Distributors across the U.S. are sounding the alarm as new tariffs and potential tax hikes threaten to squeeze already tight margins and disrupt supply chains. A recent survey by the National Association of Wholesaler-Distributors (NAW) and Modern Distribution Management (MDM) reveals that many in the industry are bracing for large cost increases and operational challenges in 2025.
“The survey indicates that one-third of distributors are already facing price hikes of 25% or more. Though these increases haven’t hit store shelves yet, it’s an indication of where prices are headed,” said Eric Hoplin, CEO of NAW. “We urge President Trump to secure trade agreements quickly to restore certainty, help businesses plan, and ease supply chain pressures.”
Key Findings
Rising Costs: 62% of distributors expect their cost of goods sold to increase by 10% or more in 2025.
Financial Strain: 67% report that tariffs have hurt their businesses, while only 2.5% have experienced a positive financial effect.
Operational Adjustments: Distributors are responding by slowing inventory replenishment (48%), delaying new hires (44%), cutting capital investments (37%), and reducing discretionary spending (60%).
The survey also highlights concerns over tariffs on Chinese imports, with 37% of respondents indicating that more than 20% of their inventory originates from China. Only 17% have been able to shift sourcing to domestic or non-impacted suppliers.
Beyond tariffs, distributors are wary of potential tax increases. Preserving key provisions of the 2017 tax reforms, such as the 199A deduction for pass-through entities and a competitive corporate tax rate, remains a top priority. Distributors credit these tax cuts with driving growth: 62% reinvested in their businesses, and 40% increased wages and benefits.