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How Tariffs Between Canada and the U.S. Could Impact Your Salon, Spa, or Barbershop
41 Plays1 month ago
What Are These Tariffs and How Do They Work?
A tariff is a tax placed on imported goods by a country’s government. The goal? To encourage domestic production by making foreign products more expensive. The U.S. is planning a sweeping 25% tariff on Canadian goods, meaning that anything from Canada heading south will be more expensive for American buyers. In response, Canada may impose retaliatory tariffs on American products entering Canada.
For the beauty industry, this could mean higher costs on products moving across the border. Whether you’re importing American-made products or exporting Canadian-made ones, these tariffs could impact your bottom line.
Tariffs can shake up pricing and supply chains, but they don’t have to derail your business. With smart planning, flexibility, and strong supplier relationships, you can keep costs under control and maintain a strong service offering.
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Transcript
Introduction to Tariffs Discussion
00:00:00
Speaker
There is a lot of talk about tariffs between America and Canada so today we're here to unravel some of the mysteries as to how that can affect your salon spa or barbershop. My name is Greg Robbins and welcome to another episode of the Business of Style brought to you by the beauty council.
00:00:24
Speaker
Okie dokie, let's just jump right into this and cover off a few basic topics around these tariffs and and what we
Understanding Tariffs: What, Why, and How
00:00:32
Speaker
can expect. So I'm going to break this down into three parts. ah The first is just what are these tariffs and specifically these ones? What what is coming down the pipe that we've been reading in the news?
00:00:42
Speaker
And what could we what are they and how do they work? And the second piece is how might this affect you? So I'll be looking and exploring at some ways in which this could ah change the way that you will need to do business ah based on what it's going to do to your bottom line and and your input.
00:00:59
Speaker
And the third piece is, what can you do to prepare? So we'll just cover off some ideas of things you can start doing now in preparation for these tariffs. Okay, so first, what is a tariff anyways? Tariff is something that a country imposes on the import of another product from another country. So I'll give you an example. If you are a manufacturer in Vancouver and you make shampoo, all right, there's a couple of companies that do that here.
00:01:26
Speaker
and you ship your products to America, the American government will be charging an extra 25% at the border when that product goes across. The idea is that people in America are more likely to purchase products not imported from another country because they're not subject to that extra 25%, which is coming up. Idea as well is to foster jobs in the economy within that that country. There have always been tariffs. This is nothing new. Countries have had tariffs for years. It's just a way of protecting their own economy. We have tariffs. America has tariffs. They're usually small. They're usually in around 3% or 5%, something small, and they're typically on very specific products as those countries try and protect those industries.
00:02:13
Speaker
So they're nothing new. It's just that this is going to be a sweeping 25% across the board charge on everything that leaves Canada and goes to America. That's what a tariff is. And typically that is captured at the border as it crosses.
Effects of Tariffs on Business Operations
00:02:31
Speaker
So let's say a bottle of shampoo is $10 as it crosses the border towards a wholesaler in America.
00:02:37
Speaker
It gets charged 25%, so that's $2.50, that's taken by the US government, and then it heads on over to the distributor. Now, who pays that 25%? The payment is made by the importer, so the person who brings the product into America will pay that. So, there's a couple of things that can happen. Either the people who import it just pay it and then pass it on to the consumers,
00:03:01
Speaker
and of course that means a more expensive product, or they come back to the manufacturer in Canada and say, hey, this is costing us more, you need to give us a better price. We need to get it for $9 or $8.50, or we're not buying any anymore. So this is how the tariff works on both sides. It gets collected as it crosses the border.
00:03:21
Speaker
Now, originally, these tariffs were supposed to go into effect in the beginning of February. There was obviously a lot of negotiation between the two governments in Canada and America, and as a result, it's pushed now till the beginning of March, but still.
00:03:34
Speaker
The plan is for them to be brought into effect, they're just paused, that's it. So we can expect this to happen. All right, so next, how might this affect you? Let's just talk a little bit about that. What has happened, of course, is that the Canadian government retaliates or matches those tariffs back to America.
00:03:53
Speaker
And that's sort of a tit for tat thing. So what we're going to see now is the Canadian government saying, okay, fine. If you're charging us or you're imposing these tariffs as we take items from Canada into the States or those are imported, then we're going to do the same for things coming from America into Canada. So any products, well, not any products, but a specified number of products will be subject to additional charges as they cross the border from America.
00:04:21
Speaker
into Canada. And so what will that mean for you? It means that anything that you're currently buying from America may cost more if these retaliatory tariffs come into effect. So let's say you are purchasing an American made product, you are using it in your salon or spa, or you're retailing it, you may find those prices will jump once the retaliatory tariffs are put into place.
00:04:44
Speaker
Now if the tariffs are matched and that's 25% that could add up to a lot. So let's say a distributor is bringing a brand in from let's say California and it's a $10 bottle of shampoo let's say and it comes into the warehouse and the Canadian distributor has to pay 25% on that particular import.
00:05:05
Speaker
They're going to pass that along in part to you, the purchaser, making it more expensive for you. And then as you mark that up to your retail level or whatever it is you're going to do with it, whether you're using it in the back, you will see your cost of goods go up. So that's how that pricing is is going to affect you or could affect you. The other way it might affect you is if you're currently using a Canadian made product and that Canadian made product is having to who sell to their American distributor for less,
00:05:35
Speaker
they may choose or be forced to charge their Canadian customers more because they have to make up for that shortfall. So even if you're already purchasing a Canadian product, you may see that price go up even if you are here in Canada. It's one of those things where if there are additional costs, a manufacturer or an organization or a company, rather than lay people off or downsize their operation, they're going to have to raise prices across the board no matter where they're selling their products.
Strategies for Business Resilience
00:06:04
Speaker
Now, it's good to be aware that none of this is gonna happen overnight. If tariffs are introduced, let's say March 1st, then there's always going to be inventory inside of warehouses all over the place that have been bought before the tariff costs. So we're going to see prices typically begin to rise over time after the tariffs come into effect to three months, even longer depending on the inventory that the distributor has and the deals that are made and the amount of time that people are willing to hold back on price increases So you're not going to see this happen overnight So you have some time to prepare and the time to prepare is now so let's talk about what you need to think about doing
00:06:50
Speaker
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00:07:10
Speaker
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00:07:27
Speaker
All right, so let's get into some of the ways that you can not only protect yourself, but also just build more resilience for your business overall. Because you know this is a good opportunity for you to rejig the way you run your operation, whether you are a solo renter, an independent contractor, a mobile stylist or esthetician makeup artist, or you operate a large operation. This is one of the opportunities you can use to Re-jig and reconfigure your operation to be more resilient in the future. Like I always say, a crisis is a terrible thing to waste. So, considering we're in a crisis, let's not waste it and let's find ways to make ourselves better. So first, protecting your salon or spa.
00:08:12
Speaker
review your supply chain and sources. So find and identify which products are subject to tariffs. The easiest way to do that is to look at the back of the bottle and try and figure out whether it's made in America or is shipped from America. If you're not sure you could always check with your distributor. um We are going to be releasing a list of products that are not sourced from America, so just a resource for you. But the best thing to do ultimately is reach out to your distributor or look online to try and figure out where the brands come from that you're currently using. And then look for domestic or alternative international suppliers in countries not affected by these tariffs. So that would be
00:08:55
Speaker
Europe, the EU, Korea, um Australia, even South America. So anything outside of the United States will not be subject to these retaliatory tariffs. So there are lots of great options, especially domestically. There are so many great options in Canada. It's a good opportunity for you to find out more about Canadian brands and products.
00:09:18
Speaker
and see if they're fit for you and explore opportunities to buy in bulk before these tariffs go into effect or lock in current pricing with suppliers if you can or if they're willing to. So if you do use let's say American made products which you feel that you cannot live without or work without then by all means see if you can stock up at this point or lock in pricing.
00:09:43
Speaker
Number two, just diversify your product portfolio. So just reduce your reliance on any single supplier or any single country. If you're doing business with one distributor, maybe take a look at a few others. Find out what else is out there. Take a look and see what other opportunities there are with other products that could supplement or diversify the the lineup that you carry. And offer your clients a mix of domestic and imported products. you know If tariffs spike for one, you still have alternatives. So if you do have a product and suddenly it goes up 10, 15, 20, 30%, you can offer your clients an alternative. People like choice, they love choice, and very often they will buy based on price and take your word for it. And ah if they if if the results are good, they're gonna stick with it.
00:10:29
Speaker
Number three, negotiate with your vendors. So just discuss any new contract terms or bulk discounts to offset the increased costs. Again, depends how much you buy and how good of a customer you are and the type of relationship you've had. But why not? Just see what you can do. See if you can buy in advance or commit to certain purchases down the road or or just take a look at what you've been paying up till now and see what you can get.
00:10:55
Speaker
and then collaborate with those distributors who can navigate your customs and regulatory changes. So again, maybe your distributor has some ideas and has some strategies for you to buy in a certain cadence or a certain time and can help you save money. They're there to help, reach out to them.
Managing Cost Increases: To Absorb or Pass On?
00:11:13
Speaker
Number four, adjust your pricing strategy. So you you will need to decide if these tariffs come into place whether to absorb some or all of the increased costs or pass it on to your clients. So you're gonna have a choice to make. And if your brands and products and your cost of goods sold is going up at some point,
00:11:32
Speaker
You're going to have to sit down and ask yourself, is my client willing to take on a price increase? Yes or no? And what will that price increase be and how am I going to implement it? Again, a good worthy conversation to have with yourself, with your team or anybody else around you that can give you a good idea of whether or not you should do that sooner or later.
00:11:55
Speaker
and communicate in clear terms any pricing changes to consumers or your clients and emphasize obviously the quality and value. So don't just say, oh it's going up 25% and on the benefit of the product and how it works and how the size is the same and that way you won't be focused on the pricing.
00:12:14
Speaker
Number five is just you know monitor legislation on all these policy changes. I know that you know watching some of the news can be a little ah bit of a downer, I'd say, but also it's just good to be informed. Over the beauty council, we will keep everybody informed about proposed tariffs and the actual changes in the import duties. We will match those with the products that are coming in and of course any retaliatory as well. We don't know or can't say what those pricing increases will be, but it's good to know who may be affected and what's going on in the world.
00:12:43
Speaker
So stick with us if you don't want to sit and watch all the news and just know what's good for you and for your industry, for your for your company. um And then optimize your inventory management. And I know that sounds kind of you know fancy, but really just try and anticipate fluctuations in your product costs and availability. So if you think or feel that some of your products are going to become more expensive and you may need more of them in the future, I can think of one for example like sunscreen in the summer let's say, then
00:13:17
Speaker
you would consider purchasing that now or earlier or sooner before you feel it's going to go up. So again, just optimize that inventory. You may be able to reduce some things and boost up some others. So like I would say, get it while it's on sale, right?
00:13:32
Speaker
and maintain a buffer stock of any of your high turnover items that may be hit by tariffs. So that way you won't suddenly open the drawers and say, oh, we need a bunch of this stuff and we need it today because we use a lot of it and suddenly find out that it's very expensive. And then you're kind of behind because you've already booked your clients and set your pricing up. You'll have to absorb those price increases until you can change your pricing. So again, just buffer up those high turnover items.
00:14:03
Speaker
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00:14:22
Speaker
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00:14:52
Speaker
Number seven is just communicate with your clients proactively. It's good to start now. People are wondering, everybody's kind of concerned about these
Communicating with Clients About Tariffs
00:15:00
Speaker
tariffs. It is totally the talk of the town and everyone's wondering what and how it's going to affect them. So explain if and why prices might change. might change Something like, you know, due to these new tariffs, some of our products may be more expensive to source and I can only absorb that increase for so long.
00:15:19
Speaker
your clients will understand they're going to get used to this all over the place and you know what they might buy some product early they might pick up an extra one or two or book a service a little sooner than later you know your transparency can help maintain your trust and loyalty for sure um Again, just explore that domestic brands and local sourcing, supporting locally made products can help you avoid tariff related price hikes. I mean, I did explain a little bit earlier that even a Canadian brand could see a little bit of a price increase because they would just incur more costs and have to kind of spread it around. But still, you won't be paying that straight 25% as stuff comes across the border.
00:16:01
Speaker
And the second piece is just you know market you try local sourcing efforts as a benefit, like eco-friendly or supporting local businesses and and market those out. tell Tell your clients and even your team that that's what you're doing. That's the focus. You're taking this opportunity to become a local shopper, to support Canadian businesses and to become more eco-friendly or any other aspect of your clients that you think they're looking for. It's a great opportunity for you to kind of reorganize or reorient your business into something more, let's say, palatable to the kind of people you want to get. So I hope these tips have been helpful for you. I would like to end on one piece that I haven't really talked about, and that is how will your clients be affected? So that's going to be in two different ways, and we're going to start seeing this in what's called this consumer sentiment. That's what the economists call it.
00:16:56
Speaker
ah Essentially, it's sort of the mood that your shopper is in or your client is in, I should say. um yeah what What are they thinking of? What keeps them up at night? Are they worried? So there could be some people that work in certain sectors or certain industries that could be very, very much impacted by these tariffs. I'm thinking specifically things like forestry. So if you have people as clients who who or or their spouse or their family is in forestry,
00:17:22
Speaker
They may find themselves a little short on cash or a little worried about their future because many, many forestry products are exported down to the states. Anybody who is in tourism, they meet there may be sort of a lack of tourism and in either direction, especially sending people down to America to shop. Our dollar is changing.
00:17:41
Speaker
um There's also anybody who is remotely connected to doing business in America may find that they can ship a product down there and would have to spend more and then they may take something like a pay cut or just be a little worried about their future. So again, if you understand your client and get a sense of how these tariffs may affect them, whether it's kind of psychological or just straight up on their paycheck, it's worth being sensitive to those individuals and either accommodating them, being transparent and communicative with them,
00:18:10
Speaker
and just knowing that you know, they may spread out their appointments or and maybe not buy so much retail or Just not go for those luxury services as much as they have in the past It's really important just to remember how your clients feel of course as you always do but especially in this environment as a little bit of that fear index plays into play so connect with your clients Be transparent with them and work with them for maximum success. I hope this episode has been helpful to you. It's a complex issue. I tried to keep it simple because tariffs are fairly straightforward. Basically a cost when products go across a border incurred by the people who import it and nothing's for free in life so someone's got to pay for
Conclusion: Navigating Tariff Challenges Successfully
00:18:53
Speaker
it.
00:18:53
Speaker
and that's why everybody's talking about it. With enough preparation, enough adjustments, and enough communication, and enough teamwork, you can be very successful, even despite these tariffs upsetting the Apple cart. So stay tuned, and until next time, stay strong, stay collected, and if you need anything as a member, please reach out.