What is your Business System Strategy for Accounting for Tariffs?

Posted on: September 20, 2019 | By: Andy Vitullo | QAD Financials

The current US  trade climate in 2019 involves the use of tariffs to apply economic pressures on United States trading partners. The overall strategy is intended to create an outcome more favorable to US businesses and the greater US economy. If you are a US business with operations in China, these tariffs are having an immediate impact on the price of inbound material, as well as, creating downward pressure on contribution margin. Your business should have a defined strategy for dealing with these issues.

QAD Enterprise Applications can assist your business in accounting for these tariff conditions. For purchased material, tariff costs can be identified to an item or part that is sourced with tariffs. Components of costs or the cost profile can identify the specific tariff cost in a separate cost category. This gives the business analyst team visibilty to material costs versus other procurement costs of the item.  The other procurement costs will include freight, warehousing and tariff costs.

Pricing tables for these items can have both non-tariff and tariff prices components. Building price tables with this approach will provide flexibility as tariffs are increased or decreased by the politicians. QAD’s best pricing tool will enable a combinable price list for customers that will identify the incremental price related to tariffs.

Enabling your ERP to classify and segragate the tariff costs can provide flexibilty and visibilty.  The business can then determine when or if to pass on those incremental costs to their customers.



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