Tariffs have exploded into the news as the US government wages economic conflict. Challenging allies and foes with rates unseen since the 1940s. While they seem like an issue for big business and politicians, tariffs will affect everyone and all businesses. And they require considered messaging for customers.
Tariffs represent the latest upheaval for businesses globally. Following on from years of soaring supply chain, energy and production prices, import rises are part of the messaging landscape. The threat of tariffs may seem distant for consumers. That is, until the price of avocados (or cars or high technology products) rocket.
In preparation, larger companies lined up pricing strategies and other mitigations. Some are stockpiling key resources, most are raising their prices to compensate. Boston Consulting’s“New Tariffs Are Coming. Here’s How to Prepare” about likely price rises across FMCG, automotive and medical sectors, shows how to mitigate them.
For firms seeking an advantage from tariffs. Gartner advises on how “Supply Chain Organizations Can Use Tariff Volatility to Drive Competitive Advantage.”
But the advisory firms provide no information on sharing changes with customers. And there’s little guidance for smaller digital-first firms facing a barrage of real-world disruption including the effects of inflation.
Sharing tariff pain with your customers
Notable changes in the consumer sector include an end to cheap goods and free shipping from China to the US. That may stretch to other regions through retaliatory or sympathetic action. Similarly, any business with a complex supply chain will face major price rises. Ones that they will pass on to consumers.
For Europe, the US will use tariffs to pressure the EU to accept low-quality US foods. Those laden with antibiotics, steroids and toxic chemicals like brominated vegetable oil, titanium dioxide and the carcinogenic red dye 3. Europe is unlikely to back down, but may make other concessions.
These tariffs (like the 10% blanket initial tariff aimed at China) and any retaliatory measures from other governments have a common source, the US government. One that neatly justifies legitimate price rises or business changes. The key to maintaining customer satisfaction is clarity in the messaging for any changes.
DKC offers a US-focused report, “A Business Leader’s Guide to Talking Tariffs” that could soon apply almost anywhere. It provides messages that are received positively despite their negative nature, helping leaders communicate internally and externally.
Tariffs impact on business
For specific changes in B2B markets, preparing customers for possible changes as early as possible is vital to provide clarity. An example advisory could be, “Due to x tariff changes, component/product y will be sourced from country z. Pricing impact from import duties or supply chain changes are to be established.” to provide clarity.
Another example is, “Our prices will rise from this date due to imminent tariff changes impacting the price of y by x%, driving up our producer costs.” The more specific you can be, the better.
When dealing with consumers, add a “Tariffs: pricing news” banner to the front of your store page with all the facts you can provide to help prepare customers. An additional “Learn more about how tariffs will impact prices” pop-up on the basket or checkout page can provide more specific details.
Leading brands will have their CX playbooks ready for any changes, if you lack in-house marketing and messaging experience, following in their footsteps is a time-honoured approach.
Taking advantage of tariffs
Companies that can take advantage of tariffs include those with local producers and suppliers. They can deliver marketing and messaging under the “buy local” banner, often a winner during global trade disputes, and create a more positive customer experience.
Consumers can also take advantage as price competition becomes a greater differentiating factor and they consider lower-cost choices. Assuming a 20% tariff, some firms will increase prices by 10% absorbing some of the impact while others will add 20% to the price, in the belief that most consumers won’t switch.
Any changes require balanced messaging about how your business or product offers greater value than your rivals.
As for the losers, US consumers and businesses will immediately pay more to the US government. Beyond that, typically, everyone loses to some degree.
The trade war could fade out, if countries come to an agreement, as we already see with Mexico. Or it could spark into a global pricing conflict as less-willing governments hold their ground and become more aggressive. Whatever happens, businesses need to be ready to communicate pricing and product changes to customers in a timely and transparent manner.