Medium-term: Understand the current cost of tariffs on your business and use baseline data to implement a modeling approach.
Do you have a full view of the impact today’s tariffs have on total sales? Retail sales? Other product categories? There’s a direct correlation between increases in sales/VAT tax and declines in total retail sales. At some point, consumers will stop purchasing the items they want if the price for the items they need continue to increase. With the appropriate data in place, you can identify that tipping point.
But it’s not only important to understand the cost of tariffs now, you should also model the impact of proposed tariffs. Build trade modeling into procurement and network design strategies to lower landed costs of materials and finished and semi-finished products. You can also build this modeling into your pricing strategy to manage costs passed on to consumers.
Duty classification analytics, where you break down and understand the duty value of the products you’re importing and exporting, is a core component of modeling the future impact of tariffs. If you’re able to anticipate what could be coming in the medium-term, you can shift production around to more cost-effective means within your existing footprint.
Long-term: Reinvent your supply chain.
To better respond to the long-term implications of trade uncertainty, double down on more transformational efforts linked to smart factories and smart supply chains.
- With the reduced labor load associated with data and AI-enabled supply chain operations, there’s less pressure or need for manufacturing in lower cost geographies.
- Even still, the resulting agility allows you to more easily move manufacturing operations to more tax-efficient and cost-effective locations should operations still exist in international locations.
- End-to-end supply chain visibility helps identify and eliminate compliance gaps, including availing of trusted trader programs to reduce lead times.