Tariffs are the headache many of us simply can’t afford right now.
After years of navigating COVID-related disruptions and enduring double-digit inflation, our customers have already absorbed more than their fair share of price increases. But now, with new tariffs on the table, the question looms:
Will our customers tolerate yet another round of price hikes — or will our margins take the hit?
That’s the tough reality for today’s distributors. Trade policies are shifting with little warning, and the impact is immediate. With import duties fluctuating and geopolitical tensions escalating, pricing stability has become a thing of the past.
And it’s not just importers who are feeling the strain. Distributors who source internationally are being squeezed from every direction — raw materials, transportation, finished goods. Cost unpredictability is the new norm, and traditional pricing models just aren’t cutting it.
The distributors who will come out ahead are the ones who adopt pricing agility — not just to protect margins, but to capture market share while competitors scramble to keep up.
Here are six strategies to help you and your customers survive and even thrive in this new era of tariff-driven volatility.
1. Mapping Your Tariff Exposure
Begin by shining a light on every corner of your portfolio. Go beyond “imported versus domestic” labels and capture granular country‑of‑origin data for finished goods and critical components. Overlay Harmonized Tariff Schedule (HTS) codes, free‑trade‑agreement carve‑outs and supplier‑specific duty treatments.
Most importantly, classify each SKU by both price elasticity and price sensitivity — two concepts often conflated but fundamentally different. Elasticity gauges volume response to a price move; sensitivity reflects how much weight price carries in a buying decision relative to factors like quality or availability. Distributors that make this distinction can decide where full pass‑through is safe and where more nuanced tactics are needed
This mapping exercise should also surface upstream and downstream ripple effects: Which suppliers will raise costs first? Which customers face the thinnest margins and will push back hardest? With a 360‑degree view, you can anticipate policy shocks sooner.
2. Model Scenario-Based Pricing
Tariff changes often move faster than static price lists or spreadsheets can handle. Smart pricing teams stay ahead by simulating “what-if” scenarios across product lines and customer segments — testing the impact of a 10% duty, evaluating pass-through strategies, or exploring margin opportunities during periods of cost pressure.
As tariff rules grow more complex – stacked duties, shifting zones, commodity-linked adjustments – manual processes can’t keep up. Tools like Enable’s tariff price planner let teams model cost impacts in real time, simulate pricing strategies by HTS code, test price sensitivity across SKUs or regions, and connect directly to ERP systems to deploy changes instantly.
The result? Instead of reacting with blanket increases or hesitating due to uncertainty, pricing teams make fast, targeted and margin-protective decisions.
3. Layer Cost-Driven Adjustments onto a Value-Based Foundation
Value-based pricing has long been the gold standard for differentiated products. It allows distributors to charge according to perceived customer value, often capturing higher margins. But when tariffs spike steel or semiconductor costs by 25% overnight, those same organizations must blend cost-based principles into their strategy. This hybrid model preserves a stable base price tied to customer value while layering on adjustments (or surcharges) to reflect external shocks. This approach allows distributors to stay true to their value proposition while protecting profitability.
4. Segment Customers for Targeted Price Strategies
Not all customers can absorb price increases equally. Strategic pricing should account for customer value, price sensitivity and relationship maturity. For key accounts, you may choose to temporarily absorb part of the cost increase to preserve goodwill. For others, full pass-through may be appropriate.
Using customer segmentation, you can craft tailored pricing strategies that optimize both short-term margin and long-term loyalty. This approach prevents blanket policies that might alienate valuable clients or leave money on the table.
And here’s a critical operational question to ask: How long does it take you to change a price? If the answer is anything more than two to three days, you could find yourself severely exposed to margin erosion. In volatile markets, the speed at which you can respond to cost changes is just as important as the strategy itself. Delayed price updates mean you’re absorbing increases longer than necessary, eroding profitability in the process.
5. Harness Rebates and Incentives Strategically
Across‑the‑board list‑price hikes are easy to explain but blunt in effect. Rebates and incentive programs let you fine‑tune outcomes: volume‑based rebates can share the burden with customers who consolidate spend; supplier rebates can cushion component costs upstream. Tariff volatility is the ideal test bed for these levers because you can dial support up or down without rewriting every price file.
Key to success is real‑time tracking. As duties shift, rebate thresholds and accrual rates must update automatically, or you risk over‑paying incentives just as margins are under siege. Treat rebates as adjustable shock absorbers, smoothing tariff jolts while maintaining growth momentum.
6. Understanding that Inventory Is King
In a tariff-driven world, inventory isn’t just a supply chain concern — it’s a strategic pricing asset. If you anticipate tariffs being imposed, building up inventory beforehand can help you avoid immediate cost hikes and preserve margins. On the flip side, if tariffs are expected to be lifted, reducing inventory ahead of time can prevent you from being stuck with overpriced stock.
More importantly, tariffs often cause broader supply chain disruption. And when supply is constrained, pricing power shifts to those who can deliver. If you’re holding the product while your competitors are waiting on delayed or more expensive imports, you gain the upper hand — not just in sales, but in pricing.
In volatile markets, availability becomes leverage. The businesses that align pricing strategy with inventory planning will be the ones turning uncertainty into opportunity. When others can’t deliver, you can — and you set the price.
Invest in Long-Term Pricing Resilience
Tariff volatility is no longer a short-term disruption — it’s a permanent feature of global trade. Distributors that thrive will be those that embed pricing agility into their core operations, not just as a reaction to crisis but as a standard capability.
Building resilience means aligning pricing with real-time data, automating updates across systems, and equipping teams with tools for rapid scenario planning. When tariffs hit, you need the ability to model the impact, adjust prices and communicate changes — instantly and clearly.
Tariffs test more than just your pricing; they test your organization’s adaptability. The faster you can respond, the more margin you preserve and the more trust you build with customers.
With the right visibility, automation and strategy, pricing becomes more than a defensive measure. It becomes your sharpest lever for competitive advantage in uncertain times. In a volatile world, pricing agility is power.
Mark Gilham is vice president, rebate advisory for Enable.
