In the realm of supply chain cost management, unexpected changes can be particularly daunting. Three weeks ago, a construction client called us, deeply concerned about tariff impacts on his business. His lumber supplier had just informed him that materials for a $2.8 million project would cost an additional $180,000 effective immediately. The reason? Tariff policies that most business owners thought were still “under negotiation.”
Here’s what’s actually happening: The average U.S. tariff rate hit 28 percent in April 2025, the highest since 1901. While policymakers continue debating details, your suppliers are making pricing decisions today based on what they’re paying at ports right now.
If you’re waiting for clarity before taking action, you could already be behind.
The Timing Everyone’s Missing
Most news coverage focuses on the big policy announcements like steel and aluminum tariffs doubling to 50 percent, automotive facing 25 percent rates, the universal 10 percent baseline. What gets overlooked is how quickly these changes can take effect.
The data tells the real story. U.S. Customs collected $19.3 billion in duties during April alone, roughly three and a half times the monthly average from 2018-19. Your competitors who moved early avoided much of this impact. Those still adjusting are absorbing costs that may never fully reverse.
Tariff Impact on Business: What Your Industry Faces
Manufacturing and distribution companies encounter a particular challenge. Modern supply chains mean single products contain components from multiple countries, each with different tariff rates. A brake assembly might include steel from Canada (25 percent tariff), electronics from China (60 percent), and rubber from Mexico (25 percent). The final tariff depends on where “substantial transformation” occurs, a legal standard that’s anything but clear.
Construction faces different issues. Steel and aluminum tariffs don’t just affect obvious materials. They also impact pre-engineered buildings, rebar, roofing materials, and HVAC components containing covered metals.
Real estate developers see compounding effects. The National Association of Home Builders estimates direct cost increases of $7,500 to $10,000 per home, but this misses indirect impacts. When concrete prices rise due to steel tariffs, electrical costs increase from component tariffs, and lumber faces trade restrictions simultaneously, the cumulative effect exceeds simple addition.
Tariff Planning Strategies: Three Critical Moves Smart Businesses Are Making Now
Regardless of what happens in Washington over the next 90 days, successful companies are taking these steps:
First, they’re conducting “tariff forensics” on their supply chains. This goes beyond mapping suppliers by country. You need HTS codes (the classification system that determines tariff rates) for critical components, current duty rates, and landed cost calculations including duty, freight, and currency impacts. Most companies discover they’ve been operating with incomplete information about their true exposure.
Second, they’re restructuring contracts with explicit tariff language. Standard force majeure clauses (legal terms for unforeseeable circumstances like natural disasters) don’t typically cover tariff changes because courts view trade policies as foreseeable business risks. You need specific contract language addressing how duty increases get handled and whether you can pass them through to customers.
Third, they’re exploring domestic sourcing as a financial hedge.
The math works differently now. When foreign suppliers face 25 to 50 percent tariffs, domestic alternatives that previously seemed expensive suddenly become competitive. The key is running scenarios that account for total cost of ownership, not just unit prices.
The Advisory Advantage
During the 2018-19 trade disputes, businesses made two types of mistakes repeatedly. Some panicked and made expensive sourcing changes that proved unnecessary when exemptions materialized. Others waited too long and got caught in price spikes that compressed margins for months.
The companies that navigated successfully had three characteristics: they modeled multiple scenarios instead of trying to predict outcomes, they built flexibility into their operations rather than optimizing for single outcomes, and they treated tariff planning as part of broader financial management rather than an isolated trade issue.
When tariffs shift your costs, it impacts your tax planning in multiple ways. Higher input costs affect deductions, inventory values fluctuate with duty changes, and timing matters more for equipment purchases.
Next Steps
The tariff landscape will keep evolving, that’s the only certainty. But waiting for stability means missing opportunities that exist right now for companies willing to act on incomplete information.
Contact your Rea advisor today to discuss how current tariff policies specifically affect your business model and cash flow. We can help you model scenarios, identify opportunities, and build the flexibility you need to succeed regardless of what policymakers decide next quarter.
