U.S. Tariffs: What’s the Impact on Buying a Business?
As a business buyer, navigating the impact of tariffs has become increasingly complex. Now more than ever, due diligence must factor in how trade policy affects costs, supply chains, and long-term viability—and include sensitivity analysis to prepare for a range of economic scenarios.
Buying a business has never been simple. Now, with U.S. tariffs rising faster than most people can track, the due diligence process just got harder.
In the first quarter of 2025 alone, the U.S. introduced sweeping changes to international trade policy. What was once a stable and open global marketplace has tilted. If you’re buying a business today, you can’t just ask if the numbers pencil out. You have to ask: how exposed is this business to tariff risk?
Tariffs can quietly erode profitability, disrupt supply chains, and kill margin. And yet, most buyers still don’t factor them in. The good news: a little awareness goes a long way.
What Are the Current Tariffs and How Have They Changed?
Let’s start with the numbers. In just a few months, tariffs have climbed dramatically, especially for countries that dominate U.S. imports.
China alone accounts for around 13% of all U.S. goods imports. With a 145% tariff now in effect, any business that touches B2C goods sourced from China will feel it—often before they even know it.
Goods That Are Excluded
Not everything is affected. Here are some categories that remain exempt (for now):
Electronics and Semiconductors
- Smartphones, computers, and components are excluded from the 145% China tariff.
- Semiconductors and integrated circuits are also spared.
Informational Materials
- Books and printed media are protected under the IEEPA exemption.
Energy and Critical Minerals
- Electricity, petroleum products, and copper are fully excluded from new tariffs.
Section 232 Tariff Items
- Steel and aluminum products continue under pre-existing tariffs and are not subject to new reciprocal rates.
USMCA-Compliant Goods
- Products from Canada and Mexico that meet USMCA criteria remain tariff-free.
But these classifications can change. Smartphones, for example, may still face up to a 20% levy depending on how they’re categorized. And the $800 de minimis exemption for China? Gone.
What Types of Businesses Will the Tariffs Affect?
Any business importing goods or materials from abroad is potentially at risk. This includes:
- Retailers sourcing finished products from Asia
- Manufacturers who rely on foreign components or raw materials
- Distributors with offshore suppliers
The auto industry has already been hit. As of April 3, 2025, imported vehicles and parts face a 25% tariff. Electrical equipment was also in the crosshairs until a last-minute exemption spared semiconductors and related devices.
The bottom line: if a business imports anything from China, Vietnam, or similar markets, assume tariffs are part of the cost structure—and plan accordingly.
How to Account for Tariffs When Buying a Business
Tariffs create margin risk. If you’re buying a business, and you’re not stress-testing the supply chain, you’re flying blind.
1. Supply Chain Exposure
What’s coming from overseas? What countries? Are those inputs now more expensive? Ask for a full supplier list—and where each is based.
2. Sensitivity Analysis
Model out cost increases. What happens if materials go up 10%? 25%? 50%? Can the business still make money?
3. Pricing Power
Can the business raise prices without losing customers? Niche players can. Commodity players usually can’t.
4. Alternative Suppliers
Is there a Plan B? Are there domestic or USMCA-friendly vendors ready to go?
5. Inventory Strategy
Has the business been stockpiling? That might buy time—but it can also temporarily inflate margins. Be careful not to overvalue a business riding on cheap, pre-tariff inventory.
Key Questions to Ask the Broker and Business Owner
Due diligence isn’t about checking boxes. It’s about asking questions that reveal the truth behind the numbers.
Here are 10 you should ask:
1. Who are your suppliers, and which ones are international?
2. Have you increased prices to reflect tariff-driven cost increases?
3. How have your customers responded to recent price changes?
4. Are supplier or customer contracts fixed or flexible?
5. Do you have alternative (non-tariffed) sources for key inputs?
6. Have you experienced any supply disruptions over the past year?
7. Are there products you’ve stopped offering due to rising costs?
9. What percent of your cost of goods sold is linked to imported materials?
9. How frequently do you renegotiate with suppliers?
10. What’s your strategy if tariffs increase again—or expand?
Final Thoughts: Tariffs Are a Test of Flexibility
Tariffs don’t make a business bad. They make it fragile. The question isn’t whether tariffs will change again—it’s whether the business can adapt when they do.
If you’re evaluating a company and see heavy import dependence, start mapping options:
- Can you switch suppliers?
- Can you renegotiate terms?
- Can you raise prices?
- Can you absorb temporary margin loss and still win?
Entrepreneurship isn’t about predicting the future. It’s about surviving it.
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