The U.S.-China Tariffs Reset & what Retail Suppliers should do ASAP!

In this episode of The Savvy Supplier, Boyd Evert & Al Frank discuss the recent 90-day tariff reset between the U.S. and China, its implications for suppliers, and strategies for navigating the changing landscape. They emphasize the importance of understanding pricing strategies, forecasting, and the need for expert guidance in a volatile market.  #TariffsReset #UnitedStates&China #RetailSupplier #Deductions #BestPractices

Takeaways

• The 90-day tariff reset offers a temporary relief for suppliers.
• Suppliers should reassess their pricing strategies during this period.
• Forecasting will be crucial as companies adjust to new tariff rates.
• The reset may open up exports of key raw materials between the U.S. and China.
• Building uncertainty into cost of goods is essential for suppliers.
• Long-term agreements between the U.S. and China are likely necessary.
• Retailers need to be prepared for potential deductions related to pricing changes.
• Expert guidance is invaluable for navigating tariff implications.
• Suppliers should focus on the actual market conditions rather than rhetoric.
• The reset could lead to more reasonable shipping and sourcing strategies.

Chapters

00:00

Understanding the 90-Day Tariff Reset

02:59

Impact on Supply Chain and Pricing Strategies

05:59

Long-Term Implications and Expert Guidance

What do #retailsuppliers need to do IMMEDIATELY during the 90-day Tariff Reset between the U.S. and China?   

Welcome to “The Savvy Supplier,” your go-to podcast for navigating the ever-changing landscape of retail supply! Join us as we dive into expert insights and actionable tips to help retail suppliers save time and money. From tackling inflation to optimizing operations, we’ve got you covered. Tune in every week for strategies that empower you to thrive in a competitive market. Don't miss out—subscribe now and become a savvy supplier! 💡

www.HRG-audit.com
www.SavvySupplierPodcast.com

Need help with managing Deductions and implementing Supplier Best Practices?  Help is here!
Email:  Boyd.Evert@HRG-audit.com

#RetailSupplierDeductions
#RetailSupplier
#Post-AuditClaims
#HRG

"Wiser Decisions, Fewer Deductions"

Transcript

Al Frank (00:01.538)
What the 90 day terrorist reset with China means for you and what suppliers should do ASAP on this episode of the Savvy Supplier.

Al Frank (00:12.93)
Welcome into the Savvy Supplier where we save you time and money. I'm Al Frank alongside Boyd Evert, the CEO and co-founder of HRG. Boyd, wow, what a big announcement from the White House today. The U.S. and China agreed to a 90-day tariffs reset with U.S. tariffs on Chinese imports falling to 30%, while China's tariffs on U.S. imports fall all the way down to 10%. What are your initial thoughts on this?

Boyd Evert (00:40.446)
Wow, I think there's a huge sigh of relief among the suppliers and vendors of the world, particularly those in the US. I think that this is an opportunity for everyone to sort of take a deep breath and start to rethink their pricing strategy for the rest of 2025.

Al Frank (01:01.358)
Well, this agreement, it's really only for 90 days, but what do you think is going to happen during these 90 days? Will the transport prices, are they going to take a big jump during these three months? And if so, what are the wise moves that suppliers should make right now?

Boyd Evert (01:19.562)
Great question. I think that on so many fronts, it's just anyone that's asked to give me what do you think is going to happen, internet's forever. So I'll be careful to choose my words carefully here. But I think it's a great opportunity for people to assess it from the perspective of it's probably, maybe even likely, this is the new range, right, between 10 to 30%, because we...

Al Frank (01:22.926)
Thank

Boyd Evert (01:47.466)
Great Britain, signaled that this is the best rate. And then with China, we know there's a lot of concern around Chinese imports and for them to come in at 30%. I'm thinking that that's probably the min and the max for the industry going forward.

Al Frank (02:08.974)
Well, this reset should open up exports of some key raw materials between the two superpowers. Again, good news for many. For example, parts needed for consumer electronics, those should be headed this way. What do you think the impact will be on supply and demand? What will be the impact on pricing?

Boyd Evert (02:31.466)
Right. So I think the biggest impact is going to be on forecasting, right? Because a lot of companies were scrambling thinking that if we're going to have a triple digit tariff for China, we're going to have to quickly find alternate points of sourcing. And so I think this sort of signals to everyone that you can probably still leverage most, if not all, of your sourcing out of China. You're just going to have to find a way to build that into the cost of goods. And I think the

biggest winners here are the people that source for Black Friday. I know it's a little early to talk about it, but in retail parlance, really, some orders have already been placed for Black Friday, right? And some of them are even on the water. So I think for everyone that's in the import business, particularly those that have a long lead time for those orders, I think there's much needed relief. And I think people can...

step back and actually look at something that's more reasonable.

Al Frank (03:32.024)
That's so amazing to think that the Christmas season is, you know, either in jeopardy or in flux right now. What are some principles that suppliers can use to guide them when planning long-term in a time of volatility?

Boyd Evert (03:48.008)
Right, so I think the best approach is typically to build in that uncertainty into your cost of goods, whatever that looks like, how aggressive you want to be or conservative you want to be, but to build that into your price, your cost of goods. And then knowing that it's likely the 30 % is the high end, that going forward you partner with the individual channel, which particular retailer that you're dealing with.

to come up with a strategy saying, we have to take this price increase, but as the tariffs come down, we can pass that savings onto you immediately using price protection.

Al Frank (04:30.776)
Yeah, that's huge right there. think those words, that advice, you can take that to the bank, you know, that would be really important for people to hear. In terms of a long-term agreement between US and China, do you think we get one? And what do you think it might look like?

Boyd Evert (04:49.502)
I think it would be shocking if we didn't get one. There's no way that any company can reshore in a matter of months. It's always a matter of years. Also building up those alternate points for sourcing, it's going to take time. you just, in retailing is like a giant tanker. not going to, it's not a speedboat. You're not going to turn in a dime.

It's going to take a lot of planning and execution. So I think that the fact that the rates are where they're at, think it's far more reasonable and I think it's far less disruptive. And I think the stock market, at least initially, is showing that relief. I think in some indexes, they're either close to or slightly above where they were prior to the April 2nd announcement.

Al Frank (05:46.67)
You know, the European Union also got a bit of a warning today from President Trump. said that trade talks with European nations might be tougher than those with China. Bit of a foreshadowing of what's ahead.

Boyd Evert (05:59.836)
Yeah, I think so. I think that sometimes the analogy I used to one of the concerned parties that reached out to me last week, and there's been multiple regarding some guidance on how to think about tariffs, was back when I was in high school, I was years ago, and learning how to, in wrestling, how to do a takedown, you always focused on the hips, right?

The arms, right, we were told the limbs could go any which way, but no one goes anywhere without their hips. Right. And so I think we look at the rhetoric as the flailing, you know, arms and legs, but you look at what it what what the US does and that's the hips. Right. So I think a lot of anxiety, there's been a lot of antacid consumed over the past several weeks. And I think that that if you just focus on what is happening rather than what's

being said, I wouldn't be surprised if the EU, some of them came in under 30%, right? But for right now, it's almost like that typical bargaining that you see in open markets, you know, over in maybe the Middle East or the Far East where you're out, you know, arguing with a street vendor over the value of what you're purchasing. And I think that's what we're hearing is an open market negotiation technique.

Al Frank (07:26.904)
Well, as you focus on the hips, so to speak, how will this reset with China? How might it affect deductions for retail suppliers?

Boyd Evert (07:29.002)
Thanks

Boyd Evert (07:37.352)
Well, another great question. So anytime you have the cost of goods or the retail move, usually there's deductions involved, whether they're unintentional deductions where the invoice isn't matching the PO, right? Or you have price protection, maybe it's not being calculated correctly. And incidentally, price protection is just you're buying down the cost of goods.

both in transit and as well as on hand. So those are two areas just from the pricing perspective. You also have the supply chain penalties and fines regarding on time and in full. we were all reading in the newspapers that there was a lot of ships showing up at the port that weren't entirely full, right? And so you don't have the optimum shipping. And so there might even be

some additional shipping costs that are being incurred that particularly if the retailer owns that freight, they're gonna probably pass that along in the way of deductions because that's not what we agreed to pay. So those are just a few things to come to mind, but I'm always open to new deductions as they come across the desk.

Al Frank (08:57.762)
So much going on right now, so many different sources of information or disinformation as the case may be. How important is it for suppliers to seek the help of true experts in the field when they're trying to consider their strategy right now?

Boyd Evert (09:13.244)
It's priceless, right? Because you don't get a redo. You don't get to do this over. And a lot of this stuff, there's a lot of money at stake. And so I'd say that you definitely got to lean on those expertise, you know, whether it's internally with people that know or are other business partners or here at HRG, you really need somebody to give you a broader context. Otherwise, you're dealing with a situation and then you have no idea what the downstream implications are in the form of

unauthorized or unintentional deductions.

Al Frank (09:46.062)
Well, boy, thanks for jumping in here for this very timely and helpful info today. As things happen right now, this is a place that suppliers can come and see the latest about not only what the information is about what to do with the information. I want to mention to suppliers that the experts at HRG are able to take a look at your particular situation and help you to get a clearer picture of what you need to do right now. You can schedule a free strategy call with us at the website.

HRG-audit.com, that's HRG-audit.com. You can call us at 479-616-1600, or you can email us at info at HRG-audit.com. These are all ways to reach us, and HRG is ready and able to help you. Our wish for you is this, wiser decisions, fewer deductions. See you next time on the Savvy Supplier.