When Tariffs Affect Your Business: 6 Tips To Navigate Disruption

Economic disruptions are affecting businesses of all sizes in 2025. Between newly enacted and proposed tariffs, threats of inflation, stock market volatility, and fears of recession, organizations are looking for ways to optimize costs and drive long-term business agility amid economic uncertainty.  '

Tariffs are complex, difficult to predict, and challenging to navigate, especially as trade policies shift. As a business leader, understanding the impact of tariffs, as well as how to respond to them, can seem overwhelming. In this article, we discuss what tariffs are, how they affect businesses, and how to better prepare your business for unpredictable market conditions. 

What is a tariff?

A tariff is a tax or duty placed on goods imported into a country. Tariffs are typically applied as a percentage of an item’s total value and are paid by the importer when the goods enter the country. As an example, the Chicken Tax was introduced by President Lyndon Johnson in 1964, imposing a 25% tariff on imported light trucks.

Governments impose tariffs for a range of reasons, including:

• Protecting domestic industries from foreign competition
• Encouraging businesses and consumers to purchase domestically produced products
• Increasing tax revenue on imported goods
• Responding to perceived unfair trade practices by other countries
• Creating jobs by manufacturing more goods domestically

How tariffs impact businesses

Tariff and trade-policy changes can impact businesses in many ways, presenting challenges with both short- and long-term business planning. According to a survey of 625 small business owners conducted by the National Small Business Association, more than half (51%) of respondents are somewhat or very concerned about increased tariffs.

Additionally, a survey of 437 business professionals conducted by Endeavor Business Intelligence found that 66% of respondents believe tariffs will affect their business somewhat or very negatively. 

Ways tariffs and economic impact businesses include: 

• Increased costs. Tariffs increase the price of imported goods and materials, which can increase supply chain and operational costs, cut into profit margins, and lead to higher prices for customers. The Endeavor Business Intelligence research cited previously found that more than 61% of respondents believe tariffs will drive a double-digit increase in operating costs and 51% expect to raise prices to pass along tariff-related costs to consumers. 
• Supply chain disruption. Shifting trade policies and increased costs may force businesses to look for new suppliers or adjust logistics operations, which can lead to delays, inefficiencies, and reduced quality control. The Endeavor Business Intelligence research also found that, following increased raw materials costs, respondents expect tariffs to most impact their businesses through disruptions in the supply chain and loss of international suppliers. 
• Regulatory complexity. Navigating the legal and financial implications of tariffs and international trade agreements can become a full-time job in itself, especially for small- to mid-sized companies that may not have dedicated legal, finance, or compliance teams.
• Long-term planning challenges. When economic conditions are uncertain, long-term business planning and forecasting becomes more complicated, as organizations may look to decrease operational costs or adapt product or service offerings to align with shifting customer needs. Having a proactive plan in place to prepare for a recession or other market shifts can help businesses quickly pivot when challenges arise.  
• Staffing reductions and other workforce changes. Given potential increased costs and decreased customer demand as a result of tariffs, some businesses may make the difficult decision to reduce headcount or implement hiring freezes. According to a survey conducted by CNBC, 37% of CEOs expect job cuts in 2025 due to tariffs and another 14% said they're considering cuts. However, staffing reductions can lead to critical skills gaps, which may hold organizations back from achieving strategic business goals.    

6 tips to respond to tariffs and navigate disruption 

In response to tariff-related challenges, businesses are looking for ways to stay agile, become less fragile, optimize costs, reduce risk, and make smarter decisions as quickly as possible. 

‍Tips for your business to respond to tariffs include:

1. Assess the impact of tariffs on your business 
2. Develop a tariff mitigation strategy
3. Optimize and diversify your supply chain 
4. Ensure trade compliance
5. Negotiate contracts
6. Engage freelancers to build an agile workforce 

1. Assess the impact of tariffs on your business

Start by evaluating where and how tariffs may affect your business operations. Review your list of supplies and products and take stock of the country of origin for each item, along with associated tariffs for each region. This approach can help you calculate increased costs across your supply chain and helps prioritize areas that require the most immediate attention in your response strategy.

Consider answering the following questions as you assess the impact of tariffs:

• Which materials, supplies, or materials are affected by current or proposed tariffs?
• Which countries or regions do business imports come from?
• What are the specific tariff rates for goods across the business?
• How much may tariffs increase the total cost per product?
• Are partners passing on additional costs to the business?
• Have any suppliers increased prices as a result of tariffs?
• What percentage of our revenue depends on imported goods or affected markets?
• How do new costs impact our profit margins and pricing strategy?
• Are exemptions or tariff relief programs available?
• How may potential increased or expanded tariffs impact the business?

2. Develop a tariff mitigation strategy

Once you understand the impact of tariffs, identify ways for your business to mitigate their impact. Your approach may include adjusting pricing models or reevaluating which markets you target. A well-planned and executed mitigation strategy can help protect profitability and maintain competitiveness in a disruptive market. 

Mitigation strategies may include:

• Adjusting product pricing to reflect increased costs
• Shifting to local or tariff-free sourcing alternatives
• Bundling or repackaging products to reduce tariff exposure
• Applying for tariff exclusions
• Strategically timing imports, such as increasing inventory levels before tariffs take effect to avoid price increases
• Reducing inventory to minimize potential losses if demand decreases due to higher prices 

3. Optimize and diversify your supply chain

Relying on a single supplier, country, or region can be risky in a volatile trade environment. Look for opportunities to diversify sourcing, transition to domestic suppliers, or rethink your logistics strategy to reduce reliance on tariff-affected imports. A more flexible supply chain can improve resilience and reduce future disruptions.

Ways to optimize and diversify your supply chain include:

• Identifying alternative suppliers in low- or no-tariff regions
• Considering nearshoring (relocating production closer to your market) or reshoring (relocating production to your home country) to reduce reliance on imports
• Taking factors such as labor costs, quality control, infrastructure, and regulatory requirements into consideration when nearshoring or reshoring 
• Evaluating logistics partners and shipping routes to identify cost efficiencies
• Analyzing lead times, costs, and quality trade-offs of different suppliers
• Building relationships with alternative suppliers to reduce disruption risks
• Using supply chain mapping tools or software to increase visibility across the supply chain and make better informed, data-driven decisions

Rethinking your supply chain and logistics strategy on your own can be complicated, especially if you’re a small business owner juggling many other responsibilities across the business. Consider enlisting the support of a freelance supply chain management consultant to help you evaluate your current strategy and identify ways to drive efficiencies across your supply chain.

4. Ensure trade compliance

Tariffs and other trade regulations can change frequently; staying up-to-date with the latest regulations helps ensure your business is fully compliant. Misclassification of goods, incomplete documentation, or failure to meet new requirements can lead to penalties, delays, and other risks.

The following steps can help you maintain trade compliance: 

• Verify product classifications are correct
• Maintain accurate, updated documentation for all imports and exports
• Track regulatory updates in relevant markets and regions
• Conduct training sessions for your team on customs and compliance procedures
• Regularly complete internal audits to ensure ongoing compliance

Similar to optimizing your supply chain, ensuring compliance with the latest trade regulations can be complex and time-consuming. Partnering with a freelance international trade attorney can help you access the expertise you need to better understand and comply with both existing and future trade regulations. This can enable you to reduce risk and avoid costly penalties.

5. Negotiate contracts 

Flexible contracts are essential to business continuity in an uncertain trade environment. Tariffs can quickly increase costs and disrupt operations; proactively revisiting your agreements with suppliers, partners, and customers is important. Effective contract negotiation can help share costs, improve responsiveness, and protect your margins.

When negotiating with suppliers or partners, consider including cost-sharing clauses, which share the burden of new tariffs with both your business and the supplier. Other steps you can take include adding renegotiation terms to address cost or availability challenges related to tariffs, ensuring partners and suppliers maintain compliance with trade regulations, and clearly defining who is responsible for covering tariffs, customs duties, and related costs. 

When negotiating with customers, striking the right balance between minimizing the cost impact on your business while retaining loyal customers is critical. If you need to raise prices, empathize with customers and clearly explain how tariffs impact costs. Also consider offering phased pricing changes (rather than immediate changes), as well as incentives for customer loyalty, such as discounts for extended contracts or bundled packages.

Whether you’re negotiating with suppliers, partners, or customers, freelance legal or procurement experts can review contracts and help negotiate terms that minimize risk for your business and leave room for policy shifts.

6. Engage freelancers to build an agile workforce  

Given the uncertainties surrounding tariffs, businesses of all sizes and across industries are looking for ways to drive operational efficiencies. Because hiring and workforce costs—such as salary, benefits, training, and payroll taxes—are among most organizations’ top expenses, companies look to implement workforce reductions, hiring freezes, and related measures as a way to control costs in response to tariffs. However, accessing workers with the skills you need is essential no matter the economic conditions.

Traditional hiring models—such as exclusively relying on full-time, in-house employees—lack the speed and agility required in today’s disruptive business environment. Businesses can more effectively manage costs, increase flexibility, and address skills gaps during uncertain times by engaging qualified freelancers.  

Whether you’re looking for an artificial intelligence expert to integrate AI into your business and streamline business operations, a finance professional to refresh your pricing strategy, or need to address any other skills gap across your business, freelancers are a fast, flexible, and cost-effective option. 

With access to freelancers, your business can identify and begin working with skilled professionals within a matter of days—saving significant time compared to a traditional hiring process. You can also build a more antifragile business by easily scaling up and down and adapting your strategic workforce planning strategy as economic conditions change and new opportunities emerge. 

Navigate economic uncertainty with support from freelancers on Upwork

While navigating tariffs and economic volatility may seem daunting, effectively preparing and responding can increase the likelihood of long-term business success. One of the most critical ways your business can support ongoing growth and agility is by building a skilled, flexible workforce.

Upwork has a decades-long history of helping businesses scale, adapt, and grow even in uncertain economic climates. If you’re a business leader looking to optimize costs and ensure you have qualified workers with the skills you need to thrive, consider engaging skilled freelancers on Talent Marketplace™. There you’ll find a diversity of experienced freelancers with more than 10,000 skills. They can help you quickly fill skills gaps while reducing fixed operational costs compared to hiring full-time employees.

With an Upwork Business Plus plan, you can engage the top 1% of freelancers on Upwork and short-list top individuals who meet your specific job requirements. Log in to your Upwork account or create an account today. 

If you’re a freelancer looking for new opportunities to boost your income amid economic uncertainty, search for projects on Upwork that align with your skills and experience. ‍

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This article is intended for educational purposes and should not be viewed as legal or tax advice. Please consult a professional to find the solution that best fits your situation.