How Does International Trade Affect You?
Suddenly, things happening “out there” might be hitting very close to home.
What does international trade have to do with your small business? Unfortunately, quite a lot.
In the US or North America, there are simply many items that cannot be acquired locally. Our interdependence is here to stay. Even if you yourself don’t import or export something, your suppliers or clients probably do, and this can have a big impact on your bottom line.
In the world of exit planning, we harp frequently on the topic of concentration v. diversification. When it comes to international trade, this is very relevant. We live in a globalized economy, but this has not been without many bumps in the road.
This isn’t a new development: International trade has been subjected to numerous shocks over the past decades.
Here’s a brief list:
The George W. Bush administration introduced steel tariffs in 2002, seemingly out of nowhere, sending steel prices soaring and hurting steel consumers (e.g. manufacturing companies) badly.
The United States government has long used economic sanctions as a tool of foreign policy, including sanctions on governments such as Iraq, Iran, Russia, Cuba, Venezuela, and other nations at various times.
The Trump administration introduced steel tariffs in 2017, similarly to 2002, creating similar steel price chaos. It also introduced tariffs on a number of Chinese products.
In 2020, with the coordinated global lockdowns by the world’s governing authorities in response to COVID-19, supply chains were shut down and disrupted for years come
Currency fluctuations have created situations where profitable relationships quickly turn unprofitable without the time to adjust supply chains
The Trump administration in 2025 has opened up a trade war globally with threats of reciprocal tariffs on nations worldwide
Anytime goods are passing over an international border, this introduces new risks that must be weighed against the benefits of the transaction. That said, as a business owner there are a number of things you can do.
Strategies for Business Owners Looking to Navigate International Trade Risks
Business owners can adopt several strategies to mitigate these risks:
Diversify Suppliers: Relying on a single international supplier can be perilous. Establishing relationships with multiple suppliers across different regions can reduce vulnerability to regional disruptions. Is this more work? Yes. But it will leave you less vulnerable to variables you cannot control.
Develop Contingency Plans: Preparing for scenarios such as sudden tariffs, sanctions, or supply chain interruptions ensures business continuity during unforeseen events. We cannot know the future, but we can reasonably predict that everything won’t always go smoothly. Once again, this type of planning requires work but also provides you with peace of mind.
Monitor Economic Indicators: Staying informed about global economic trends, currency movements, and geopolitical developments enables proactive adjustments to business strategies. While you may not be able to impact the direction of economic policy, for example, you can proactively observe where it is headed to be more prepared when changes come.
Administrations will come and go, and policies will change.
Here’s an example from a client project we completed. As many of you will know, we call our flagship preparedness assessment an Exit Audit. In this case, we were working with a company that had been able to dramatically reduce the bill of material cost of its product by shifting production from the US to China. By dramatic, I mean the landed cost of goods dropped by over 50%, flipping the script and taking the company from incurring financial losses to substantial profits.
They maintained their backup supplier in the US, but that supplier’s costs were so high that profitability would steeply decline if they needed to shift their procurement away from the Chinese supplier and back to their domestic source.
When we went through the Exit Audit, we identified this supply chain concentration risk as a potential challenge for investors (our client was considering a majority sale of the company in the near future). The concern we had was that having a critical supplier in China was creating a serious potential fragility in their business.
Our recommendation was to run a project to find other suppliers in Southeast Asia, with the goal being to find alternative sources to produce at the same or better cost with equal or better quality.
At the time, the Biden administration was in power, and tariffs were not a discussion point, but you never know. Our client loved the idea and asked how they might accomplish it. This allowed us to tap our trusted partner network and make a referral to a group that was able to assist them.
After spending a modest amount of money, they found two new suppliers elsewhere in Southeast Asia with great quality and pricing. The end result was that they now had diversified their low-cost country sourcing across three firms and two countries. They still have a US-based supplier as well, but they’ve now fallen to fourth on the priority list.
If you’re like us at Doescher Group, your company is too small to influence policy in Washington. Administrations will come and go, and policies will change. But all we can do is think about what concentrations we might have in our business model and actively work to minimize the potential impact of these risks.
If you’d like a third party to holistically look at any vulnerabilities in your business and a thought partner to advise you through how to address these issues, consider giving us a shout.
We are here to help you build a more resilient business to the many inevitable shocks that might impact your business. As we love to say, this is just one of the many ways we are leveling the playing field for self-made business owners.
