The Boomerang Tariff Trap: How Suppliers Can Dodge a Painful Hit
- The HRG Team
- Jul 22
- 3 min read
Tariffs are back in the headlines—and not in a good way.
In the latest twist, the U.S. government has warned that if certain countries don’t strike a new trade deal by August 1, tariffs will snap back to April levels. For some suppliers, that could mean import taxes as high as 50%. The term floating around for this phenomenon? “Boomerang tariffs.” And like a real boomerang, they’re poised to come back hard—fast—and hit you square in the margin.
The New Tariff Whiplash
Boyd Evert, CEO of HRG, says it plainly: “If I were a supplier, I’d be terrified.” And here’s why.
We’re not just talking about tariffs going up. We’re talking about volatility. The on-again, off-again nature of these policies creates chaos, especially when layered with the long tail of post-audit reviews. Imagine this: An auditor two years from now digs through your email threads from today and uses those discussions to justify a compliance deduction or profit recovery claim. Sound extreme? It’s not. It happens.
And the stakes are even higher if you’re selling items with high price sensitivity—think back-to-school gear, seasonal décor, or pantry staples. These products don’t have the same wiggle room as, say, luxury skincare or niche electronics. Even a modest increase in cost can cause demand to nosedive.
When Retailers Delay—And Suppliers Pay
Price increases aren't just about the math—they’re about timing and power dynamics.
In one example Boyd shared, a major health and beauty brand rolled out a cost-based price increase. But Amazon refused to raise prices until Walmart did, and Walmart wouldn’t budge until Amazon moved. The stalemate lasted nearly 90 days. Once both retailers finally increased their retail prices, they had already eaten the margin, and then turned around and sent the supplier a bill for their lost profits.
You read that right: the supplier bore the cost, and the retailer handed them a chargeback.
This is the stuff that deduction nightmares are made of.
Three Moves to Make Right Now
So what should you be doing if these boomerang tariffs do, in fact, land?
Create a Paper Trail. Every pricing conversation—whether by phone, in person, or via email—should be documented and saved. Future audits will examine how cost and retail price changes were handled. If there’s no record, auditors can (and will) make their own assumptions. That’s a costly risk.
Get in Front of the Buyer. Communicate early. Communicate clearly. Don’t wait until a deduction hits to explain a price change. Instead, show your math, your sourcing issues, your tariff exposure, and your projected impact. When buyers are informed, surprises shrink, and recoveries grow.
Watch Inventory and Sell-Through Like a Hawk. Tariffs don’t just hit your COGS. They mess with timing. If your seasonal items get delayed or over-ordered due to planning confusion, you’ll either face markdowns or reduced shelf space later. Either way, that’s revenue down the drain.
Reshoring Isn’t Just a Buzzword
With the risk of 50%+ tariffs on steel, aluminum, and even pharma ingredients, more suppliers are rethinking their supply chains altogether.
Boyd believes this trend is only accelerating. “The automation and robotics we have today make reshoring a no-brainer in many cases,” he said. “Retailers were already nudging suppliers to build capacity closer to home. These new tariff threats are pushing that conversation to the top of the agenda.”
Tariffs Hit More Than You Think
Let’s take canned vegetables. If steel tariffs spike, the cost of the can itself could triple—before we even talk about the peas inside. That’s just one example of how price increases ripple far beyond their obvious targets. HBA, pharma, even basic grocery items could be impacted in ways we don’t yet see.
Which brings us to this: Surprises are the enemy.
Final Word: Transparency and Timing Are Everything
The best defense against tariff-related deductions is simple: stay informed, stay transparent, and document everything. Whether you're launching a spring collection, shipping back-to-school stock, or adjusting to sudden cost increases, clarity with your retail partners is key.
And if you're navigating this chaos solo, don’t.
HRG helps suppliers anticipate and avoid deductions before they occur, especially in times of economic and policy uncertainty. Schedule a free strategy session today, and we’ll walk through your risk factors and where you can recover lost margin before it’s gone for good.
