It’s hard to talk about tariffs without bumping into politics. There are labor issues, international dynamics, and political figures at the helm of the policies. We do our best to stay away from all this.
Most importantly, when you get down to it, and whether you are for or against or begrudgingly tolerant of tariffs, there are real material impacts along the way. The products we buy, the companies we do business with, and they people they employ, they are all affected by global trade and ipso facto, by tariffs. Even purely domestic companies are affected by tariffs as they are very likely competing with global businesses.
Brad Feld, entrepreneur and VC, took to his blog to discuss some of the ways this manifests, specifically discussing those affected.
It also became apparent, [right after the tariffs went into effect], that startups had a huge disadvantage over larger companies that had significant U.S. lobbying activities. We explored a few paths to engaging with the U.S. government around this and basically were told some version of “go away – you are too small and unimportant.”
This isn’t peculiar to tariff policy. It pays to be big. Both because there is ostensibly state interest in the success of a large business, but also because they can have advocates and lobbyists voicing their concerns to the state.
Now if you’re a small company, and tariffs hit your products, what’s the best way to handle this vis-a-vis customers? Pricing is naturally a little opaque. But some companies, in order to ensure that customers know how tariffs are affecting current prices, and in what seems to be an attempt to draw some awareness to the trade climate, have been adding a “Tariffs” line item on invoices.
This is advantageous for a business in two ways. One is that it reveals that a certain percentage of the price is outside of a business’ control. The other is that it ensures that if and when tariffs disappear, the overall pricing structure will be intact and the line item can simply be removed.
With no end to the trade dispute in sight, this is likely not the last to be seen on the subject of tariffs, and it’s likely that this line item will be seen more and more, if not absorbed into a more opaque price increase.
Read the whole article over at Feld’s blog, and stay tuned to Maker Business as this sure to come up again soon.