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Impact of Tariffs on Businesses and Braidy Industries’ Response

in Opinion

After the current administration took over the White House, there have been a lot of changes to the governing style. Courtesy of the widespread effects of these changes, millions of business owners and taxpayers around the nation have been impacted in some way. Just consider, for example, how the latest tariffs that the United States imposed on certain nations affect domestic producers. When the Trump Administration announced its steel-based tariffs on countries like Canada, Mexico, China and many others in Europe, the goal was to create a leveled playing field.

Unfortunately, once competing countries are engaged in trade deals, there tends to be a form of tit-for-tat action that occurs every time changes are made. So, when the United States introduces tariffs, it is effectively incentivizing the corresponding countries to fight back with their own tariffs or fines. After looking at the example mentioned above with steel, one can easily see that this scenario is exactly what took place.

A Vicious Cycle

After the countries who trade with the U.S. enacted their own tariffs, the only possible outcome was a large spike in prices for everyone involved. Thus, foreign producers who now have to pay more to export their steel will attempt to pass that surcharge on to the customers. The way that they do so is by increasing prices and making the demand cover their new costs. This helps maintain the same or very similar level of profitability. Unfortunately, however, it directly impacts the low-level buyers like the companies that rely on a lot of steel and must pay these new prices.

Although it is fairly obvious, the reason why these businesses are affected is that they have to cover an unexpected expense. Moreover, that expense is a byproduct of political agendas that the current leadership is pursuing. Sadly, failing to obey them could lead to terrible consequences such as fines and penalties for tariff violations. In translation, it is impossible to sidestep this landmine, and almost every company will have to find a way to cover the new charges.

Companies Respond

According to the Chief Executive Officer of Braidy Industries, Craig Bouchard, not everything related to tariffs is bad. On the contrary, many positive outcomes can be explored and leveraged for future success. How can one do so? Well, terminating any outsourced production that is currently hosted in foreign countries is the first step. Given that the government is doing their best to bring large companies to the United States and, in turn, reduce unemployment, they are willing to offer favorable conditions for businesses to repatriate. For those unfamiliar, these are the businesses that once operated in the United States but left somewhere along the way.

As witnessed by the example of Braidy Industries, Inc., bringing employment back to domestic workers will achieve the underlying purpose of the latest tax changes. Additionally, consumer confidence is bound to skyrocket when large businesses announce their return. Ultimately, this may even help raise long-term revenues by finding a lot of new buyers who will become loyal to the brand.

Learning Curve

Although the course of action one takes when there are large tariffs in place defines their companies’ future, many business owners make mistakes. Some simply fail to adapt to the changes and continue to run their operations nonchalantly. Others, however, dedicate themselves to finding the best strategy to overcome any changes that will affect their ventures. This is where companies like Braidy Industries can take advantage of their experience.

For someone who has never dealt with tariffs, it can be very difficult to decide whether to scale the production back or maintain the same strategy and output levels. Based on their decision, however, it is likely that the business will either prosper or undergo a major financial crisis. Hence why it is very important to make the right decision that will equally focus on the revenues, employees, buyers, and the public interest.

Future Expectations

Even though many companies are currently suffering as an unintentional consequence of the tariffs between the nations, the future should help adjust these costs. Whether business leaders pass them on to the customer or decide to relocate to a more reasonable place is almost irrelevant. The most important fact is that tariffs will raise prices. Consequently, businesses will have to decide if they will start relying on their own production and potentially come back to the U.S. or continue to pay higher prices.

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