As tariffs continue to make headlines, small business owners are left wondering how these economic shifts will impact their operations. On this edition of The Small Business Show, we sit down with small business expert and columnist Gene Marks about what tariffs mean for entrepreneurs and how they can navigate the uncertainty.
Marks explains that the Trump administration has imposed or threatened tariffs on various imported goods, including a 25% tariff on steel and aluminum worldwide. Tariffs are being considered for goods from China, Mexico, Canada, and the European Union, with the intent of leveling the playing field for American manufacturers. While the impact of these tariffs continues to spark debate, Marks stresses that business owners need to concentrate on practical solutions to mitigate their effects.
One key strategy he highlights is the use of bonded warehouses and free trade zones, which allow businesses to store imported goods without immediately paying tariffs. This can be beneficial in an uncertain trade environment, as tariffs may change before the goods are sold. Marks also recommends seeking assistance from organizations like the World Trade Center Association, which helps businesses find alternative suppliers in countries with lower tariff rates.
For companies looking to offset tariff costs, investing in automation and process efficiencies can be a smart approach. Marks advises business owners to explore technology solutions that streamline operations and reduce overhead costs, helping to maintain profit margins despite increased expenses from tariffs.
Shifting the discussion to aspiring entrepreneurs, Marks reassures that now is still a great time to start a business, given the accessibility of technology and global markets. However, he suggests that rather than starting from scratch, prospective business owners should consider buying an existing business. Many baby boomers are looking to retire and sell their businesses, often at favorable terms, providing a solid foundation for new owners to build upon.
"If you're able to buy inventory, put it into a bonded warehouse or a warehouse in a free trade zone, you don't pay any tariffs until you take it out. And by the time you take it out, two or three months from now, tariffs might not be the same—they might be a lot lower." – Gene Marks.The Small Business Show