US tariff increases drive up working capital needs
Tariffs aren’t a new concept. Far from it - however tariffs of up to 50% implemented almost overnight are. Recent US trade policy has often shifted quickly, and tariffs have been no exception, bringing in changes that reshaped international supply chains.
Currently, supply chain planning is one of the toughest challenges for companies because of the new tariff rates. These additional costs are putting pressure on margins and cashflow as businesses adjust and adapt to the new trade environment.
Balancing the seesaw at the pivotal point between paying tariffs to release goods ahead of sales, while keeping enough liquidity to maintain healthy cashflow is what it’s all about. However, when tariff invoices add up to millions of dollars each month, that’s easier said than done.
US tariffs have meant that more cash flow than before is being used earlier in the supply chain. Companies without the liquidity to cover tariff payments at their usual import volume risk delaying the release of their goods from ports or reducing import volumes altogether. Either way, fewer sales follow, without the working capital to support them.
It’s a financial conundrum:
- Delay payment → Goods sit at port, unsold, locking up value.
- Pay tariffs immediately → Cash is drained, throttling the ability to purchase more goods.
For businesses handling high-value shipments and large volumes, a monthly tariff bill of $5 million is not out of the question. That’s rather a cold shower for finance, sales and procurement teams – and one that will take some time to warm up from.
But here’s the good news – there is another way.
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Our newest solution, TariffPay™, lets you release goods immediately without tying up capital. It allows businesses to defer their payment of US Customs and Border Protection (CBP) tariffs by up to 90 days, backed by over 40 of the world’s leading financial institutions.
