Should Manufacturers Take on More Inventory Before Tariffs Hit?

Tariffs have dominated business headlines over the past few weeks, creating significant volatility and concerns in 2025. Compared to a couple of decades ago, the use of tariffs has shifted from a need to protect industries to a diplomatic tool with greater emphasis on nonbusiness considerations. The randomness of decisions makes for a difficult planning environment.

Tariffs act as a form of tax or duty paid by an importer, which increases the cost of the inventory. The basic idea is if inventory is bought before tariffs are implemented, additional costs could be avoided.

Amid these uncertainties, manufacturers are wondering if it makes sense to take on additional inventory before tariffs hit. 

10 questions manufacturers should consider regarding inventory and tariffs

As you consider a business case for taking on more inventory, discuss these questions as you work through the costs and benefits with your team.

1. What is the ultimate ‘why’ behind bringing in additional goods?
2. Do you have existing contracts limiting the ability to adjust pricing or add surcharges?
3. Is there demand for the product? What is the risk it won’t sell?
4. If the inventory cannot be sold via traditional channels, is there a secondary market?
5. Do the goods have a shelf life or high potential for obsolescence?
6. How will the inventory be financed?
7. What is the cash position of the company?
8. What is the opportunity cost of allocating cash for inventory?
9. What are competitors expected to do?
10. Do you have sufficient space? If not, what are the costs of additional warehousing?

Concerns manufacturers have about tariffs timing on inventory

Several manufacturers have asked about lead time, and if goods are ordered now prior to tariffs, exactly when will the tariffs take effect. Based on our current understanding, if goods are purchased before tariffs hit, tariffs won’t apply to goods in transit on the final mode of transport. Work with your trade broker to confirm you have the necessary paperwork in place.

Taking on additional inventory is a significant short-term decision that can have long-term implications on your balance sheet. Need help brainstorming options? CLA can help with that.