The Trump administration's plan to impose substantial tariffs on products imported from Mexico and Canada will be suspended for 30 days, the White House announced Monday night. Development will give you more time to plan your company, but US companies still need to hurry to prepare. For example, customs duties on goods from China are still being recycled. China has announced retaliatory tariffs on imports of crude oil, agricultural machinery and trucks from the United States.
The broader taxation on trade could support the pricing strategies of many US companies. Some domestic companies will benefit from greater pricing power as international competitors face increased costs. Others will see the tariff prices that have passed on completed products and parts imported from other countries put pressure on them. Also, in certain US markets, domestic producers could be challenged by new, low-cost competitors.
How do smart companies respond? CFOs are used to adjusting pricing when dealing with the country's sustained inflation match, but changes to pricing strategies due to tariffs differ from those CFOs, and their partners to the market have been in the past three years. The year had to be managed, says partner Adam Ector, group lead in the industrial sector at consulting firm Simon-Kucher.
For example, tariffs are primarily unpredictable and often more material. Additionally, as the events on Monday showed, the government can turn them on/off (or delay them quickly).
How do CFOs stay agile and adjust their pricing to maintain market positions, margins and excellent customers? Talk about chief executive officer Echter, a January 23rd webinar, thinks it would be wise for CFOS to follow.
It's agile
Being prepared to act quickly in response to customs duties is a competitive advantage, says Echter. Customers will not expect prices and accept price changes, so they must prepare a pricing response once customs duties are in effect.
Organizations can roll balls, for example, about whether to absorb the tariff costs of products imported from Mexico or products handed over to customers or products handed over to customers. Domestic sellers can begin analyzing whether a price rise coincides with foreign competitors due to tariff increases.
“We have all rights to meet customs duties,” Echter said. “It's an uncomplicated, general response and it's one of the underlying reasons why tariffs can pay more.”
To prepare, Echter encourages management to invest in their pricing teams rather than treating pricing as an ad hoc feature. “If I go to the team tomorrow and ask, 'Who is the price set?' and their answer is, '10 people are 10% of the time.' If you do that, no one is pricing it,” he says.
Additional charges will be used
Flexible pricing models help businesses adapt to cost changes without tinkering with base prices. According to Echter, talk to your sales team about the potential Surcharges. You can have a system in place and have three or four additional charges, for example, in a particular region, material input, fuel, or shipping. “It's shocking to see how many CFOs can't charge an additional bill,” Echter said. “For many businesses it's a systematic change that's ready to do that.”
Beware of temporary price abnormalities…
Tariffs also pose risks to the domestic market. They could trigger a global trade flow that leads to low-cost foreign competitors entering the US, Echter said. Consider the US tariffs on China's imports, as China's response to a potential 10% tariff. As a result, if Chinese goods cannot find a home here, they may find a way to Europe, Ector assumes. Competition-focused European producers may generate sales to turn to healthier US markets.
“If a high-quality German machine appears in your backyard and it's half your price, you need to ask yourself: is this really their long-term strategy, or I just Are you looking at what was left or elsewhere are there homes?” Ector said. CFOs need to be able to monitor these potential confusions and filter the signal from the noise, he says.
…But maintain price discipline
It's appealing to positively match the low price, but Echter advises against dramatic price cuts. Targeted discounts, flexible payment terms and enhanced services are ways to stay competitive without destroying price positions, he says.
“Don't let the world know that you can come down prices,” Ector says. “It shows a massive price collapse [shows] You're chasing everyone. It will confuse your salespeople and your customers. ”
Create your message carefully
Clear communication is required to raise prices for products, where demand is heavily affected by the impact of price (high elasticity). “Most people aren't excited about price increases, but there's a huge difference between emotional responses and understanding reality,” Echter says. Framing price increases on legitimate factors such as labor costs, supply chain disruptions, and surges in input prices makes them even more attractive to customers.
“Professional procurement workers aren't excited to hear that, but they'll accept that,” Echter says.
There is hope that some of Trump's tariffs won't come to fruition, but Ector recommends a game plan that “wait, I hope it's gone” that says more than 10 days before Monday night's development Not done.
“We saw companies trying to endure when inflation came, and the costs were rising,” Echter said. They say that trying to flatten the prices and gain market share will only bring them short-term benefits, and in the end many of these companies have been acquired or bankrupt.
