NDSU experts talk about tariffs

Tariffs are once again making headlines, and their effects are being felt close to home. From grocery bills to business operations, these economic tools influence everyday decisions for families and companies alike. Faculty experts from the NDSU College of Business are helping to make sense of it all, offering insights into what tariffs mean today, what changes may be on the horizon, and how individuals and businesses can prepare.

WHAT FAMILIES SHOULD KNOW

John Bitzan
Menard Family Director, Challey Institute for Global Innovation and Growth
Professor of management and marketing, NDSU College of Business

What is a tariff?

A tariff is a tax placed on imports. When products with tariffs are imported from other countries, the buyers are charged a tax. For example, if a U.S. company buys a $100 product with a 10% tariff, the U.S. company now pays $110 due to the tariff.

How do tariffs affect things like groceries, clothes and school supplies?

Tariffs affect the prices of things families buy in three ways:

For many products, like athletic shoes, clothing, fresh fruits and coffee that are produced in other countries and imported into the U.S., some or all the import tax is added on to the price of the product, increasing the price for you.

Even domestically produced goods that use imported parts will see increased prices for consumers. For example, soda and beer makers will increase their prices because of the increased costs of canning their products due to aluminum tariffs.

The increased demand for domestic goods, or substitutes of goods being taxed, may also result in an increased costs for families due to supply and demand dynamics.

Are there certain products or brands that are more likely to get more expensive because of tariffs?

It is difficult to predict with certainty. However, some big-ticket items like kitchen appliances and automobiles are likely to see price increases due to tariffs on steel, aluminum and automobile parts.

Other products imported from countries with high current or proposed tariffs, like clothing, athletic shoes, electronics, furniture and toys also are likely to see price increases. It is important to remember that many everyday items, like food products, could see price increases due to increased costs of production resulting from tariffs.

How should families plan for or navigate the effects of tariffs?

One of the best things families can do is to be more intentional with budgeting and saving. Even small changes in spending can help families to achieve this goal. Building a financial cushion, such as the 3 to 6 months of savings often recommended by financial experts, can provide added peace of mind and flexibility when prices fluctuate.

WHAT BUSINESSES SHOULD KNOW

Alfredo Roa-Henriquez
Scholar, Challey Institute for Global Innovation and Growth
Assistant professor of transportation, logistics and finance, NDSU College of Business
How do tariffs impact small and mid-sized businesses in a region like Fargo-Moorhead?

Tariffs can create both challenges and opportunities for small- and mid-sized businesses. By raising the cost of imported goods, tariffs aim to reshore production and make domestic suppliers more competitive.

Businesses in the Fargo-Moorhead region that rely on overseas suppliers for products or inputs are likely to face greater challenges. The main hurdle is building a domestic supply ecosystem that enables viable product delivery. This takes time, as companies must cultivate trust with new partners and bridge quality gaps when establishing new operations.

Businesses serving overseas markets also face risk, since they must prepare for demand swings if U.S. trading partners impose retaliatory tariffs. In Fargo-Moorhead, both direct and indirect effects are felt across supply chains, including construction, retail, manufacturing (steel fabrication, ag-machinery), ag-tech and logistics.

What should business owners do to prepare for potential new tariffs or changes to existing ones?

Business owners should examine their supply chains. On the procurement side, businesses often diversify suppliers, shift sourcing locations, negotiate lower prices, qualify alternative inputs under free-trade agreements, front-load imports, collaborate on purchases and lock in forward contracts to limit cost variability.

On the distribution side, they may monitor retaliatory-tariff proposals, map exposure, adjust prices, identify alternative markets and build flexible pricing and inventory strategies to redirect shipments or absorb margin pressure. More broadly, they should run tariff-risk scenarios distinguishing between import and export exposures.

Are there industries in North Dakota that are more exposed to tariff risk than others?

In agriculture, soybean and wheat exports are particularly vulnerable due to their dependence on international markets, making them sensitive to retaliatory tariffs, as noted by NDSU’s Center for Agricultural Policy. The energy sector also is at risk, as most of North Dakota’s oil exports go to Canada.

Machinery manufacturing and food processing are further exposed due to reliance on imported inputs like steel, aluminum and fertilizers.

How do tariffs affect pricing, supply chains and customer relationships and what can businesses do about it?

Tariffs ripple through supply chains and often raise prices. Businesses and suppliers must choose to raise prices and risk losing customers or keep prices steady and accept thinner margins.

This pressure can strain buyer-supplier relationships and disrupt product flow. To reduce impact, businesses should run tariff-risk scenarios that map exposure and assess likely consequences.