As we enter 2026, trade policy continues to be as uncertain as ever, and this period can be labeled as tariff chaos. The unexpected U.S-China tariffs, the rules applicable during the Brexit era in the U.K-EU region, and fluctuations regarding trade agreements have caused havoc for small businesses.
It’s not an abstract scenario. A remarkable 97% of importers are small businesses in the U.S, so any abrupt increase in tariffs hits hard on these marginal businesses. Only about 40,000 small U.S. fabricators rely on imported components. A marginal increase in tariffs will either force these small businesses to raise prices or absorb costs.
However, agile entrepreneurs sense there’s gold in turmoil. Consider, for instance, towards the end of 2025, the U.S. removed tariffs on approximately 200 farm goods ranging from bananas to beef. After Brexit, most goods traded between the UK and the EU do not face tariffs if they meet origin rules. In other words, how to profit from tariff changes is becoming a key survival question.
Yet there are U.S. industries that have already seen benefits. According to an analysis, there had been a huge increase in local steel production because imports had reached a 20-year low. At the same time, local solar production had doubled within a quarter. Smart entrepreneurs can also benefit from changes. These are five ways.
1. Diversify and Localize Your Supply Chain
The first line of defense would be to sever one-sided dependencies. Diversified suppliers should be sought, and preferably, these suppliers would be from nations not affected by tariffs. Exploring alternative markets for suppliers would be worthwhile. A country that imports goods from China could source alternative imports from Vietnam, Malaysia, and Mexico.
It would thus entail researching products on sites like Alibaba or ThomasNet. Finding suppliers outside the tariff zone would be a start. Even American suppliers can reap the benefits. Their business may have to pay a bit more for components. It will, however, eliminate all small business tariffs.
Another angle is nearshoring. Moving production closer to home often pays off. This also cuts transportation times because of shorter routes and reduces inventory holding, and appeals to customers demanding “Made in America” or country of origin purchasing.
Regionally based trade agreements will also help, as seen with USMCA (NAFTA), where a large amount of North American made product qualifies for tariff-free entry, and with the UK-EU trade agreement, which will enable tariff-free trade that meets UK-EU rules.
Generally, diversification and localization equal risk reduction. Within an uncertain market, tariff chaos will punish a business with a focus on a single market. Diversify your supply chain and make your business tariff-proof and poised for success as competitors suffer.
2. Expand Into New Markets
Just as you can diversify your factors, expand your customer base beyond. Geographical shifts for your product sales can be a common strategy to exploit changes in tariffs. Higher costs at home meant that several businesses realized existing markets abroad could sustain price increases.
Example: A U.S. craft beer brewery, with tariffs imposed on aluminum cans brought from abroad, entered new markets in Canada and Europe. By offering multiple regions, it not only reduces tariffs but also enhances growth opportunities.
Today, small businesses can tap foreign demand at very low cost using e-commerce. Look into trade agreements. Some nations still have zero or low tariffs on your goods. Britain’s trade agreement with the EU means that most British goods can enter Europe tariff-free. Even limited sales abroad can help offset fluctuations at home.
Local distribution companies or even export agencies can assist with these rules. Overall, taking some business or your market elsewhere can be a proven way to profit from tariff changes. By understanding that your market on one side of a border may be set to pay higher tariffs, while on the opposite side, there might be an appreciation for your product.
3. Use Smart Pricing and Cost-Sharing
When tariffs raise input prices, you cannot absorb all the costs. Instead, start rethinking pricing and negotiations. Dynamic pricing with transparency is a very good tactic. Transparency in explaining tariff-driven price hikes keeps customers loyal to the company. A distributor in the electronics industry wrote to its customers with a clear explanation of the price rise due to new duties, which turned out to be 3-5%, and gained their understanding.
The U.S. Chamber recommends that many small enterprises increase their prices, but they should clearly communicate variations in costs. Yet another suggestion is the tiered or value-added pricing: add extra services or smaller package sizes to justify the changes. One small clothing manufacturer, for example, increased margins by offering a higher-priced, upsized option while downsizing its base product.
It’s also important to negotiate costs upstream. Some small businesses are taking the opportunity to deal with existing suppliers to absorb some of the tariff costs, or are using longer-term contracts or bulk buying to lock in lower rates. That might mean agreeing to share duties with a vendor, or pooling orders with industry peers in order to qualify for volume discounts.
Also consider financing. If the tariffs chew up cash flow, look for low-interest loans or credit to smooth out short-term shocks. The objective is to protect profitability. Using smart pricing, raising prices judiciously, gaining customer buy-in, and negotiating collaboratively, a small firm can make up for what higher small business tariffs take away. In essence, it is a lesson in how to profit from tariff changes rather than being at their mercy.
4. Optimize Inventory, Operations, and Intelligence
Amid tariffs, time and efficiency become important considerations. While some firms keep inventory before a tariff hike, small companies may not have such capital. But with a focus on lean business and instant information, chaos can be outsmarted.
For example, join or establish a buying cooperative, where a combination of small importers can combine their purchases and realize a lower cost of tariffs per unit. Cut unnecessary spending and prioritize high-selling items. Re-evaluate budgeting and cut unnecessary spending in a tariff environment.
Staying informed is equally important. Make use of tariff tracking and news feeds. Such sources include the WTO/IMF tariff database or law firm notifications, which allow you to plan. With this information, you can postpone imports after a cut in tariffs or speed up imports before a tariff increase.
Finally, invest in visibility tools. A supply chain application or logistics platform can keep you informed of customs updates in real time. When your goods face shipping delays or additional taxes, notifications and backup plans can help you reroute or reprice goods before your end customers realize a problem.
Efficiency is profit. With better inventory control, reduced waste, and a focus on news related to tariffs, you will make small business tariffs a predictable element rather than an unpredictable shock. Being ready and making informed decisions will be one of the smartest investments towards making a profit out of tariffs.
5. Innovate Your Products and Models
A final approach is to design around tariffs. So-called tariff engineering involves modifying products so that they fall within a lower-duty category. Big brands already do it. Converse sewed a layer of felt into its sneakers to prompt U.S. Customs to reclassify them as low-duty “slippers. Columbia Sportswear put small pockets on shirts to drop the duty bracket.
Small companies can be equally creative, just on a smaller scale. Take a furniture manufacturer who, affected by one of the various rounds of lumber tariffs, switches to a veneer that’s duty-free, or the tech startup that prioritizes digital services, where no import duty applies over hardware sales.
Another angle is to pivot your offerings entirely. If one product line is severely affected by new tariffs, see if your R&D team can create a variant using different materials or redesign the item to meet a lower-rate category. The key to this is flexibility. In time, such innovation can open up new revenue streams.
Even changes in business model count. Some service-based SMBs, for example, are hiring local subcontractors or automating tasks at home to avoid any import costs on overseas labor. Others are tracking legal shifts: with the U.S. Supreme Court set to review whether the President had authority, some businesses are filing challenges now with the hope of future refunds. If successful, that would go directly to their bottom line.
When tariff chaos descends, the most resilient businesses are those that bend. Inventing clever product tweaks or new business lines can turn a cost center into a profit center. Small businesses stand to benefit from tariffs by offering them the chance to build in extra resilience into their operations.
Conclusion
Far from being impossible, tariffs can be navigated, even profited from, with the right playbook. The five strategies above illustrate practical ways to turn chaos into advantage. Tariffs are here to stay and will continue to cause uncertainty.
The main concern is not whether turmoil will hit, but how businesses respond. Small firms that act now, building agility into their supply chain, pricing, and product design, won’t just survive tariff chaos, but they will also show how to profit from tariff changes. By doing so, they not only protect their margins today but position themselves stronger for tomorrow’s growth.
Featured Image – Freepik
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