How Tariffs Will Impact Your Business as a Supplier Selling to Retailers and Consumers
- Market Muse
- Feb 9
- 3 min read
In the world of consumer packaged goods, every dollar counts. Whether you're selling directly to consumers or working with retailers and distributors, external economic factors like tariffs can dramatically impact your pricing, margins, and supply chain. As the U.S. continues to implement and adjust trade policies, businesses like yours must stay ahead of the curve to remain competitive.
Understanding Tariffs and Their Impact (We know you know this but we’re saying it again)
Tariffs are essentially taxes imposed on imported goods. When the government increases tariffs on specific products or raw materials, the cost of importing those goods rises. For food and wellness brands that rely on international ingredients, packaging, or manufacturing, this can mean higher costs at every step of the process.
For suppliers like you, tariffs can create several challenges:
Increased Production Costs – If you source ingredients or packaging from overseas, higher tariffs could make these components more expensive, cutting into margins.
Higher Wholesale Prices – If you pass these costs down the chain, your wholesale prices may increase, making products less attractive to retailers.
Retailer Pushback – Retailers are highly price-sensitive, especially when considering new products. If your pricing increases due to tariffs, you may face resistance when trying to secure or maintain shelf space.
Consumer Price Sensitivity – If prices increase at the retail level, consumers may opt for lower-priced alternatives, affecting your sales volume and market penetration.
Who Will Feel the Effects?
1. Suppliers and Manufacturers
Companies that rely on imported materials will face higher costs, which may require adjusting pricing or seeking alternative sourcing solutions.
2. Retailers
Retailers that prioritize competitive pricing may start seeking alternative products with lower price points or shifting to private-label alternatives. This can impact your ability to grow within key retail channels.
3. Consumers
Ultimately, the end consumer pays the price. If tariffs force higher retail prices, many shoppers will adjust their spending habits, potentially moving away from premium or niche products.
How to Prepare as a Supplier
To mitigate the impact of tariffs, suppliers should take proactive steps to protect their business and relationships with retailers and consumers:
Sourcing Strategy – Explore alternative sourcing options, including domestic suppliers or regions with lower tariffs.
Retailer Negotiations – Communicate the impact of tariffs to retailers in a way that preserves relationships and secures fair pricing agreements.
Pricing Strategy Adjustments – Restructure pricing models to maintain margins while remaining competitive.
Exploring Direct-to-Consumer (DTC) Models – Diversify sales channels and reduce reliance on retail by strengthening DTC strategies.
Steps You Can Take Now
Stay Informed – Trade policies can change rapidly. Keep an eye on tariff updates that affect your category and materials.
Reassess Your Supply Chain – Look at alternative suppliers, consider domestic manufacturing, or negotiate better pricing with existing partners.
Communicate with Retailers – Be transparent about how tariffs are affecting costs and work collaboratively to find solutions.
Adjust Your Pricing Strategy – Ensure you remain competitive without sacrificing profitability.
Diversify Your Sales Channels – Strengthen your DTC approach to lessen dependence on retail partnerships.
Final Thoughts
Tariffs are just one of many challenges suppliers face when scaling in the retail space. However, with strategic planning, supplier adjustments, and pricing strategies, businesses can mitigate the impact and continue to grow.
Need help with your retail strategy in light of changing tariffs? Start assessing your options now to protect your margins and maintain strong relationships with retailers and consumers.
Contact Honey Bee Brands for help with finding viable options to keep your net in the positive.
