America imports over $1.3 billion of French wine, while Italy ships over $600 million of pasta stateside annually. Although the U.S. has a substantial domestic pet food business, did you know it imports over 39 million tons of dog and cat food annually?
All these items and many more are being hit with new tariffs, which vary depending on the country of origin.
Should You Halt Shipments?
If you’re the CEO of a consumer products business exporting to the U.S., should you follow Jaguar’s lead and temporarily halt shipments?
Manage Your U.S. Business
If I were a big exporter, I’d be in the U.S. now, sitting down with my team and my sales and marketing partners, working out options.
Many importers in the U.S. are exposed and will feel vulnerable. It’s critical they feel their suppliers are fully supportive.
The Importance of Forward-Looking P&Ls
Have you re-crunched your numbers to assess the business impact? What activities and initiatives should be reassessed?
Temporary price promotions, which are a big line item for many FMCGs, may be one area to focus on.
You may have money put aside for a sales launch or other events. Should that be reallocated?
What can be done on shipping and supply chain to eke out costs further? Are there other businesses you can share freight with? Shipping companies will be worried about moving empty containers. Perhaps it’s time to give them a call.
Longer-Term Options
No one knows how long President Trump’s tariffs may last. As a CEO, you have to assume the worst. While Democrats are shouting, history shows that they too have a protectionist bent.
Portfolio & Mix
Is it time to add a domestically made brand into your U.S. portfolio? With stock prices depressed, it could be an opportune moment to acquire.
Another longer-term option is to license your brand to a local party.
Review Your U.S. RTM
RTM, or route to market, is key. Are there more efficient ways for you to sell to key customers in the U.S., saving you and the consumer money?
Is it time to consolidate some distributors? There may be economies of scale and cost savings to negate the extra tariff costs. Can you explore direct trading with select key accounts?
Governmental Support
While governments around the world were shocked, they’re starting to respond.
In Britain, Labour is already talking about support packages. What financial help can your business claim? Will there be grants to help research and investigate new markets? Sometimes those who shout the loudest…
Diversify Your Exports
Which other markets can you develop to counter these headwinds in America? Is it time to look again at Europe, Canada, or Mexico, for example? What about big population markets in Asia like India, Indonesia, or Japan?
Are there any big regional customer plays available? Costco is trading in many countries now. What about large QSR customers like McDonald’s?
The Importance of Time
Brands and businesses are built over decades. Consumer products businesses aren’t hedge funds which can reverse strategy several times in a week and still come out smiling.
Your response to Trump’s tariffs depends on whether you and your bosses are looking at the next four quarters, the next four years, or the next four decades.
Don’t forget consistency of execution (physical and online shelf presence, messaging, pricing, product offer) is key. Now is maybe the time to grab market share whilst your competitors dither!
In 10 years’ time, will your business want to be in America? For most of us I think the answer will be yes.