Tariff Therapy: Practical Strategies to Reduce Costs and Optimize the Supply Chain

Tariffs have a way of showing up at the worst possible moment. One quarter your margins look solid, the next you’re fielding urgent questions from investors, customers, or the board about rising costs and delayed shipments. The instinct is often to react quickly—switch suppliers, redesign products, or rush production decisions—but that reaction can be far more expensive than the tariff itself.

A more effective response is what manufacturing leaders are calling “tariff therapy.” It’s not about ignoring tariffs or pretending they don’t matter. It’s about slowing down, understanding where costs truly live, and making disciplined supply chain decisions that reduce exposure without creating new risks.

These strategies were shared by Addison Merchut, Co-President and Co-Founder of Hatch, whose work sits at the intersection of product design, manufacturing, and vendor strategy. Drawing from years of hands-on experience, Addison outlined practical ways companies can protect margins and build more resilient supply chains—especially in unpredictable trade environments.

“Tariffs aren’t something you panic over. They’re something you prepare for—by understanding where cost actually lives.”

A practical approach to tariffs—without panic

At the center of tariff therapy is a simple truth: tariffs tax cost, not headlines. That means the most productive place to start isn’t policy headlines or worst-case scenarios—it’s the bill of materials. When product cost comes down, tariff dollars come down with it. Looking closely at a typical hardware BOM—processors, memory, electronics, mechanical parts, packaging—quickly reveals how many decisions quietly inflate cost long before a product ever crosses a border.

One of the most counterintuitive strategies is buying ahead, selectively. Certain components drop dramatically in price at higher volumes. In some cases, purchasing more than immediate production needs—while storing inventory with a vendor and pulling it into builds as sales materialize—can unlock better pricing without committing to full-scale production. When vendor relationships are strong, payment terms can often be structured to reduce cash strain, lowering unit cost and tariff exposure at the same time.

Addison mentioned: “If you lower your product cost, you lower your tariff cost. It’s that simple—and that gets overlooked.”

Another powerful lever is simplification. Early products often carry features added to satisfy future roadmaps or stakeholder expectations. Over time, real-world usage shows which features actually matter. Oversized memory, unused chips, or “someday” capabilities that never shipped all add cost without adding value. Removing them simplifies sourcing, reduces risk, and lowers recurring costs that compound across every unit produced.

Where vendor relationships make the biggest difference

Vendor relationships are one of the most underutilized tools in managing tariff exposure. Suppliers are not just transactional counterparts—they are partners navigating the same economic pressures. Many maintain networks across multiple countries, allowing components to be sourced in one region, assembled in another, and imported through pathways with lower exposure.

Pricing flexibility often lives here as well. Vendors regularly quote pricing tiers based on volume, and while companies may not be ready to commit to higher quantities, it can still be worth asking whether future pricing can apply earlier. In today’s manufacturing environment, vendors are balancing utilization, forecasting, and long-term relationships—and flexibility is sometimes available where it wasn’t before.

“The best cost reductions usually don’t come from switching vendors—they come from working better with the ones you already have.”

Design itself is another source of hidden savings. Manufacturing partners often see inefficiencies that engineering teams can’t catch alone: unnecessary tolerances, overly complex geometries, excess fasteners, or assembly steps that drive labor cost. Small design changes—repeated across thousands of units—can materially reduce cost over time. Standardizing parts, especially fasteners, is one of the fastest and least disruptive ways to simplify a BOM and improve purchasing power.

Cosmetics and packaging are another area where cost quietly escalates. Premium finishes and elaborate packaging often introduce additional vendors, additional handling, and additional markup. Unless the brand experience demands it, simplifying these elements can remove entire steps from the supply chain without affecting customer adoption.

For some products, shifting final assembly closer to customers can also reduce tariff exposure tied to finished goods. While domestic labor costs may be higher, those increases are often offset by tariff savings, improved quality control, and faster iteration cycles. As volume grows, this approach can create long-term stability rather than short-term savings alone.

Automation enters the conversation later, but it matters. At sufficient scale, automation can compete with low-cost labor—and tariffs only strengthen the business case. Planning for automation early ensures that when volume arrives, cost doesn’t spiral alongside it.

Beyond cost, tariff therapy also means understanding risk. Importing terms, importer-of-record responsibility, and documentation matter. When vendors offer to “handle importing,” it’s critical to maintain visibility. Even trusted suppliers often outsource logistics, and errors can lead to delays, audits, or compliance issues that cost far more than the tariff itself.

Finally, expertise matters. Tariffs vary widely by material, industry, and classification. Product categorization and documentation can significantly affect cost and timing, making import and logistics specialists a strategic investment rather than an administrative one.

The point of tariff therapy isn’t to eliminate exposure entirely. Tariffs change. Markets shift. The real goal is to build a supply chain that can absorb disruption without panic. By understanding the bill of materials, simplifying product decisions, strengthening vendor relationships, and designing for manufacturing and scale, companies can protect margins and move forward with confidence—even when the trade landscape shifts.

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