With only bad options, businesses scramble for a tariff chaos playbook

Ship containers are positioned for unloading at Port Manatee in Palmetto, Fla., April 1, 2025. President Donald Trump’s trade war is forcing companies to cut costs, raise prices, shrink profits, discontinue products and find other suppliers. (Scott McIntyre/The New York Times)

By Lydia DePillis

Shock. That was the first response to the Trump administration’s barrage of tariffs.

Businesses that rely on imported products expected duties, which President Donald Trump had promised. Just not this high, this universal or this sudden, with almost no time to adjust. A 145% tariff on all Chinese products, after all, is more like a trade wall than a mere barrier.

But shock is settling into reality, and corporate leaders are trying to manage. Here are the main tacks that businesses are taking — at least for now, given that whatever duties the White House declares today may change tomorrow.

Move out of China, preferably yesterday

For many importers, this round of tariffs isn’t as painful as it might have been eight years ago. Trump’s first trade war, in 2018, while milder, pushed many to diversify their sourcing beyond China. The COVID-19 pandemic sent yet another signal that dependence on a single market, however cheap and efficient, is unwise.

For William Westendorf, CEO of medical supply distributor Air-Tite Products, the final straw was a 100% tariff on Chinese-made syringes imposed by the Biden administration last fall. He sent a staff member to scour Europe for a factory that could meet the Food and Drug Administration’s exacting standards.

After six months of hunting and hoop-jumping — and with Chinese syringes now tariffed at 245% total — Westendorf has a shipment on the way from Turkey. It’s lucky timing, because factories outside of China are getting flooded with orders.

“It’s not something you can do real quickly because of the regulatory environment,” Westendorf said. “Fortunately, we were there early.”

Decisions like that add up. Goldman Sachs’ research team estimated that the tariffs, if sustained, would reduce the share of U.S. imports that come from China to 5% from 13%.

Take the hit and hope it’s temporary

When products can’t be found quickly outside China, importers are trying to negotiate better terms with their suppliers. Chinese factory owners are offering some discounts, but not much; they operate on low margins as it is.

However, plenty of American companies are prepared to absorb at least some of the cost of tariffs, very likely softening the blow to customers. That’s especially true for bigger companies that built up inventory in advance of Trump’s inauguration, anticipating what was to come. Corporate profits are near record highs, so they might accept narrower margins, at least for a while.

That kind of loss is easier to stomach if it’s a one-time thing.

Batten down the hatches

Even for those with healthy profits, paying more in tariffs generally means spending less on something else. That could mean deciding to not lease a larger space, pay for advertising, buy new equipment or hire a new sales associate.

Some can cut costs through automation. Others will end up letting people go. Kelsey O’Callaghan is one of the owners of a company, Dorai Home, that imports kitchen and bathroom products made from a special quick-drying material from China, and she has searched fruitlessly for viable suppliers in the United States. To prepare for an enormous tariff bill, she has cut the hours of many of her call center contractors and creative agencies and even some core staff members.

“We did have to reduce the size of our team slightly, which, as a founder, is a tough thing because you see not only how hard people are working,” O’Callaghan said, “but you are also aware of risk of burnout or more errors happening as other people absorb roles.”

Sell fewer things

Some products simply can’t be made economically outside China right now, and they won’t be unless the current tariffs remain in place for many years. Globally integrated retailers may redirect some of their Chinese-made inventory to markets with lower tariffs, like Europe, while trying to find close substitutes produced in other countries to sell in the United States.

But consumers may notice fewer choices.

Reduce, redirect, delay

One lesson importers learned in the 2018 trade war was how to sand down their tariff liability through techniques collectively known as “supply chain engineering.” A product mostly made in China but finished in Thailand could result in a lower tax than one imported directly from China, for example.

That sort of tactic is less popular this time around because the tariffs have hit more countries, reducing the utility of complicating the process, according to Angela Santos, a trade lawyer at ArentFox Schiff. But companies are increasingly doing things like making sure the tariff is assessed on the shipment’s value as soon as it leaves the factory, before ranks of middlemen take their markup.

“They’re taking any legal avenue they can to lower their duty liability,” Santos said.

Another type of refuge that gained popularity in Trump’s first term is foreign trade zones, a network of special areas within the United States that is technically considered outside U.S. jurisdiction for customs purposes. Products imported to the zone and ultimately bound for the U.S. market don’t have to pay duties until they leave the zone.

Raise prices, carefully

Ultimately, few importers are going to be able to avoid charging more. But they’re thinking hard about how to do so without scaring shoppers away — and keeping a wary eye on the competition.

For Jiake Liu, who runs Outer, an outdoor furniture company, that means giving his customers plenty of lead time. His wicker sectionals and chaise longues are mostly made in China, which produces special fabrics that hold up well outdoors.

With newer brands, consumer trust is precious, so Liu emailed customers in March to let them know that they still had some time to buy at current rates. “It would not be responsible if we just jacked up the price overnight,” Liu said. But, he added, “In the long run, prices will have to be adjusted upwards, anywhere from 10 to 15%.”

For lower margin products, phasing in price increases slowly isn’t as feasible. Selling smaller quantities is another way to keep things affordable. That’s what Roberto Colón, who supplies socks and underwear to big retailers from his base in Puerto Rico, is thinking he might try to maintain sales.

“Instead of 10-packs of socks, we will go to six-packs and three-packs, trying to have lower retail prices,” Colón said.

Plead for mercy

None of these strategies will solve importers’ problems entirely. They would much rather the tariffs just go away.

Unlike in 2018, the White House has not set up a process for granting tariff exclusions. But Trump has nonetheless made some exceptions — such as those for computers and other electronics — and mused publicly about others, like cars and their parts. That’s why some industries are appealing for clemency, sending lobbyists and writing open letters to explain that tariffs will inevitably raise costs for consumers.

The auto industry, for example, is trying to press pause on as many operations as possible while pushing for more relief.

“More exceptions or exclusions is something we have been talking with the administration about, especially the low-value components,” said Jennifer Safavian, president of Autos Drive America, a trade group for foreign automakers with U.S. interests. “They’re not made in the U.S., could they maybe be excluded from the tariffs? So that piece is still a big question mark.”