The False Choice: China vs. Margin—Or Is It Both?

Jon Allen
3 days ago
2 min read

Why deduction recovery could be your secret weapon in the tariff battle.

China was the go-to manufacturing hub for years: affordable, fast, and scalable. But now, with U.S. tariffs on Chinese imports stuck at 30%, suppliers are staring down a tricky question:

Do I absorb the cost, or abandon China altogether?

But what if that’s a false choice?

Because for many suppliers, the honest answer isn’t about finding a new factory or raising prices. It’s about looking inside your P&L for hidden cash to buy breathing room.

The Tariff Trap

Let’s say you’re importing portable fans from China. The base cost is $8.50 per unit. Add 30% in tariffs—your landed cost jumps to $11.05. Multiply that by 100,000 units, and you're staring at an unexpected $255,000 additional cost.

You’re already juggling:

Retailers who won’t accept price increases
Rising freight and warehousing costs
Buyers are demanding faster delivery and better margins.

You're told your only option is to move production. But that takes months—or years—and comes with new startup costs, mold investments, and risk.

Here’s the Twist: You May Already Be Sitting on the Cash You Need

Let’s introduce a fictional brand: BreezeMax, a mid-size home goods company. Facing a similar situation, they considered pulling production out of China. But the CFO hit pause.

Instead, they audited their last 18 months of retailer deductions.

What they found:

$64K in invalid shortage deductions
$41K in overbilled freight charges
$28K in promotional chargebacks that weren’t agreed to

Total recovered: $133,000. That’s not magic. That’s math.

Now, did it solve everything? No. But it bought BreezeMax time to negotiate better terms with suppliers, explore secondary sourcing, and avoid passing panic-driven costs onto their retail partners.

The Real Cost Isn’t the Tariff—It’s the Margin You Let Slip Away

Every supplier’s situation is different. But if you’re facing a 30% tariff on your top SKUs and not simultaneously evaluating deduction recovery, you’re playing the game with one hand tied behind your back.

Because here’s the truth: 🔴 Deductions are often preventable. 🟠 Tariffs may be policy-driven. 🟢 One you can’t control. The other you can.

Don’t Choose Between China and Margin—Fund One with the Other

Before you blow up your supply chain, take a deep breath. Do a full deduction audit. Know precisely what you’re losing—and where you might win it back.

In volatile times, recovery is your most underused strategy.

Take Action

Tariffs are here, but so is your power to recover. Woodridge can help you uncover hidden cash and reinvest in your growth without making rash sourcing decisions.