The currently imposed customs duties and special tariffs pose a complex challenge for medium-sized industrial companies, which can affect their competitiveness on several levels. The effects extend across various business areas and can have both short-term and long-term consequences.

Price sensitivity and market positioning

In the area of price sensitivity and market positioning, customs duties in general and special duties in particular often lead to increased sales prices if the increased procurement costs cannot be offset by internal measures such as efficiency increases or margin reductions. This creates a clear competitive disadvantage compared to companies that source their primary products from duty-free countries or produce locally and therefore enjoy a direct cost advantage. It is particularly serious that medium-sized companies, which often operate in niche markets or with specialised products, can lose the price advantages they have painstakingly built up. In markets with strong competitive pressure or high saturation, it is also extremely difficult to pass on price increases to customers, which inevitably leads to falling margins and a weakening of financial performance.

International competitiveness and exports

International competitiveness and the export business also suffer from the effects of international customs policy. If these additional costs increase the prices of domestically produced components that are incorporated into export products, these products become indirectly more expensive, which significantly reduces their competitiveness on international markets. Another risk is countermeasures and retaliatory tariffs, which can be imposed in response to the implementation of special tariffs and potentially affect the SME’s exports. This can lead to the loss of existing sales markets or make it more difficult to open up new ones. More expensive export products become less attractive on international markets, which can result in a decline in export volumes and thus a loss of market share. The general uncertainty and the threat of cost increases due to customs duties can also dampen the willingness of SMEs to invest in new export markets that may be subject to customs duties.

Flexibility and adaptability

Customs-based economic policy influences the flexibility and adaptability of companies. Companies that are highly dependent on individual suppliers subject to customs duties have significantly less room for manoeuvre to react to changing conditions at short notice. The necessary reorganisation of supply chains, including the search for new suppliers, their qualification and the adaptation of logistics, can involve considerable costs and time. Medium-sized companies in particular often have fewer resources available than large corporations. One particularly problematic aspect is that dealing intensively with customs issues ties up resources that were actually intended for research and development or the introduction of new products. This can seriously jeopardise long-term competitiveness, as innovation cycles are delayed.

Reputational risks and customer relationships

The reputational risks and strain on customer relationships should also not be underestimated. If customs-related difficulties lead to delivery delays or even production stoppages, this can permanently shake customer confidence in the reliability of the company. Even if price increases are unavoidable, they can lead to customer dissatisfaction and weaken customer loyalty in the long term. In extreme cases, negative headlines in connection with customs problems can cause considerable damage to the company’s image.

To summarise, tariff-based economic policies, especially punitive tariffs, pose a serious threat to the competitiveness of medium-sized industrial companies. They cause direct cost increases, can weaken market positioning, make international trade more difficult, restrict operational flexibility and even put a strain on valuable customer relationships. To minimise these negative effects and ensure long-term competitiveness, a proactive and strategic response from the purchasing department is essential. The key tasks are to reduce costs, diversify supply chains, develop innovative solutions and strengthen relationships with customers and suppliers. Only through comprehensive and forward-looking management of these challenges can medium-sized companies maintain and expand their market position even under difficult conditions.

ADCONIA – Out of the ordinary

Consulting for purchasing, supply and value chain with a focus on cost management, digitalisation, organisational development and sustainability