Tariffs: What Should Businesses Know and How Can They Prepare?

Tariffs. There’s been a lot to absorb the past month after the White House announced a 10% tariff on all imports into the United States from any country and then notified a combined nearly 190 countries and territories in early April that there will be additional tariffs placed on their goods before getting to U.S. businesses and consumers.

Days after placing tariffs on a mass number of nations, the president decided to pause the additional tariffs – although, the 10% still stands – for 90 days on all trading partners that had not placed retaliatory tariffs on the United States.

The back-and-forth, on-and-off tariff policy has caused nervousness on Wall Street and in the marketplace, and questions abound: Is there an upside after the initial downside? What goods will be most impacted? How will this affect the economy, inflation, and employment? Even the basic question: What are tariffs?

How Are Tariffs Impacting Businesses?

Whether the current tariffs in place achieve their intended goals remains to be seen. Some nations have acquiesced, including Vietnam, whose administration offered to zero out its 90% tariffs on U.S. goods (an offer the U.S. rejected), while others have responded with reciprocal tariffs. Canada imposed them on $30 billion in goods imported from the U.S., including steel, aluminum, and more. The EU has also elected to apply retaliatory tariffs on farm produce and products from Republican-controlled states.

There have been reports that some tariffs might even be on ice, as in, felt by the businesses in Canada and the U.S. that make and distribute hockey equipment – from skates to sticks. Consumers of these products are feeling pinched by higher prices and sometimes canceled orders. Tariffs might also impact the cost of food and energy, hitting the wallets of employers and employees alike.

The degree of impact on the job market remains unknown. Reports from the U.S. Bureau of Labor Statistics show an increase of 228,000 nonfarm jobs in March, which exceeded expectations. The Paychex Small Business Employment Watch shows job figures from March consistent with the previous several quarters. Economists are keeping an eye on this because the administration’s tariff announcement was made right around the time the reports were released in early April. The reports in April and May might be a better indicator of how much the labor market is being affected.

The U.S. inflation rate in February 2025 was 2.8% and the March rate was 2.4%, according to data released on April 10. Even with the slight decrease, some leading financial experts, including JPMorgan CEO Jamie Dimon, have expressed that inflation could rise with this current tariff approach, sparking fears of a recession.

Employers should keep an eye on the job market trends and any economic shifts, continue consulting with their advisers, and be prepared to make changes that suit their business needs.

Tips To Manage the Costs and Impacts of Tariffs

Moving forward, employers can begin preparing a response to tariffs, starting with taking a breath every time a new tariff announcement comes from the White House. By staying out of the emotionality of the moment and keeping an eye on the big picture, employers can spare their business a roller-coaster ride. For example, did any owner gain ground by furloughing or laying off employees upon announcement of some of the highest tariffs, only to hear days later that a 90-day pause was going into effect? Did the quick reaction cut costs, or did it impact morale and possibly productivity?

Employers should understand the tariff evolution – from a tax to any potential trickle-down effect on the workforce. The current pause provides an opportunity to review and evaluate current processes impacting everything from how to manage costs to how to maintain your edge in the constant battle for talent.

Small business owner and host of the Paychex THRIVE business podcast, Gene Marks, recently wrote about tariffs in the Philadelphia Inquirer, offering approaches that businesses can take to minimize any impact. Here are a few of his suggestions, plus HR strategies from Paychex HR professionals that could help your business survive and hopefully thrive in this new economic environment:

• Use free trade zones or bonded warehouses: Employers will not incur the tariff until goods shipped to these places are removed from the premises.
• Work with organizations familiar with trade: Certain organizations, including the Export-Import Bank and Small Business Association, provide free consulting on overseas trade.
  • Tips from a Paychex HR Professional: “We recommend conducting a full budget review to identify non-essential costs that can be trimmed, while still trying to keep your business stable and employees supported,” said Lisa Reyes, HR Strategy and Talent Partner with Paychex. “This could free up additional capital to afford any potential current or new tariffs."
• Review your supply chains: With the potential for renegotiations to change the landscape, employers potentially can lessen the uncertainty by developing three- to six-month alternative strategies for goods provided by key vendors.
  • Tips from a Paychex HR Professional: “Employers should look at any vulnerabilities in their supply chain, especially where dependence on a specific supply is present,” said Megan Burdett, HR Strategy and Talent Partner with Paychex. “This could lead to delays, which might result in additional costs that impact the budget and possibly affect decisions about the size of the workforce.”
    • “Research the domestic supply chain, where businesses might find better costs or more reliable delivery,” said Reyes.
• Rethink your overhead costs: If employers can reduce or eliminate unnecessary expenses – maybe even invest in technology or manage utilities better – then the money saved can be used to lessen the price increase passed on to consumers.
  • Tips from a Paychex HR Professional: “The constant goal is to keep winning the talent war,” Reyes said. “Benefits are drawing cards for talent, so focus on keeping those in place, such as a 401(k) program. However, the business can save on some costs by suspending a company match while the business works through the current tariff environment. This helps businesses balance their short-term and long-term goals.”
    • “Another consideration to trim overhead is to conduct a review of the overtime taken and adjust if it can be limited temporarily,” said Burdett.

If tariffs impact your ability to grow the business in the short term, business owners have options.

“An employer could consider a hiring pause,” Burdett said. “During that time, they can develop the talent they have on hand by either upskilling people for different roles and responsibilities or cross-skilling people from different teams.”

Again, if the knee-jerk reaction is to reduce the workforce to save money, the talent an employer has spent money and time on to train could end up showcasing those skills with a different company – maybe even a competitor.