How these RIA advisors are helping business owners through tariff ankle-breakers

In life, they say only two things are certain: death and taxes.

Still, that doesn't mean people know when or how the grim reaper or the IRS will come knocking.

And so it goes with the tariffs ordered by the current administration under President Donald Trump, which since its April 2 "Liberation Day" declaration announcing levies on some 90 countries has been working furiously to hash out new trade agreements with those targeted nations.

While Trump looks to apply his trademark dealmaking technique on the global stage, the White House's reciprocal tariffs been put on hold until July 9, leaving one month to go until those levies could resume.

A 'very dour mood'

With no confirmed deals as yet and various escalations, additions, cancellations, and walkbacks of tariff threats occuring over the past eight weeks, numerous advisors have shared stories with InvestmentNews about challenges to their business owner clients – and what they've been doing to help.

"Our entrepreneur and business clients' moods are generally unstable," says Erik Jensen, Managing Director and Client Advisor at Caprock. "Although tariffs are certain, it is unclear how much, where, and when they will be implemented, making planning and forecasting difficult."

While many expect the tariffs to hit everything and everywhere, it won't be the same for everyone. According to Jensen, anxiety has run highest among his clients with product-based businesses, with high-volume, low-margin items being especially vulnerable to significant tariff increases.

"At the peak rate of more than 100%, a few enterprises would suffer severe reductions and layoffs. ... Retail heavyweights have deeper coffers and can typically withstand more than our country's middle- and low-weight businesses," he says. "When running the numbers, one client with a mid-sized business was looking at a 10x increase in the cost of an item."   

Karen Glassman, a managing director at NewEdge Wealth, describes a "very dour mood" among her business owner clients, with smaller shops facing the biggest risk of absorbing additional costs..

"Small business owners face the greatest concern because they are least likely to be able to 'pass along' any price increases to the consumer or retailer," Glassman says.

In discussions about his own business clients' financial plans, Jeremy Kovacs, wealth advisor at Perigon Wealth Management, says margins are a major consideration.

"For entrepreneurs in higher margin industries, there is slightly more cushion in a rising tariff environment," he says. "It goes without saying that businesses with tighter margins have less room to absorb higher costs."

Planning and pivoting

The uncertainty surrounding tariffs has taken a toll on business confidence with at least one poll by the Federal Reserve Bank of New York in May suggesting the a climate that's "considerably worse than normal." Many frustrated business owners are also speaking out, publicly breaking down how higher input costs pose an existential threat to their enterprises.

"Some clients are banding together with other industry groups to advocate and educate the current administration and legislators about their industrial needs and issues," Jensen says.

Proponents of the tariffs say the endgame is to incentivize domestic manufacturing, but Jensen noted it's not always possible for business owners to build an entirely onshore supply chain. The implications also go beyond manufacturing, says Blaine Bowers, advisor-owner at North Carolina-based Bowers Private Wealth Management, who shared how a client in the distribution space saw several key suppliers get impacted by rising import costs.

"Rather than panic or pivot prematurely, we leaned on the plan already in place: they had liquidity in reserve and a business line of credit available," he says. "Because we had already aligned their financial plan with operational flexibility, they’ve been able to manage short-term pricing pressures without making decisions that could harm long-term business value."

Patrick Mundlin, market vice president at 49 Financial, says one of his clients has also been seeing rising costs due to tariff-driven volatility in the goods they have to import.

"While they focused on operational decisions, we worked behind the scenes to ensure their personal and business financial plans stayed in sync. That meant reviewing cash flow assumptions, pressure-testing cash reserves, and making sure their household and long-term goals were insulated against near-term uncertainty," he says.

Similarly, Jensen says he has been running various discounted cash flow models and scenarios to account for reduced revenue coming from his client's companies during the year.

"The current environment necessitates acute planning and focus, as well as control of liquidity where possible," he says. "We are having more conversations with our client’s entire team, including tax and estate professionals."

Glassman says her team at NewEdge has been "[helping] clients think through alternate supply chains and delivery routes" to blunt any additional costs from tariffs. Similarly, Jensen says most of his client base "have taken steps to diversify where products are manufactured, but this is a long process." 

Despite the prevailing angst among business owners over what Democratic Senator Elizabeth Warren has described as "red light, green light" tariffs, Bowers remains positive, maintaining that solid financial planning, access to liquidity, and having a contingency mindset can make disruptions – including tariffs – manageable for the most part. 

"Overthinking the unknown can often cause more harm than the uncertainty itself, which is why ongoing planning and the role of a financial planner is so critical," he says.

For some of Kovacs' clients at Perigon Wealth Management, the tariffs have also been a blessing in disguise as it opened the door for them to revisit certain aspects of their business.

"I have seen business owners leverage this situation as an opportunity to refocus operations by streamlining costs and renegotiating contracts to better weather rising costs related to tariffs," Kovacs says.