aluminum, an essential commodity for their canned goods. As the tariffs inflate the cost of production, it will only add to the increasing costs of logistics. This comes at a time when higher fuel prices increase overhead costs. Additionally, diesel is expected to only get more expensive in the final quarter of the year. High fuel prices add up across the industry as merchandisers, delivery drivers, sales reps and account reps all drive for work. Beverage cans and bottles are also set up to suffer a blow beyond the increased cost of aluminum and steel. Retaliatory tariffs target American exported foods including embossed aluminum cans, soups and more.

Small and mid-sized businesses

These companies are particularly vulnerable for one specific reason. While Caterpillar and Polaris are big enough to absorb the cost of the aluminum and steel tariffs, and Harley Davidson can shift production overseas with ease, small businesses cannot. Again, businesses trying to remain competitive have to offer products at a comparable price to other companies in their industry. If they cannot absorb the costs, they have to resort to other cost control measures. This often means lay-offs or passing the cost to the consumer and risking a loss in sales.

What solutions can offset these negative tariff impacts?

The best options for companies looking at cost-control measures revolve around flexibility. Having operations in place that can grow with your company in good times and tighten up in downturns is incredibly valuable, even beyond the imposition of tariffs. A company that can adapt to the changing market when the unpredictable happens is a company with a long future ahead.

One such area is a company’s vehicle program. Businesses with company-provided car programs can remove the expensive upkeep and liability associated with fleet. Other programs are better equipped to adapt with the current economy. Companies with flat allowance programs can switch to a program that removes tax waste from the compensation equation. There are several options, and they’re guaranteed to offer more flexibility than either company-provided car or flat allowance programs.

Another way companies can offset the negative tariff impacts is increased visibility. It’s hard to improve processes when you don’t have any insight into how they’re performed. Managers can benefit from removing unknowns on their teams and gaining insight into field activities. Mileage tracking apps do double duty by providing IRS-compliant mileage logs and capturing data on the activities of each mobile worker. Insightful data points include time spent driving, places visited and time spent at each location. Gathering this data across the team can help your company in numerous ways. These include gaining context into their trips, identifying top performers and optimizing routes for mobile workers spending too much time on the road.

What’s next?

Despite the tariff troubles plaguing many companies, no matter your industry, no matter your company size, Motus can help you gain visibility and control costs with your vehicle program. Interested in learning more?

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The Author

Ben Reiland

Ben Reiland is a Content and SEO Specialist with Motus, LLC. Keeping an eye out for industry impacts and staying on top of trends, Ben's expertise ranges from verticals and labor laws to oil price impacts and more!

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