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Price Increases in the Wake of Tariffs

Unless you live under a rock, you know that on May 10, the United States increased tariffs on billions of dollars of goods imported from China to 25%.  Because of this, many US-based manufacturers and distributors are suffering dramatic cost increases.  In the face of these crippling cost increases, many companies are asking:  Can I pass these higher costs on to my customers through higher prices?  How much can I pass on?  How do I pass tariffs along without hurting sales volume?

The answers to these questions is pretty unsatisfying:  it depends.  It depends on your industry and what effect the tariffs are having on your competitors.  It’s very likely that if you are suffering higher costs from tariffs, your competitors are, too.  Few companies can absorb cost hikes of 25% without passing some portion along to customers.  I recommend to yes, pass along the higher costs via price increase.  (Obviously.)  And pass along all of the higher costs if you can.  If you cannot, pass along as much as possible.  (Obviously.)

To the last question, how?  I recommend the following formula from my workshop tailored to the tariffs:  Messaging + Preparation = Confidence


  • Write a price increase letter which simply and clearly communicates the change. (Stay tuned for next week’s blog post containing a sample tariff-related price increase letter and other helpful customer messaging.)  Remember, from this Boost blog post, communicate, but don’t overcommunicate! Communicate only what is commercially necessary and responsible, but no more.  Overcommunicating on pricing increases price sensitivity.
  • Create a tariff-related price objection FAQ document to help your team effectively handle customer pushback. This document may be partially adapted from the increase letter, but should contain additional detail and support.  Research other manufacturers’ and distributors’ pricing responses due to tariffs.  Be prepared with facts, figures, examples, lists, etc. to cite to customers.  Anticipate customer pushback & prepare responses.  (For example, see this article listing other brands who publicly declared their intention to raise prices after the first round of tariffs, including Costco, Pepsi, Walmart, Gap, Coca Cola, GM, LG, Toyota, MillerCoors, Rubbermaid, Kleenex, Huggies, and more.  A five-minute internet search yields pages of results.  Tailor the search to your needs.)
  • Use price increases due to tariffs by competitors and even companies in other industries as tailwind for the price increase in written and verbal communication in supportive phrases such as:
    • “Like everyone in our industry…”
    • “As I’m sure you’re hearing from many of your other suppliers across industries…”
    • “As you know, the entire sector is getting hit with this…”


Prepare the sales team, customer service, and other customer-facing folks.

  • Publish the price objection FAQ document and helpful phrases to the team to arm them with messaging in anticipation of customer pushback.
  • Practice, practice, practice! The team must be fluid and fluent with the answers. Role play the conversations.

Investing in messaging and preparation will result in confidence and help your company realize the highest price increase possible with the minimum sales volume loss in these tumultuous economic times.