Mike Hall Discusses Impact of Tariffs on Supplier Liquidity Risk in Financial Times Feature
Tariffs Strain Small Business Suppliers and Put Corporate Stability at Risk
As new U.S. tariffs place mounting pressure on small businesses, corporate leaders are confronting a growing and often overlooked risk: instability in their extended supply chains. In a Financial Times feature, Mike Hall, Managing Director with A&M's Corporate Performance Improvement practice, discusses how tariff pressure on small suppliers could cascade into bigger problems for large organizations.
With some small businesses now facing millions in unexpected duties, many are unable to absorb the costs or find viable U.S.-based manufacturing alternatives. And for the larger companies that rely on these suppliers?
“This is the risk that is now just starting to rear its head in the marketplace,” said Hall. “The suppliers that source from small mom-and-pop shops... are putting at risk bigger corporates.”
As trade tensions intensify, corporate leaders are being urged to pressure test the health and resilience of their supplier networks by asking:
Liquidity
- Do you have a line of credit or sufficient cash flow to withstand a 2, 5, or 10 percent erosion in gross margin?
- What feedback are you getting from your bank about line of credit renewals?
- How close are you to tripping covenants on any outstanding bank loans?
Commercial
- Are you planning any price changes in the next 30, 60, or 90 days?
Operational
- What percentage of your cost of goods sold comes from high-tariff regions?
- Do your current suppliers have the capacity and flexibility to shift manufacturing to countries with lower tariff exposure?
- Are there opportunities to pivot to U.S.-based or USMCA-compliant suppliers in Mexico or Canada?
Read the full article to learn how companies are addressing hidden supply chain threats, and how leaders can proactively navigate supply chain volatility.
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