For small and mid-sized businesses, procurement has never been simple, but it’s rarely been this volatile. In recent months, costs have surged across key categories, suppliers have grown harder to rely on and the policy landscape is once again shifting. With the United States having officially ended the de minimis exemption for sub-$800 imports from China and Hong Kong this month, SMBs are bracing for even greater disruption, and so are shoppers.
This change, which removes tariff-free treatment for low-value shipments, is poised to hit smaller businesses disproportionately hard. Many SMBs rely on frequent, lower-volume imports to maintain agility and preserve cash flow. The new rules will force these businesses to absorb tariffs of up to 120% or flat surcharges as high as $200 per shipment—costs that can’t easily be passed on to customers in today’s price-sensitive environment.
Even before the new tariffs take effect, we’ve seen a steep climb in procurement costs. At Katana, we analyze over $300 million in monthly spend data from more than 500 SMBs across industries like food and beverage, cosmetics, pharmaceuticals and electronics, to name a few. The signals are very clear: procurement pressures are building. In February, average input costs from Mexico and Canada rose by approximately 20% compared to January. By March, those same categories had surged more than 50$%. Year-over-year, SMBs are now paying nearly 30% more per unit across essential categories, despite keeping order volumes relatively stable.
This isn’t just inflation; however, it’s fragmentation. With global trade flows under stress from geopolitics, retaliatory tariffs, shipping delays and growing regulatory scrutiny, supply chains are no longer linear. These are multi-directional issues, and SMBs are vulnerable to policy shifts and this deeply unpredictable climate.
And yet, within the noise and looming trouble ahead, we’re also seeing a pattern emerge among the most resilient SMBs who are pulling ahead. These are the companies that are strategically planning and making sure their operations are flexible. They are leaning in on data to inform smarter decisions for their businesses.
First and foremost, there’s a shift underway in sourcing strategies for SMBs. While many large enterprises have long diversified supplier networks and will likely fare well during these tumultuous times, SMBs are playing catch-up, and many are learning how to cope on the fly. For example, some are strategically shifting key purchases to suppliers in Southeast Asia or Eastern Europe to sidestep steep tariffs and reduce risk. Others are exploring reshoring and bringing elements of their supply chain back to North America to mitigate volatility, even if it comes at a slightly higher unit cost. For players in the consumer electronics space, consolidating shipments through a Vietnam-based supplier and transitioning away from China not only reduced exposure to upcoming tariff hikes, but also improved landed cost through fewer shipping delays. This seems to be reflective of a larger trend.
Second, inventory is being treated less as a static asset and more as a dynamic lever for resilience. In a more stable trade environment, just-in-case inventory strategies may have sufficed. Today, we’re seeing SMBs use real-time Enterprise Resource Planning (ERP) tools to run simulations, anticipate demand spikes and fine-tune reorder points based on potential policy changes. One cosmetics manufacturer I chatted with recently recounted the impact of a 25% increase in raw material costs and how they adjusted batch sizes and safety stock thresholds to preserve margins while maintaining service levels.
The third trend is about speed and scenario planning. Weekly, if not daily, procurement reviews have replaced the old quarterly check-ins. Procurement leaders are tracking not just prices but lead times, backorders and geopolitical risk. This agility is crucial as the U.S. handles current trade wars, with further trade policy changes potentially on the horizon. We’re advising SMBs to prepare now for multiple futures, including deeper tariffs, new country-specific restrictions or additional shifts in customs enforcement.
What’s clear is that the SMBs weathering this moment most effectively are those investing in the right digital infrastructure. Cloud-based ERP systems don’t just streamline operations; they give procurement and operations leaders the visibility to move quickly, forecast accurately and act proactively. For many growing manufacturers, these platforms are now table stakes.
We’re definitely in uncharted territory navigating this level of global uncertainty. But by adopting flexible sourcing strategies, SMBs are best positioning themselves to survive and perhaps even thrive through the next wave of disruptions. It’ll be interesting to see how the effects of this spring policy shift play out. But I anticipate the ones that make it will be the ones thinking a few steps ahead.
