Tariff Turbulence: Is Expanding to the US Worth it?

Over the past four months, ongoing tariff uncertainty has driven global markets into flux. Weekly, daily and sometimes hourly changes to regulations have led to the economy’s least favorite sentiment: uncertainty.

At the center of this global disruption is a single market — the United States (US).

Yet, despite continued instability, the US remains the world’s strongest economy. With nearly 340 million consumers, who spend over $19 trillion a year, it remains a critical market for many businesses to expand into¹.

But with ongoing tariff uncertainty — including tariffs imposed by and on the US — businesses still view the US as a beneficial market to enter. So what makes it worth it?

Let’s take a look.

Where tariffs stand

On 2 April 2025, the US government announced a new round of tariffs that impacted nearly every country in the world. With each country receiving a custom tariff rate, world leaders were left reeling at the scale of the policy and its potential impact. And in the days and weeks that followed the initial press conference, global markets have struggled to find their footing.

Today, even as most countries (besides China) face a 10% base rate tariff and enjoy a 90-day pause on additional tariffs, uncertainty has left both businesses and consumers unsure of their best next move².

Has scalability stalled in the US?

In an uncertain market, founders and investors tend to play things safe — they prioritise a healthy profit margin, double down on their budget and make conservative decisions. For many businesses, that means steering clear of unknowns or costly new initiatives.

Still, the US can offer unparalleled opportunities for some — whether it’s access to the world’s biggest investors, millions of new consumers or unprecedented reach.

Due to US-sanctioned tariffs and reverse tariffs on the US, however, expanding into the market is now more expensive than it was six months ago. If you have an entity in the US and import goods from Portugal, a 10% import tariff means your goods are 10% more expensive to bring to the US. This, in turn, eats into your profit margin and makes it more difficult to turn a profit.

The threat of higher tariffs is omnipresent for countries globally. And for many businesses, one question is most pressing: is expanding to the US worth it right now? Especially if it requires a reworking of your supply chain or vendors?

Even if your business deals in services, these tariffs could impact you in innumerable ways. For one, operational costs are likely to increase. If you’re a SaaS provider that relies on cloud companies fitted with foreign-made hardware, it’s likely that you will have to pay more for these services. The hardware you and your team rely on yourselves is also likely to be impacted. According to the United States International Trade Commission, 34.5% of US electronics imports come from China and are therefore subject to any current or upcoming tariffs³.

To offset these increased costs, businesses may have to raise prices for their consumers. These increases can have a significant negative impact on competitiveness and cause disparities in your global product costing.

As tariff uncertainty leads experts and financial institutions to anticipate greater risk of recession,⁴ US consumer confidence has reached a 2-year low⁵. As a result, consumer spending has already decreased⁶. With growing fears of inflationary pricing, shoppers are cutting back on non-essential goods and services — and the same goes for businesses.

Businesses seeking to enter the US market have to grapple with these factors and consider whether now is the right time to start expanding into the region.

Do tariff-proof entry strategies exist?

Understandably, businesses are looking for creative ways to avoid tariffs. Whether that’s Apple chartering six cargo flights to ferry 600 tonnes of iPhones out of India to the US or pausing imports altogether, businesses want to know: do tariff-proof entry strategies exist? And if so, what do they look like?

Aptly enough, the answer to tariff-proofing your business may lie in expanding to the US. That could mean creating a US entity or moving your production to the US. Many companies have already started on this trajectory — Italian premium coffeemaker Illycafe’s CEO said it would consider building a plant in the US to avoid tariffs, Honda will now produce its next-generation Civic hybrid in Indiana, rather than Mexico and Inventec, a Taiwanese company which makes AI servers is evaluating locations for a US investment⁷.

Creating a US entity in states like Texas or Delaware, which have favorable tax laws for businesses, could be a valuable facilitator of growth. In Texas, businesses could benefit from the lack of state income tax to reduce overall operating costs, while businesses incorporated in Delaware can take advantage of the state’s lack of sales tax. Delaware also has favorable legislation toward out-of-state or even out-of-country businesses, making it an attractive choice for many who want to incorporate in the US.

While expansion may be costly, businesses are betting that it will pay off in the long run. Producing and importing goods domestically within the US means you and your customers won’t have to worry about tariffs when selling to the US market — even if policies change on a regular basis. Plus, with this strategy, businesses can still maintain their foreign entities, specialising their US-based production and resources on the US market.

Amid uncertainty, the best approach is staying informed. While most countries are enjoying a 90-day lift on country-specific tariffs beyond the 10% base rate, policies are liable to change at any moment. Take this time to assess your plans, build out room in your budget to navigate unexpected scenarios and start considering ways you can mitigate risk in your business.

How to mitigate risk amid tariff turbulence

In addition to staying informed, it’s important for business owners and finance teams to be proactive about managing the risks of foreign exchange (FX) volatility, their potential exposure on exports and the risk of increased operational costs — especially if you’re expanding to the US.

FX risk — also known as currency exchange risk or exchange rate risk — is the potential loss of money due to currency exchange rate fluctuations in international financial transactions. As the value of the dollar falls, businesses that raise funding or hold capital in USD are getting less for their money than they would have six months ago. Likewise, companies that pay salaries, payroll or suppliers in USD are finding that it costs more in real terms to make these payments compared to strengthening currencies such as GBP or EUR. To avoid additional losses, business owners should integrate a solution that enables them to convert their business’ money easily and when the exchange rate is favourable.

If your business plans to export goods to the US, especially goods made in China, it may be worthwhile to explore changes to your supply chain. If you can find a comparable manufacturer in a country with a tariff at 10% rather than the higher rates being imposed on China, you can protect your profit margins and reduce the risk of inflationary pricing on your goods.

Similarly, shop around before purchasing new hardware products or subscribing to new software providers. Consider your provider’s exposure to tariffs and make informed decisions about how their pricing may change or increase as a result of new tariff policy.

The Wise Business account is designed to make these transitions effortless. Create local account details in 9+ currencies to improve flexibility and reduce the risk of funds lost in the conversion process amid currency fluctuations. If you do need to exchange currencies, you can set up Auto-Conversions to automatically convert your money between two currencies once they reach your desired exchange rate. If you change vendors or suppliers, it’s easy to pay them via direct debits in 40+ currencies at low, competitive fees. All in one account.

There’s only one guarantee when it comes to tariff policy in today’s political environment — uncertainty. To best shelter your business from the repercussions of these changes, consider what you have to gain from expansion to the US during instability. For some businesses, there is still plenty of opportunity to be found in the US market but for others, the best move is to simply wait it out.

Discover how Wise Business can help

Sources:

1. U.S. Bureau of Labor Statistics - Consumer expenditures in 2023
2. CNBC - Lutnick says 10% baseline tariff will stick around for “foreseeable future”
3. United States International Trade Commission - Electronic Products
4. The Guardian - Trump tariffs risk higher prices and make US recession more likely, says JP Morgan boss
5. The Conference Board - US Consumer Confidence
6. The Washington Post - Americans are spending less as they brace for new tariffs
7. Reuters - Which companies are looking at US expansion to lessen tariff fallout?