Expert Insights: Spotlight on Tariffs
Richard Cabrera, Head of Commercial Banking
Tariffs are taking center stage in 2025, and businesses are seeking counsel from their financial partners to navigate potential impacts and opportunities. In this Q&A, Richard Cabrera, Head of Commercial Banking, shares his perspective on what businesses can expect and how they should approach planning and preparation.
Q. Tariff negotiations are back on the table in 2025. How will new potential tariffs impact businesses?
As new tariffs take effect, the expectation is that prices for impacted goods will rise, and most businesses ― as well as consumers to some extent ― are operating under that assumption. New tariffs are likely to have an impact on profit margins, and businesses should be prepared to adapt. But as we learned from the impact of the 2018 tariffs, businesses have proven to be remarkably resilient and nimble in adjusting to such developments.
It’s an evolving situation, and businesses and industries will be impacted unevenly. For those interested in closely monitoring tariff developments, you can visit the International Trade Office for detailed tracking tools. There are also a variety of business groups, economic institutions and think tanks offering insights on the topic and specific proposals as they are introduced. Business owners can also check with their respective industry associations and consult their banking partners for more information.
Q. What should companies do to navigate this landscape?
The important thing is not to panic. Be prudent and consider the advantages of increasing your supply and/or product inventory before tariffs are imposed. But be strategic about it. Evaluate your supply chains and explore diversification. Obstacles also create opportunities for pro-active problem-solvers to think differently. A trusted banking partner with trade finance expertise can be a valuable resource to help you explore different scenarios.
Q. Investing in more inventory will have an impact on a company’s liquidity for other working capital needs. What is your is your guidance here?
Be strategic. Look at your company’s historical performance and extend your inventory moderately ― but don’t go overboard. For businesses dealing with perishables, stockpiling isn’t an option, so the focus should be on flexibility and supply chain resilience.
Q. Looking at the longer term, how should business operators assess the impact of potential tariffs?
We’re closely monitoring the tariff situation and counseling clients accordingly. The key takeaway: stay prudent and plan for adaptation, but do not overreact. In other words, we are talking about reasonable preparation and staying grounded in the facts. Again, the uncertainty potential tariffs create is nothing new for businesses that have managed through the past several years.
Have a Plan B in place that considers domestic production and/or manufacturing. If that is not feasible for your company, then consider partnering with others that can assist. That said, it’s unclear if executing on Plan B will be necessary ― only time will tell.
Q. In summary, what should business owners be doing?
First, they should be prepared for price increases. Tariffs increase costs, and that will impact margins as they take effect. Business owners should assess demand and focus on their products’ elasticity, and against alternative products, and strategize accordingly. In this environment, I believe businesses with strong, tested leadership are well-equipped to navigate tariffs and other challenges and opportunities that will arise in 2025.
