Coping With Tariffs: Don't Panic, Make a Plan

Tariff talk is everywhere, and it is stirring up a lot of fear and confusion. I posted a short video about it yesterday and it instantly became my most viewed ever. The TikTok version especially took off, with more comments and questions than usual.

That tells me people are worried, and rightly so. So let's skip the panic and talk about what you can actually control, which is your pricing and your margins.

Why This Matters

News sites are built to get clicks. More drama means more revenue for them. But you are running a business, not chasing headlines.

Here is the part that is real. Tariffs will raise your costs, especially if your business depends on imported goods. That does not have to wreck your business, but it will if you wait to see what happens and adjust later.

How to Protect Your Profits

Let's say you sell a $100 product and your goal is a 60 percent profit margin. Watch what a cost increase does to that number.

Before tariffs, a $100 sale minus $40 of cost leaves $60 of profit, which is a 60 percent margin. Now say the cost of goods doubles to $80. That same $100 sale leaves $20 of profit, a 20 percent margin. Even if you raise your price by the full $40 increase, a $140 sale minus $80 of cost leaves $60 of profit, which is only a 43 percent margin.

That last number is the one that surprises people. Passing along the exact dollar amount of the cost increase still leaves you worse off than you started. To keep your margins healthy, you need to raise prices by more than the increase in cost. It is counterintuitive, and it is essential.

If raising prices makes you nervous, you are not alone, and there is a right way to do it. I wrote about that in how to increase prices without losing customers.

Plan Ahead, Up and Down

A plan means deciding now what you will do in both directions, so you are not making the call under pressure.

• Raise prices now to protect your margins, before the cost increase hits your bank account
• Communicate with customers about why you are doing it, in plain language
• If tariffs ease later, be ready to adjust, but only if it makes sense for your numbers

And if you had a weak margin before any of this started, now is your chance to fix it and keep it fixed. Nobody is going to be surprised by a price change this year.

Understand the Bigger Picture

Your customers and employees are tired. After years of inflation, things finally felt normal, and now this.

But remember that tariffs are a political tool. The current power dynamics in Washington may shift by the 2026 elections. That is only 18 months away, and politicians know the economy needs to look better well before then. Tariffs might not last forever. Your business needs to last through them.

Healthy profits are not greedy. They are the thing that lets you keep the doors open and keep paying people when conditions get strange.

About half of businesses survive five years. The number one reason they fail is money problems. You need healthy finances and, super importantly, healthy profits.

If You Want Help Running the Numbers

Momentum Members, don't forget that you get unlimited question and answer support by email. Send me your product costs and your target margin and we will work out where your price needs to land.

Not a member? Learn about the Momentum membership, or book a free consultation and let's look at what tariffs are doing to your specific business before they do it.