The Weight of the Wait
A recent Freightos survey of small business importers in the US revealed that on a general basis the average rate of ‘concern’ over the tariff situation was 8.9 out of 10, with 62% of respondents choosing 10. We have seen some panel producers indicate that they are trying to make production adjustments on a bi-weekly basis as customers rapidly change plans in this volatile environment, but small businesses are far less able to make such short-term alterations to schedules. When asked what their thoughts were concerning the administration’s plans for further tariff changes, here’s what they said:
- 51.3% said there is no way to know
- 22.6% said they expected tariffs to be reduced
- 17.4% said they expected tariffs to be increased
- 8.7% said they expected tariffs to remain the same
- 33% have paused shipments entirely
- 29% are exploring sourcing outside of affected regions
- 29% will ‘wait and see’
- 19% are accelerating shipments
All in, while the tariffs themselves are a serious issue for small CE importers, the uncertainty around tariff policy and the lack of a coherent plan seems to be the real issue that leads to questioning whether some can sustain their business in light of their inability to plan for or recover some of the additional customs costs that still remain. With the administration threatening additional tariffs, new port call fees for Chinese vessels, and the end to the de minimis exemption for direct-to-consumer shipping on May 3, small importers are facing serious issues that can cause further disruptions to their business or end it entirely, not the desired goal of current tariff programs. We expect some front loading to resume again as we get closer to July, but the inevitability of price increases to cover higher overall shipping and/or sourcing costs will begin to show as pre-April inventory is reduced. Large producers can absorb much of the increased cost and reduced cash flow, while smaller ones cannot.