Tariffs Took a Bite Out of Your Margin—But Deductions May Be Eating the Rest
- The HRG Team
- 3 days ago
- 1 min read
When tariffs hit, the impact is obvious. Suppliers see it in their landed costs, freight bills, and new duty line items. It’s loud. It’s visible. And most of the time, the response is just as visible—raise prices, reduce trade spend, or shift sourcing.
But there’s another, quieter drain on your margin—and it often escapes notice: retail deductions.
We’ve worked with many suppliers who tackled tariff headwinds head-on, only to be blindsided by a separate but equally damaging issue: a spike in deductions. Here’s how it happens.
Tariffs force changes. Changes in suppliers. Changes in packaging. Changes in transportation modes and delivery windows. And each of those changes increases exposure to deduction risk. Routing guide violations, OTIF fines, labeling misfires, promo pricing mismatches—these deductions creep in while your team is busy fighting fires.
Let’s take a fictional example. A home goods supplier, trying to offset a 25% tariff on Chinese imports, shifted production to Vietnam. Great move—until delivery timelines shifted, customs delays increased, and OTIF compliance dropped. Within three months, deductions had increased by 32%—quietly eroding the very margin they worked so hard to protect.
That’s why deduction recovery should be a part of every tariff response plan.
You can’t always control tariffs. But you can control what you recover. And recovery is more than dispute management. It’s a strategy.
By identifying root causes, fixing repeat issues, and bringing in expert support, one supplier we worked with turned $180,000 in deductions into recoverable cash—covering the first phase of their reshoring costs without cutting a single budget line.
Tariffs will bite. But deductions don’t have to feast on what’s left.
Wiser decisions. Fewer deductions.
