Tariffs: The 90 Day Truce and a Lesson from History…

Tariffs: The 90 Day Truce and A Lesson from History

Tariffs are nothing new, employed globally to protect domestic industries and influence international trade dynamics. While they can stimulate certain sectors, history shows that their implementation often brings complex consequences. Understanding these historical patterns can help businesses navigate the current tariff landscape that is in continuous flux!

What we have learned, and more importantly, as business leaders we should all be asking the question of what we can do to mitigate the risks and embrace opportunities to become more efficient, productive and profitable. In good times or bad, and with the continuous uncertainty, isn’t that just good business?

tariff impact

Short-Term Disruption vs. Long-Term Gains – A Walk Through History

Manufacturing. Tariffs encourage domestic production by making imported goods more expensive, leading to job creation in certain sectors. Currently throughout the U.S., states are jumping on the bandwagon to offer incentives and tax benefits to companies to consider manufacturing within their own state lines. This is playing the long game.
Services and Retail. Likely to take a short-term hit as these sectors may face immediate cost increases due to higher prices on imported goods, leading to reduced margins and potential job losses.
Retaliation and Global Trade Dynamics. This can be expected and may lead to trade wars that can harm economic stability in markets worldwide.
Consumer Impact. Think about this in terms of the people you know. From employees to your family, friends and the markets your business serves. Higher prices, reduced purchasing power and potential slow economic growth.
Supply Chain Diversification. We are already seeing companies seeking alternative sourcing options and reshoring production when that is possible. This could lead to long-term change.

Short-Term Outcomes and Long-Term Consequences to Past Tariff Shocks (including 2018-2020 during the Trump-China trade conflict and impact of the Pandemic).

Action	Description	Short-Term Outcome	Long-Term Consequences
Cost Cutting in SG&A (esp. Sales/Marketing)	Immediate reduction in discretionary spending like travel, training, marketing, and consultants.	Marginal quick savings.	Often cut the “growth engine.” Hurt pipeline development and slowed revenue recovery.
Layoffs in Commercial & Support Roles	Reduced headcount to lower payroll during uncertainty.	Quick hit to reduce costs.	Loss of customer relationships, lower morale, and harder recovery when demand returned.
Hoarding Inventory (Pre-Tariff Spike)	Imported large volumes of goods to avoid tariffs going into effect.	Short-term cost avoidance.	Inventory carrying costs spiked; demand uncertainty led to write-downs and cash flow issues.
Shifting Supply Chains Reactively	Rapid attempts to move production to Vietnam, Mexico, etc.	Showed agility.	Often underestimated complexity, quality issues, and new regulatory burdens.
Price Increases to Offset Tariffs	Passed additional costs to customers.	Maintained margin initially.	Price-sensitive customers left, particularly for products with high price elasticity.
Delaying Capital Investments	Deferred automation, sales enablement platforms, and infrastructure upgrades.	Preserved cash.	Slowed competitiveness and operational efficiency improvements.
Short-Term Incentive Adjustments	Cut or deferred incentive compensation to preserve budget.	Reduced immediate payouts.	Demotivated sales teams and spurred turnover of top performers.
Reactive Restructuring	Reshuffled roles or regions to “streamline.”	Created optics of action.	Often led to confusion, lost institutional knowledge, and poor execution.

The Big Mistakes That Didn’t Serve Companies Very Well.

Over-rotation on Cost Savings. While ignoring the opportunity to optimizing operations and cost of sales, many companies simply slashed headcount, a pattern we are seeing play itself out once again.
Cutting Go-to-Market initiatives as Customers Become Harder to Reach. At a time when sales enablement should have been a double-down focus, companies disinvested in training, coaching and tools to support the sales engine.
Finance and Sales Breakdown. CFO’s were often forced to make budget cuts without understanding the revenue risks while sales leaders couldn’t clearly defend ROI of the spend.

What to Do This Time Around

Targeted Sales Force Redesign. Now is the time to look at your high-value segments and refocus your top talent there while removing low-yield opportunities. It’s possible, do it now.
Customer Segmentation. When was the last time you looked at that anyway? How do you segment today, and is it time to prioritize your profitable accounts that could be under extreme price pressure?
Incentive Plan Recalibration. We keep hearing about raising thresholds, raising pay curves, and then there is the question about what to do with quotas. What about getting back to the basics of ensuring smart alignment of your pay plan to your C-Level Goals and ensuring you are paying for performance outcomes?
Sales Process Redesign. Going back to the basics. What is your sales capacity today? Where are your sellers spending their time? Where can you gain efficiencies and connect with your customers and their needs more quickly and in a way they want to engage with you?
Consistent Communication. From customers to your employees. They need to hear from you. Keep your plan transparent and engage them in the discussion.

In the face of tariff pressures, the best companies won’t just slash costs, they will leverage this opportunity, to Rethink Sales. Using short-term changes to fuel long-term advantage. Now is not the time to simply pull back and wait for the storm to pass.

SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.