Tariffs are government-imposed taxes on imported goods. While the concept is simple, their impact on pricing strategy, supply chains, and market competitiveness is anything but. In today’s volatile trade environment, understanding how tariffs work and how to adapt is essential for business leaders.
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What Exactly Is a Tariff?
A tariff is a tax levied on products imported from other countries. The purpose can vary: some are designed to protect domestic industries from foreign competition, others to generate revenue, or as a bargaining tool in trade negotiations.
There are two common types:
- Ad valorem tariffs: Charged as a percentage of the product’s value (e.g. 10% of the import price)
- Specific tariffs: Charged as a fixed amount per unit (e.g. $2 per kilogram)
These costs are usually paid by the importer, but the ripple effect touches the entire value chain.
How Do Tariffs Affect Pricing?
Tariffs increase the landed cost of imported goods. Companies must then decide how to respond:
- Absorb the cost and reduce margin
- Pass the cost on to customers through price increases
- Shift supply chains to avoid tariffs
- Reposition products to justify higher pricing
The challenge lies in balancing margin protection with customer expectations and competitive pressures.
Why Tariffs Matter More Today
Tariffs are no longer isolated, one-off policy moves. They have become a permanent part of the pricing landscape. Ongoing trade tensions and evolving global manufacturing trends mean companies must build long-term strategies to manage them, not just short-term fixes.
That’s why we created custom tariff pricing guides to help businesses respond effectively:
2025 Consumer Goods Tariff Pricing Guide: Understand how to evaluate impact by product and customer segment, and equip your team with pricing tools to stay competitive.
2025 Manufacturing Tariff Pricing Guide: Get a clear framework for evaluating cost risks, adjusting production strategy, and deploying data-backed pricing responses.
Building a Tariff-Ready Pricing Strategy
Whether you’re in manufacturing or consumer goods, the core principles remain the same:
- Assess where tariffs hit hardest
- Quantify margin exposure
- Adjust pricing architecture accordingly
- Align internal teams to execute with confidence
Tariffs are complex, but with the right tools and strategy, your pricing doesn’t have to be.
