Exporters: Are you on top of your game?

AT this critical juncture, US-centric exporters are exploring opportunities in new markets or lobbying governments for amendments to current tariff structures to address trade surpluses with the US—often at the expense of other importers. This precarious moment demands simultaneous short-, mid-, and long-term tactical adjustments to business strategy. While this article does not offer a “cookie-cutter” solution for all affected exporters, it aims to provide guidance, particularly for small to mid-sized businesses.

- By Saminda Weerasinghe, CFA

1. Assess the immediate impact on sales

First, quantify the direct hit to your sales. To date, no HS codes appear exempted from tariffs, and feedback from freight forwarders suggests no leniency in enforcement.

2. Engage buyers to understand their strategy

If your exports are non-essential, US buyers may adopt a “wait-and-see” approach. With inflation and recession fears looming, US consumers are likely to curb non-essential spending. Clarify your buyers’ plans to anticipate delays.

3. Establish timelines for order delays

If buyers hesitate, seek clarity on how long orders might remain unfulfilled. This insight is crucial for managing production cycles and inventory.

4. Prioritise cash flow and short-term debt management

Most in-progress orders rely on Packing Credit Loans (PCLs) and Import Short-Term Loans (STLs) to fund raw materials. Immediately engage banks to negotiate extensions or deferrals on repayments.

5. Restructure loan terms