With much attention on tariffs in the current environment, it occurred to us recently that not everyone who is dealing with tariffs – or talking about them – has a full depth of knowledge on what they are or how they impact the world around them.
But we know someone who does. Which is why we asked Dan Krouse to be our guest on Cargo Café with Libby Hausman and Kelli Adkins.
[Link here to see the full interview.]
Dan knows this topic as well as anyone, having capped off a 35-year career at Hallmark working in global logistics and operations. After leaving Hallmark, he founded Supply Chain Analytics, where he advises manufacturers and mid-market companies on supply chain resilience and international trade risk.
So it made sense to us to start with the basics.
What are tariffs?
“Tariffs are taxes imposed on imported products as a percentage of value, used to generate revenue or protect domestic manufacturing – and oftentimes used for trade leverage,” Dan said. “Our administration currently seems to be more of the latter than the rest of it, and it feels to me like it’s geopolitical more than anything else in terms of how our current administration sees it.”
Dan helps his clients plan for the impacts of tariffs. He helps by examining how tariffs produce margin pressure and impact inventory position – and then gives his clients insight on whether they’re going to simply absorb the cost of the tariffs or pass it on to others in the process. At the same time, he works with his clients to determine if the use of Free Trade Zones or bonded warehouses can help to avoid tariffs.
The tariff policies during the second Trump presidency, Dan said, have presented more uncertainty than those imposed during the first.
“In previous years, it was more predictable and stable,” Dan said. “It was not really a C-Suite issue.”
But today’s tariff polices come with considerably more questions.
For example, the recent tariff refunds mandated by the Supreme Court were not as clear-cut as some companies might have thought. Sometimes applying for the refund brings unintended consequences.
“Before you hit the submit button, you really need to do a thorough audit to be sure you’re not causing yourself a problem,” Dan said. “I know of one instance – fortunately it was not one of my clients – where they thought they were getting a $100,000 refund and they got a $200,000 bill, because there was a misclassification on the front end.”
There can also be tax implications associated with the refunds, which Dan said many companies don’t realize until it’s too late.
Tariffs present hidden costs in the form of freight getting hung up, or the charges and complications involved with the use of Free Trade Zones and bonded warehouses – or inventory positions an importer would otherwise not take to avoid higher tariff charges.
The current tariff environment, Dan said, calls for importers to plan for different scenarios – because things can change quickly.
“I always start with planning your position at the front end of the scenario, and then work with the leadership to say, ‘OK, what’s going to make you go from Scenario A to Scenario B to Scenario C,’” Dan said. “And if you can get everybody to agree to those events that may happen, they sleep better at night.”
Sometimes changes in tariff policy create opportunities. Kelli pointed out during the interview that Bestway had recently helped a client take advantage of a short window of several days in which the client could save considerable money by manifesting shipments within that window.
With so much uncertainty in the tariff environment, Dan enjoys helping the kinds of companies that would otherwise have no one to turn to.
“Small to mid-market can’t afford to go to Big Four accounting firms,” he said.
Tariffs are a complicated and ever-changing issue, but it’s fortunate the industry has a professional like Dan Krouse who is available to help. We’re very glad he joined us on Cargo Café.
To contact Dan, email daniel.krouse35@gmail.com or call 816.810.8563.
His website is https://supplychainalytics.ai/.
