Tangling with tariffs in 2025: CEOs share their strategies

As the new administration moves forward with the promised tariffs in 2025, small and midsize businesses are concerned about their impacts. Last month, analysis of data from the WSJ/Vistage Small Business CEO Confidence Index revealed that 37% of small businesses reported expectations for negative impacts from potential tariffs in 2025.

Preliminary results of the February WSJ/Vistage Small Business survey show that over 53% now expect negative business impacts from tariff and trade policies. As specific tariffs have been detailed and some implemented, CEOs are seeking guidance on how to proceed.

When tariffs made headlines several years ago, Vistage members from three different sectors — manufacturing, construction and wholesale trade — shared how they addressed the challenges tariffs created for their businesses. Whether negotiating prices or forecasting inventory, these insights serve as a great reminder for CEOs addressing a potentially complicated trade environment resulting from new tariffs in 2025.

Q. What’s the best way to communicate price increases to customers?

Arm your customers with the right information

When steel costs rose, Dean Ricker, president of Chicago-based steel-drum manufacturer Skolnik Industries, increased his prices. He backed his reasoning with news and data from reputable publications such as the Wall Street Journal.

“That gives the purchasing person enough ammo to go back to their boss and explain price increases,” says Ricker. “It’s as much about transparency as it is about education.”

Be forthcoming about what’s happening — and why

Scott Farrell, president of i2 Construction in Parker, Colorado, said he tried to be a trusted advisor to his customers, and that meant being upfront about issues like price increases.

“We’ve always had a philosophy of, ‘I am going to make you aware of an issue, tell you that I’m working on it as we come up with some options,’” he says, adding that price conversations have served as opportunities to build better relationships with his clients. “To me, if you’re not having these conversations, you’re missing out on an opportunity to show your client how vested you are in caring about them.”

Don’t take advantage of the situation

Farrell encountered companies using the effects of tariffs as an excuse to dramatically inflate their prices, but Lavina Lau’s approach was just the opposite. As president and CEO of Terrybear Urns & Memorials, Lau made sure that any proposed price increases were reasonable and fair to her distributors.

“We know that they work hard for us,” she says. “Our approach is always to explain the situation and be fair with what we’re asking. We separate our product price from tariff surcharge to make it transparent to our customers, and we will adjust the price back when the tariffs go away.”

Raise prices gradually

Out of consideration for his customers, Ricker raised his prices incrementally over the course of five months, hoping this would make it easier for his clients to adjust to the rising costs. “It’s important to understand your customer’s business and what their needs are,” he says. “We don’t want to lose them as customers, and we don’t want them to lose their customers. If that means it takes some time and we do things more on a schedule, so be it.”

Q. How can I plan when the impact and extent of tariffs in 2025 is uncertain?

Make educated guesses

When it comes to inventory forecasting, Lau and her team planned for the worst while hoping for the best. Depending on the product category, her companies made inventory purchases based on the assumption that their sales would be equal to, or less than, the previous year’s sales. “This time with additional tariffs, we are assuming that once it’s in place, it will be here for a long time. We are closely watching for changes in demand and will plan inventory accordingly,” she says.

Create a buffer for a worst-case scenario

In some cases, Farrell received estimates from contractors that are only good for seven days, which “made them useless,” he says. “I cannot sit in front of clients and tell them that I know how to guarantee the cost of, say, a light fixture package that we are bidding on now and will deliver in the future.”

To cope with this uncertainty, he clarified and built a price buffer that served as a safety net in the event of a price increase. That way, “when we finalize drawings in 45 days, we hope that the parts and pieces of light fixtures that really get marked up don’t increase the total purchase by more than [the buffer amount].”

Scrutinize your costs

While coping with the rising cost of steel, Ricker also had to deal with price increases across a range of other goods and services, ranging from shrink wrap to freight shipping. To manage those increases, he kept a critical eye on costs while being prudent with his spending.

“We’re really paying attention to our costs and making sure our price increases are going through so we’re not exposing ourselves to losing a lot of money,” he says.

Q. How should I handle negotiations with customers?

Treat each case individually

Even though every customer was expected to share the rising costs, Lau had to approach each customer individually and develop specific programs to address the needs of each of them.

Negotiate on issues other than price

One of Farrell’s clients had a project go up by $35,000 basically overnight. Instead of scrapping the job, he helped the client work with a millworker and an architect to find an alternative option that met their budget. It ended up being a good solution to a problem “that was beyond our control,” he says.

Know your limits

Of all the raw materials that Skolnik Industries uses to create steel drums, 90% is American-made steel. Back in 2018, the price of that steel increased by approximately 25%, leaving the company no other option than to pass on the rising costs to customers.

“That’s a price increase you can’t absorb,” says Ricker. “It’s not like we had a meeting and said, ‘Gee, can we absorb these increases?’ To be able to survive, we’ve had to pass it on.”

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