Toshiba’s Approach to Tariffs and Global Trade
Tariffs have always played a role in international commerce. In the United States, they were once the primary source of federal revenue until the early 1900s. For decades, businesses viewed tariffs as a routine cost—something to factor into pricing and planning.
Today, however, tariffs and global trade dynamics are evolving fast. Companies are now under pressure to respond quickly and strategically to frequent changes. A product that once cost $100 to deliver may now cost $500—not due to logistics, but because of tariff adjustments based on product value.
In this new environment, agility is essential.
What is a tariff?
A tariff is a tax imposed on imported goods. In the U.S., it’s applied to protect domestic industries and promote fair trade. U.S. Customs uses thousands of classification codes to assign tariff rates, which can vary depending on a product’s category and its relevance to national interests.
Why does the U.S. use tariffs?
There are three primary reasons:
National security and safety
Protection against unfair trade practices (e.g., subsidies, dumping, or IP theft)
Trade negotiation leverage
For instance, U.S. tariffs on imported steel aim to protect domestic production vital for defense and infrastructure. In other cases, tariffs are used as leverage in response to foreign tariffs on American exports.
Who pays for tariffs?
It depends on market conditions:
If multiple sources are available, foreign manufacturers may absorb the cost to stay competitive.
If alternatives are limited (e.g., rare earth metals), consumers often bear the cost.
The supply chain’s flexibility plays a significant role in determining who ultimately pays.
How businesses adapt to tariff changes
At a recent global supply chain conference, nearly every speaker, including myself, emphasized the same theme: adaptability.
Companies are moving away from rigid sourcing strategies and embracing flexibility and resilience. One major trend is market-based sourcing—also called nearshoring or friendshoring—which reduces exposure to unpredictable tariffs.
Tesla is a great example. The most American-made car is a Tesla, largely because its components are sourced and manufactured within the U.S. Similarly, its overseas factories source parts locally to minimize tariff impact.
This strategy also supports sustainability, with fewer emissions from international shipping.
Tariffs vs. trade barriers
While tariffs are financial tools, trade barriers are regulatory restrictions that limit trade. Examples include:
Import bans (e.g., the U.S. ban on goods from China’s Uyghur region)
Mandatory technology transfers
Non-tariff regulations (e.g., excessive documentation requirements)
Understanding the difference is key to developing an effective global trade strategy.
How Toshiba responds to tariff changes
At Toshiba, we’ve taken proactive steps to reduce the impact of tariff shifts on our customers and partners. Our global footprint allows us to leverage Country of Origin (COO) designation to minimize tariff exposure. Many of our U.S. products are manufactured in Malaysia, avoiding high-tariff regions.
When tariffs are announced with short notice (e.g., under six months), we react by:
Bulk purchasing in advance
Expediting shipments
Accepting temporary shortages to adjust sourcing
We balance these moves with long-term strategies and internal financial planning. Tariffs are one consideration among many. We also factor in:
The carbon footprint of manufacturing locations and suppliers
The environmental impact of logistics from port to warehouse
Our sustainability goals, aligning with Toshiba’s corporate values
By evaluating both economic and environmental implications, we ensure responsible decision-making.
A final word: navigating the winds of change
As the saying goes: “We cannot change the wind, but we can adjust our sails.”
At Toshiba, we constantly adjust our approach to navigate the challenges of tariffs and global trade. Through transparency, flexibility, and a firm commitment to our values, we aim to serve our customers and partners with excellence—no matter how the global trade winds shift.
