Key Takeaways
- Tariffs Are a Business Reality, Not Just a Policy Debate: With steep increases on multiple goods, tariffs are directly affecting material costs, supply chains, and pricing strategies for Chattanooga’s middle-market businesses.
- Businesses Need a Proactive Strategy: From supply chain restructuring to margin modeling and financial reporting, companies need to plan ahead.
- Local Businesses Must Adapt, Not Wait: While uncertainty persists, businesses can regain control by rethinking sourcing, strengthening vendor partnerships, and working with advisors to mitigate risks and preserve growth strategies.
Why This Conversation Matters Now
If you’re leading a middle-market business in Chattanooga, you’ve likely felt the ripple effects of rising tariffs, whether it shows up in higher material costs, longer lead times, or tougher conversations with customers and suppliers. Tariffs aren’t just a headline out of Washington, D.C.; they are reshaping supply chains, compressing margins, and complicating financial reporting for companies across Tennessee.
Recent changes have only heightened the stakes:
- A 10% minimum tariff across the board, with some countries facing rates up to 50%, has created a layer of uncertainty that businesses must plan around.
- Steel and aluminum tariffs have doubled to 50%, now covering everything from building materials to common household products.
- Copper imports face a 50% tariff, hitting manufacturers who rely on wiring, electronics, and industrial components.
- Automobiles and parts carry 25% tariffs, which affects both manufacturers and distributors tied into global supply chains.
These changes are forcing companies of all sizes, especially middle-market firms without endless reserves, to rethink how they buy, build, and report.
What We’re Hearing from Washington
Lawmakers are starting to push back. A proposed Trade Review Act would require Congress to sign off on tariffs lasting longer than 60 days, a move backed by both parties and business groups. Abroad, countries like Brazil have rolled out their own relief packages to soften the blow of U.S. tariffs on their exporters.
But even if the policy shifts, the reality for Chattanooga businesses is clear: tariffs are here for the foreseeable future, and planning for them is no longer optional.
Practical Impacts on Chattanooga’s Middle Market
Here’s where we see companies getting squeezed and what to keep in mind:
1. Supply Chains Under Stress
- Pull forward supply where possible to avoid sudden increases from tariffs that have not yet taken effect or have been paused.
- Explore alternate suppliers in lower-tariff countries, but watch for hidden costs like quality issues and shipping delays.
- Consider reshoring or nearshoring if it strengthens long-term resilience.
2. Margins and Pricing
- Know the margins on every product line and model how tariffs affect them.
- Have frank conversations about what can and can’t be passed on to customers.
- Look at vendor partnerships or contract renegotiations to share the burden.
3. Financial Reporting and Audits
- Tariffs complicate revenue recognition, impairment testing, and disclosures.
- Business owners and audit committees should expect more frequent updates and scenario planning around tariff impacts.
- Tracking tools, including AI-driven reporting, are becoming essential to keep up with changing rates and reporting requirements.
4. M&A and Growth Strategy
- Buyers and sellers must factor tariff risks into valuations.
- Due diligence should go beyond financials to include supplier diversification and inventory risk.
- Some firms are already using tariffs as a trigger for reshoring, acquisitions, or technology investments to stay competitive.
What This Means for Our Clients
LBMC Chattanooga has worked alongside clients through multiple waves of tariff changes, and one thing is consistent: the companies that get ahead of the disruption, not just react to it, are the ones that find opportunity in the uncertainty.
For Chattanooga’s middle-market leaders, the path forward isn’t about waiting for Washington to settle on a policy. It’s about building flexibility into your supply chain, sharpening your financial reporting, and leaning on tax and advisory strategies that help offset new costs.
What steps are you taking to protect your margins and supply chain in the face of rising tariffs?
LBMC Chattanooga’s advisory team specializes in helping middle-market businesses navigate tax strategy, supply chain challenges, and financial planning in uncertain environments. From tariff modeling to sourcing strategies, we help companies turn disruption into smart decision-making.
The Bottom Line
Tariffs may be decided in D.C., but their impact is felt right here in Tennessee. If you’re asking:
- Can I protect margins without losing customers?
- Should I rethink my supply chain footprint?
- How do I account for tariffs in my financials with confidence?
Those are the right questions. And now is the right time to act.
LBMC’s Chattanooga team, backed by our national expertise, helps businesses navigate these complexities every day. Whether it’s audit, tax planning, or operational strategy, our goal is the same: help you stay resilient, competitive, and confident, no matter how the tariff winds shift.
Content provided by LBMC Chattanooga experts Steve Thomason and Brent Jolly. Contact them at steve.thomason@lbmc.com and brent.jolly@lbmc.com.