Disconcerting trade news just keeps coming.
The US government has introduced a 25% tariff on the import of steel, as well as a 10% tariff on aluminium imports. In addition to that, a new line of tariffs of up to $60 billion will be imposed on technology imports from China, while the Asian country has already levied a 25% tariff on US food exports.
There are a number of steps you can take to ensure your business survives these turbulent times.
Who knows what’s next?
The situation seems to be escalating toward a full-blown trade war. Whether it will come to that or not, small businesses need to prepare themselves to withstand the oncoming storm. Luckily, there are a number of steps you can take to ensure your business survives these turbulent times.
Diversify Your Sources
Currently, the largest aluminium and steel trading partners of the US are the EU, Brazil, South Korea, China, and Japan. If your small business imports from these countries, the tariffs can cause a dramatic rise in prices.
However, the steel and aluminium tariffs are not imposed on all countries. The US government granted exemptions, for the time being, to Canada, the European Union, Mexico, Australia, South Korea, Argentina, and Brazil.
Since Brazil, the EU, and South Korea are among the largest import partners of the US, finding a suitable supplier shouldn’t be an issue.
This means that small businesses with partners in these seven countries can breathe a sigh of relief for now. But if you import from countries not exempt from the tariffs, the best thing you can do is diversify your sources.
Look for providers from the exempted countries. Since Brazil, the EU, and South Korea are among the largest import partners of the US, finding a suitable supplier shouldn’t be an issue. Mexico and Canada are also excellent choices because of their proximity to the US.
But this doesn’t only concern aluminium and steel importers. It’s true for any other commodity as well. Diversifying your sources allows you to choose the best deal and have a back-up plan if anything goes wrong with your primary provider, whether it be a trade war or any other difficulties.
Expand Your Outlets
This same principle applies to customers as well. If your small business mainly sells to one region, you leave yourself vulnerable to problems affecting that specific region.
For example, if you’re exporting food to China, the new 25% tariff on US imports will increase your costs as well as the price you can sell your goods for.
Look for other regions to export your products to. This doesn’t mean you should abandon your Chinese partners altogether, but since prices will likely increase, they won’t be able to buy as much from you as they used to.
Sell the surplus somewhere else. If you need ideas for other outlets, check out our international business guides to help you find new business partners around the world.
Streamline Your Processes
While the full effects of the trade war are yet to be seen, it’s safe to assume that it will cost your business time and money to look for alternative solutions and to pay higher import prices on various goods.
Maintaining a positive cash flow balance is essential for your business.
You have to cut costs in other business areas to save money and to make sure your business doesn’t run into financial difficulties
You have to cut costs in other business areas to save money and to make sure your business doesn’t run into financial difficulties.
There are various software that can help you cut unnecessary costs and manage your business easier. Customer relationship management (CRM) platforms, accounting software, and many others can help you keep your head above water. For ideas, check out our blog How to Automate Your Small Business’ Operations.
For international payments, use Veem.
With Veem, the trade war is not an issue. Regardless of your suppliers’ location, you can send them payments with just a click. The same goes for your customers: request a payment with a click of your mouse.
Veem helps you cut costs, because we charge no wire fees and offer competitive foreign exchange rates. Veem saves you time as well, because you can track all your transactions on your dashboard. No more waiting around and wondering where your money is.
Sign up for a free Veem account to withstand the effects of the trade war.