Tariffs aren’t just a headline—they’re a real cost hitting small business owners across the country. Whether you’re running an auto repair shop, importing goods, or simply relying on parts and supplies that come from overseas, rising tariffs can disrupt your pricing, your margins, and your strategy.
So let’s talk about what tariffs actually are, what they mean for your business, and how to prepare for the ripple effects before they show up on your P&L.
In plain terms, a tariff is a tax on imported goods. When you import something—whether it’s a brake pad, a water pump, or a carton of packaging material—you pay a tax to bring it into the U.S. That cost gets baked into what you pay your supplier, and it eventually ends up in what your customers are paying you.
These aren't new, but the scale and speed of recent tariff changes are. We’ve seen rates jump from 3% to 80% on some items. That’s not a minor adjustment—that’s a margin killer if you’re not prepared.
Here’s where things get real. When your cost on a part jumps 20, 30, even 50%, you have three choices:
Eat the cost and let your margins suffer.
Pass the cost to your customer, risking price sensitivity or loss of sales.
Find a new supplier, possibly domestic—but likely at a higher base cost.
If you’re in the auto repair industry, you might not have the luxury of switching suppliers. A European car needs a European part. Period.
If you haven’t already implemented a parts pricing matrix, it’s time.
A good matrix lets you automatically adjust your pricing based on your cost—so if a part goes from $100 to $150 because of a tariff, the markup percentage flexes with it. You're not guessing or manually changing prices. You're staying consistent, profitable, and responsive.
And here's the kicker: In some cases, tariffs can actually increase your gross profit dollars—because your markup is based on a higher cost. But only if you're tracking and pricing strategically.
🔧 Example:
A $100 alternator imported from Germany now has a 50% tariff. Your cost jumps to $150 overnight. If your markup doesn’t adjust, you just lost margin—and maybe your profit. A smart parts matrix helps avoid that.
🔎Related article: How to Price Parts
Yes, tariffs are disruptive. But this isn’t the time to overreact or overhaul your entire pricing structure overnight. Most shops can’t survive a 50% across-the-board price hike, even if it feels justified.
Review your most-used parts. Where do they come from? What are the tariff rates?
Adjust your pricing matrix only where needed.
Monitor local competitors, but don’t race to the bottom. If they’re eating the cost to undercut you, that’s not a long-term play.
Segment your pricing if your software allows it. Some POS systems (like Tekmetric) let you build different pricing matrices for different parts or categories.
If tariffs push new car prices even higher, that’s good news for your shop. When buying new becomes unaffordable, people fix what they’ve got—and that means more repair orders, not fewer. But to make the most of that, your pricing strategy has to keep up with rising parts costs.
That’s the upside—if you're ready for it.
🔎Related article: Bulletproof Your Business—How to Thrive in a Recession
Not sure where to start? Here’s what I’d recommend:
Key Takeaways
How do tariffs affect auto repair shops?
Tariffs increase the cost of imported parts—especially those from Europe and Asia. That means your parts cost more, and your margins can shrink unless you adjust your pricing strategy.
Can I avoid tariffs by switching suppliers?
Sometimes, but not always. Many OEM parts and specialty components are only available from certain countries. When alternatives aren’t available, adjusting your pricing matrix is your best bet.
What’s a parts pricing matrix, and how does it help?
A parts pricing matrix lets you set automatic markups based on cost. If a part that used to cost $100 now costs $150 due to tariffs, the matrix ensures your markup adjusts accordingly—so your profit margin stays healthy.
Should I raise all my prices at once to account for tariffs?
No. Making drastic price changes can scare off customers. Instead, analyze your most-used parts, look at where they come from, and make incremental adjustments. Stay competitive without sacrificing margin.
Can tariffs actually be a good thing for my shop?
Surprisingly, yes. Tariffs may drive up new car prices, leading more people to keep and repair older vehicles. That means more business for repair shops—if you’re priced right and staying proactive.
Want more practical strategies for running a more profitable shop?
Explore our resource center for tools, tips, videos, and articles that help auto repair shop owners stay financially strong—even when the economy throws a curveball.
Schedule a discovery call to find out if Kaizen CPAs is a good fit for your business.
Like to WATCH content? Eric talks about how tariffs impact small businesses and what you can do to protect your margins.
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