Since early 2025, the United States has implemented a series of significant tariff policies that have dramatically raised the cost of imported goods. As of April 2025, the U.S. average effective tariff rate is 22.5%—the highest rate since 1909.
As a small business owner who imports products, you would be are required to pay this additional cost on top of the original product price. These tariffs directly increase the cost of goods sold, forcing you to make difficult decisions about pricing and profitability.
(Source: Yale University, April 2025)
Immediate Impacts
Supply Chain Disruptions
For example, If you’ve been importing from China, you’ve likely discovered that the 145% tariff has made working with your usual suppliers more complicated. You’re not alone—most businesses have been forced to cancel orders they simply can’t afford to fulfill. What’s happening extends well beyond China alone. The ripple effects have reached every corner of the global supply chain. U.S. imports have dropped 43% week-over-week through April 2025, and you’re probably scrambling alongside thousands of other business owners trying to find alternative sources for everything from your raw materials to your finished products.
Reconfiguring your entire supply chain with little notice isn’t just stressful—it’s expensive and time-consuming. Finding new suppliers in tariff-friendly countries can take months, and building the trust needed for reliable partnerships can’t be rushed. While you’re dealing with these disruptions, you’re also facing demands for faster payments from nervous suppliers who are just as uncertain about the future.
Cash Flow Pressure
Whether you import electronics, machinery, textiles, food products, or any other goods, you’re feeling the immediate financial squeeze. Your input costs have exploded overnight, and you’re stuck with an impossible choice: absorb these crushing additional expenses and watch your profit margins evaporate, or pass them on to your customers who are already stretched thin by inflation.
The situation becomes even more challenging when you consider that many small businesses rely on day-to-day sales for operations, and accessing financing can be more complex than it is for larger corporations. This creates additional pressure when unexpected cost increases hit. You may be tying up precious cash by stockpiling inventory to avoid even higher tariffs down the road, all while trying to honor existing contracts at old prices when your actual costs have increased.
Difficult Inventory Planning
You may be operating in survival mode, unable to make long-term plans when trade policies change at a moment’s notice. Every decision feels like a gamble when you can’t predict what tomorrow’s tariff announcement might bring.
Over one in four small businesses expect to raise prices in response to tariffs, but this creates a delicate balancing act. Raise prices too much, and you risk losing customers to competitors who haven’t been hit as hard. Don’t raise them enough, and your margins disappear entirely. Many business owners find themselves caught between honoring existing contracts at old prices while paying new, significantly higher costs for materials and goods.
How Some Financial Institutions Can Support Your Business
While not all banks are prepared for the unique challenges of the current tariff environment, some financial institutions are uniquely positioned to help small businesses weather these storms. The key is finding the right banking partner – one that truly understands your needs and has adapted their services specifically to address tariff-related issues.
Here are five key ways the right bank can help you navigate tariff challenges and protect your business’s financial health:
1. Digital Tools and Technology Solutions
Banks are rapidly digitizing their services to help businesses manage complex financial situations more effectively. Cash flow management technology helps you track multi-currency transactions, monitor real-time impacts of tariff changes, and automate supplier payments to reduce processing delays.
For example, FIs that offer tools like Finli can help you streamline your financial processes and provide real-time insights into your cash flow, making it easier to manage the financial complexities that come with tariff-related changes.
These platforms often include supply chain visibility tools that provide valuable data feeds on accounts receivable and payable. This improved visibility enables your finance team to forecast more effectively and make better decisions about inventory management, supplier relationships, and pricing strategies.
Some banks now offer integrated platforms that combine banking services with trade finance tools, creating a comprehensive solution for managing international business. Ask your bank about digital tools that can improve your financial visibility and decision-making during this uncertain period.
2. Advisory Services and Strategic Planning
Modern banks are becoming true business partners, offering advisory services that go far beyond traditional lending. They’re investing in research and analytics to provide clients with market intelligence about trade policy impacts. This includes analyzing how tariffs affect your specific industry, developing scenario planning for different tariff outcomes, and identifying potential cost-saving opportunities.
These advisory services often include access to trade specialists who understand both the financial and operational implications of changing trade policies. They can help you evaluate different sourcing strategies, assess the financial impact of supply chain changes, and develop contingency plans for various tariff scenarios.
Schedule a consultation with your bank’s small business advisory team to develop a tariff-specific financial strategy. This proactive approach often reveals opportunities you might not have considered, such as trade finance products that could reduce your overall costs or digital tools that improve operational efficiency.
3. Flexible Lines of Credit for Cash Flow Management
A business line of credit can serve as your financial lifeline during uncertain times. Unlike traditional loans, you only pay interest on what you actually use, making it perfect for managing unpredictable tariff costs and supply chain disruptions.
Consider this example: An e-commerce business owner who imports products from China. When tariffs suddenly increased, he used his line of credit to maintain inventory levels while transitioning to suppliers in Vietnam. This flexibility prevented stockouts, allowing him to continue to meet demand.
The key advantage is that these credit facilities provide immediate access to funds without the lengthy approval process of traditional loans. You can use them to take advantage of bulk purchasing discounts, bridge gaps when suppliers demand faster payment, or simply maintain operations during seasonal fluctuations that are now amplified by tariff uncertainty.
To maximize this resource, contact your bank about increasing your existing credit line or establishing a new one before you actually need it. Banks are more willing to extend credit when your business is performing well rather than when you’re already experiencing cash flow problems.
4. Supply Chain Finance Solutions
Supply chain finance represents a sophisticated approach to managing the complex relationships between buyers and suppliers in the current trade environment. Think of it as a financial bridge that benefits everyone involved. When your bank steps in to finance your supplier relationships, they take responsibility for settling invoices while providing valuable data through technology platforms.
This arrangement allows suppliers to receive payment almost immediately after delivery, rather than waiting 30, 60, or even 90 days. Meanwhile, you maintain your preferred payment terms, protecting your cash flow while strengthening supplier relationships. The improved visibility through digital platforms helps you forecast more accurately and make better strategic decisions.
One particularly valuable aspect of these programs is their ability to preserve relationships with key suppliers during tough times. When suppliers know they’ll get paid quickly, they’re more likely to prioritize your orders and offer favorable terms. This can be the difference between maintaining your competitive edge and losing market share.
5. Trade Finance and Letters of Credit
International trade has become more complex with the new tariff environment, but some banks offer tools to simplify and secure these transactions. Letters of credit guarantee payment to suppliers upon delivery, reducing counterparty risk when working with new overseas partners. This becomes especially important when you’re forced to find alternative suppliers due to tariff considerations.
Pre-shipment financing provides another crucial service by giving you capital to pay suppliers upfront for verified purchase orders. This allows you to secure better pricing from suppliers who are also feeling cash flow pressure, without depleting your own cash reserves. Import financing can also help you take advantage of price arbitrage opportunities that may emerge as trade patterns shift.
The key is to work with your bank’s international department to structure these arrangements in ways that optimize both cost and risk. They can help you navigate the complex documentation requirements and ensure compliance with changing trade regulations.
Key Takeaways
The challenge of navigating tariffs requires a proactive approach rather than simply reacting to each new development. Don’t wait to adapt to the challenges brought by the 2025 tariffs—start building your financial resilience now by establishing credit facilities before you need them, diversifying your financing sources, and maintaining strong communication with your banking team.
Remember that your bank or credit union could offer much more than just loans—they can often provide supply chain finance solutions, trade finance products, advisory services, and technology platforms that can give you a competitive advantage in this challenging environment.
