09-05-2025
The True Cost of Tariffs
Talk about tariffs has been filling newspapers, websites, airwaves, boardrooms, factory floors and dinner tables for a while, but reality is just starting to sink in now. What are the true costs of tariffs, and who is going to be paying for them?
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While many brands and retailers have already decoupled at least part of their supply chains from China after the last round of tariffs, they're finding that other countries aren't such safe havens either. With current tariffs on Chinese imports standing at a whopping 145 percent, and universal tariffs on most countries at 10 percent, rising prices seem to be an inevitability.
Some of those additional costs will be absorbed by the brand, some will be renegotiated with suppliers and some will be passed along to the consumer. The exact ratios will vary by company and even product on a case basis, but one truth remains: the impacts will be hardest on small businesses.
Here, Ian Fredericks, president and CEO of Hilco Consumer-Retail, chats with Lauren Parker, director, Fairchild Studio, about how tariff worries — real and perceived — are affecting shopping behavior, inventory and pricing, and how the industry can best prepare.
'What I'm really focused on [with clients] is maximizing liquidity,' Fredericks said. 'You know, your working capital borrowing facility to be able to weather this storm. And that's requiring some very nuanced discussions, especially where clients have a borrowing-based formula where they borrow based on how much inventory they have, or how much in credit card receivables or other receivables they may have. I want to help them understand how different decisions that they might make — whether it's around raising prices, discounting, bringing in inventory — how the tariffs are going to impact their cost of goods, what the impact is going to be on their gross margin percentage, and then what's the impact going to be on their cost factor.'
[To listen to the podcast, ]
