Are you feeling the anxiety about the coming trade war? Were you shocked? Will your business suffer? Are you living under a rock? Congratulations, you forgot about Murphy’s law: “Everything that can go wrong will go wrong.” Get over it, make the best out of it and prepare for the next time.
Evaluate your options
While the impact on a single consumer can be negligible, after all, we can hold off purchasing Chinese goods for a month or two, the effect on businesses will compound. Higher tariffs mean higher prices for American consumers, which in turn might delay purchasing decisions of a large group of customers. Alternatively, the prices might make customers buy smaller quantities or swear of Chinese made products altogether. After all, we often have longer lasting alternatives available to the plastic trash found in so many discount stores.
For a business, it thus is essential to think about how to react to the new tariffs. Do you raise prices or reduce profits. If you are in a private company, reducing your margin might, in turn, give you a competitive advantage, which could help the business grow in the long turn. For a publically traded company, the tradeoffs are more significant. If you reduce profits, you might miss earnings estimates, which leads to stock price declines, which might risk your seat. After all Wall Street runs as much on emotions as it runs on logic.
Chance
If you are in the position to sell American made goods, that directly compete with imports, now might be a good time to double down on the fact. While the actual price change might be slim, for a consumer, the psychological change might be significant. “Everything is getting more expensive!”
Thus, convincing the next purchaser of the advantages of going with your product might have just become a lot easier, especially if you can combine the lower difference with the higher quality or better features. Consequently, it might be a good time to double down on your marketing.
No Surprise
In last weeks post, I talked about preparing for these events. While you might have to create plans from scratch right now, you should not have to. Trade wars happened before, and they will happen again. You should have a ready-made plan in your pocket for them — no matter whether they present a risk or an opportunity.
Act
No matter whether you prepared for the trade war or not, it is time to act on it. Consider your option and decide what action is appropriate. Burying your head in the sand is not the answer.