Learn tariff basics, your options, and how you can approach tariffs strategically to stay ahead of your competitors.

“By the time you read this, your tariff rates may have already changed…”

Researching tariff news for this article was challenging because our sources included things like 9 packed pages of tariff-change timelines since the beginning of this year (2025) and frequent disclaimers like “as of the time of this article, tariff rates were…”.

In other words: if you are confused by tariffs, we hear you.

That is why we have created this easy-to-read, detailed guide to tariffs for distributors: so you can understand the basics and start thinking realistically about your strategy. We will start easy, but quickly move on to more advanced thinking.

Tariffs 101

A tariff, also called a duty, is a tax that one country imposes on the goods and services of another country.

There are two types of tariffs:

• A specific tariff is levied as a fixed fee on a specific type of item, such as $200 for a refrigerator.
• An ad-valorem tariff is levied according to value. So, for example, it could be 10% of an item’s value.

A country may impose a tariff for a variety of reasons, but some of the most common are:

• Reciprocal tariffs, which match the importing country’s tariff rate with the exporting country’s tariff rate. For example, if Country A imposed a 6% tariff on Country B, Country B may impose a reciprocal 6% tariff.
• Retaliatory tariffs impose a tax on another country’s imports to punish the other country for its unacceptable behavior.

Almost every country has tariffs of some kind, and changing tariffs is nothing new for the U.S. According to the international tax experts at Avalara, “In 2023 alone, there were 337 international rate updates and 6,779 international taxability updates.”

The new tariffs of 2025 fall under three separate laws:

• Section 232 of the Trade Expansion Act of 1962 allows the U.S. president to restrict imports or negotiate with trading partners if the imports “threaten to impair” U.S. national security. Steel, aluminum, and cars are a few of the items that fall under this tariff.
• Section 301 of the Trade Act of 1974 grants authority to the Office of the United States Trade Representative (USTR) to investigate and enforce U.S. trade rights, including imposing tariffs. Presidents Trump and Biden both invoked Section 301 for tariffs on China. Specific Section 301 tariffs must be extended or ended every 4 years.
• IEEPA (The International Emergency Economic Powers Act) empowers the U.S. president to regulate economic transactions during a national emergency. Right now, this is being applied broadly.

Section 232 and 301 tariffs are here to stay for years, but there are challenges to the IEEPA tariffs. The Supreme Court has agreed to hear arguments about these tariffs on November 5, and it should make a decision regarding the legality of these tariffs by June 2026.

Previously, some low-value shipments were exempt from tariffs under a rule called the de minimis exemption, but that ended on August 29, 2025.

Tariff Pros & Cons

Tariffs are not all negative, despite the press coverage.

PROS

• The new tariffs are bringing in phenomenal import revenues already, and they are poised to reduce U.S. government borrowing by trillions of dollars over the next 10 years.
• The end of de minimis has probably already reduced illegal drug smuggling and slowed the market for goods made by forced labor.
• New tariff rates could strengthen the U.S. economy by promoting import substitution, where people refocus on buying U.S.-made products.

CONS

• Modern distributors are extremely reliant on the global supply chain, which means distributors are paying a lot under the new tariffs, and they are likely to continue to do so because many goods are not available in the U.S. Plus, tariff costs keep shifting.
• Distributors (and manufacturers) may raise prices and, since tariffs may be here to stay, that could lead to persistent inflationthat harms the U.S. economy.
• The tariff paperwork is a bona fide nightmare. Every item under the sun is assigned a 6-digit HS (Harmonized System) code by the World Customs Organization, and the U.S. uses 10-digit HTS (Harmonized Tariff Schedule) codes, which tack 4 more U.S.-specific digits onto the end of the HS code. A slip of the finger can assign the wrong tariff rate to your goods, leading to noncompliance.
• In the case of a trade war, where countries keep upping their retaliatory tariff rate to punish each other, distributors (and manufacturers) may see difficulties exporting
• The U.S. faces a few barriers to import substitution, including a shortage of skilled labor, an aging workforce, and the fact that there are some goods we have never produced.

Tariffs’ Biggest Issue: Uncertainty

We spend a lot of time on this blog talking about uncertainty, but these tariffs take all that to a new level. With today’s constantly shifting trade outlook, none of us know what to expect tomorrow, much less in 6-18 months.

We all heard the President talk about tariffs, but no one expected double- or triple-digit numbers. We also did not expect the numbers to change so frequently. Often, tariffs are announced, implemented, paused, increased, and decreased within a matter of hours — and new countries are added to the tariff list all the time.

Considering the job reports, continued inflation, and predicted rate cuts, the economy is volatile right now with no clear end in sight.

For example, right now, many distributors are waiting on the Supreme Court’s decision on the IEEPA tariffs. That might lead to some gratifying certainty… or not, because if the Supreme Court does strike down those tariffs, the President could invoke Section 122 of the Trade Act of 1974 to set up temporary 15% tariffs for 150 days and then use Section 301 again to reinstate the tariffs currently under IEEPA.

Plus, even if that does not happen… how would your company go about getting a refund for the IEEPA tariffs you already paid, and how long would that process take?

See what we mean about uncertainty?

In addition, no one is quite sure if this is just a really impressive example of the President’s signature hardball negotiation tactics, and most of this could blow over soon. However, even if the President cancelled all the new tariffs tomorrow, it would still disrupt the supply chain for the next 6-12 months because of lead times.

And maybe the supply chain would be changed longer because, with retaliatory tariffs, your suppliers are facing the same uncertainty you are right now, and they are also trying to determine their own import/export strategy. Heck, maybe China will decide to stop supplying us at all. The point is: who knows?

But you do have options.

Your Options

In their June 2025 article, “6 Short-Term Strategies for Doing Business in a Trade War,” Harvard Business Review stated, “It is hard, if not impossible, for companies participating in global supply chains to formulate even medium-term strategies” in the current trade climate.

So, in the short term, you have to decide whether you will absorb the tariffs or pass on costs. Or, what is most likely: balance those two options.

It is a devil’s bargain: Do you raise prices and risk losing customers or absorb costs in hopes of more sales volume in an uncertain economy?

You can also begin considering long-term options like reshoring if you have overseas warehouses or localizing your supply chain(as much as you can), but the president in 2028 may reverse all of these tariffs, so it is hard to plan.

To be blunt, tariffs could very well turn out great, but uncertainty right now sure is a bummer.

Looking forward, only you can decide your best approach — and you will want to be extremely strategic about your decision.

How to Stay Strategically Competitive

We do have some good news; it is not all gloom and doom. The current shift definitely presents a real opportunity for you to pull ahead of your competitors and establish or entrench yourself as a go-to distributor. Technology can help you do that.

Even with the globally disruptive impact of Covid, businesses worldwide —yours included— were able to survive or thrive by leveraging technological advances like cloud computing and video calling. Right now, as tariffs are causing widespread uncertainty, we have AI and its ability to process data at top speed.

Because, yes, data can help you stay strategic right now.

With data, you can gain granular insight into your finances in real time, from costs to revenues, and you can use it to track your supply chain, too.

But, as we all know, understanding data can be difficult — and that is where AI and automation can lend a hand.

Using AI and automation, you and your team will be able to not only precisely track your warehouse finances and operations, but also leverage natural language queries (chatbots) for on-demand understanding of your current:

• Landed costs in real time, so you can be strategic about your pricing and suppliers
• HTS codes, so you can adjust your tariff costs (and payments) as soon as there is a change
• Metal values, so you remain compliant with the steel, aluminum, and copper tariffs
• Stock levels, so you can find the tariff-friendly balance between cash tied up in stockpiling vs. headache-causing delays with JIT strategies
• Labor expenses, so you can experiment with automation to boost your margins

HBR also recommends that you use AI to stress-test your supply chain. By precisely mapping your suppliers based on where they are and where their suppliers are, you can more confidently forecast your costs by, in effect, peering slightly ahead into your tariff futures.

Is QuickBooks Holding You Back?

As you can see, in a world where double- or triple-digit tariffs can be announced and imposed within hours, growth-focused distributors will need real-time, granular data insight.

Unfortunately, QuickBooks cannot get you the timely data you need to stay competitive.

When your business is slowed down by manual processes, outdated information, and disjointed data, it can limit your growth.

However, you can empower your company with the right data, any time, by using a future-ready, cloud-native ERP like Acumatica.

Acumatica brings your financial and operational data to your fingertips in real time, provides a secure chatbot to help you and your team confidently interpret and act on all your data, and also delivers a future-ready, flexible platform that positions you to take advantage of the latest technology advances as soon as you are ready.

Sounds great… but, in this time of uncertainty, is now the right time to move away from QuickBooks to a full-featured ERP?

Find out when you assess your readiness with our new white paper, “Migrating from QuickBooks to Acumatica: A Smarter Path for Distributors.”

Access the White Paper to Get Started

Accounting Business Solutions is a respected accounting and business management software solution provider. We provide experienced sales, consulting, implementation, training and support services for small to medium-sized companies located in south central and southeast Texas. Our portfolio of solutions includes cloud based, hosted and on-premise options.

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Sources

Investopedia. “What Is a Tariff and Why Are They Important?” article. 2025. https://www.investopedia.com/terms/t/tariff.asp

BBC. “What Tariffs Has Trump Announced and Why?” article. 2025. https://www.bbc.com/news/articles/cn93e12rypgo

Avalara. “What Are Tariffs? How Do They Work?” article. 2025. https://www.avalara.com/blog/en/north-america/2025/03/what-are-tariffs.html

Avalara. “The Difference Between IEEPA Tariffs, Section 232 Tariffs, and Section 301 Tariffs” article. 2025. https://www.avalara.com/blog/en/north-america/2025/08/the-difference-between-ieepa-tariffs-section-232-tariffs-and-section-301-tariffs.html

Avalara. “The De Minimis Exemption Is Ending: Is Your Business Ready?” article. 2025. https://www.avalara.com/blog/en/north-america/2024/11/de-minimis-exemption-changes-coming.html

Avalara. “How to Handle US-China Tariffs and the End of De Minimis” article. 2025. https://www.avalara.com/blog/en/north-america/2025/02/how-to-handle-us-china-tariffs-de-minimis.html

Avalara. Chips, Drugs, and Steel — How to Prepare for Trump Tariffs” article. 2025. https://www.avalara.com/blog/en/north-america/2025/01/how-to-prepare-for-trump-tariffs.html

Avalara. “Reciprocal Tariffs Explained: Impact on Your Business” article. 2025. https://www.avalara.com/blog/en/north-america/2025/07/reciprocal-tariffs-explained.html

Harvard Business Review. “Use AI to Stress Test Your Supply Chain” article. 2025. https://hbr.org/2025/08/use-ai-to-stress-test-your-supply-chain

Harvard Business Review. “6 Short-Term Strategies for Doing Business in a Trade War” article. 2025. https://hbr.org/2025/06/6-short-term-strategies-for-doing-business-in-a-trade-war

SCOTUSblog. “Supreme Court Announces It Will Hear Challenges to Trump’s Tariffs on Nov. 5” article. 2025. https://www.scotusblog.com/2025/09/supreme-court-announces-it-will-hear-challenges-to-trumps-tariffs-on-nov-5/

USA TODAY. “If Supreme Court Rules Against Trump Tariffs, Here is What You Can Expect” article. 2025. https://www.usatoday.com/story/money/2025/09/17/what-to-expect-supreme-court-trump-tariffs/86075784007/

Harvard Business Review. “HBR Roundtable: Adapting to the New Reality of Tariffs” panel discussion transcript. 2025. https://hbr.org/2025/04/hbr-roundtable-adapting-to-the-new-reality-of-tariffs