Uncertainties cloud the impact of tariffs on the channel

Despite having some plans in place, an IPED Consulting Study survey reveals uncertainties in the channel ecosystem when it comes to tariffs.

The month of April has been a roller coaster journey for businesses and governments all around the world after the US announced reciprocal tariffs on April 2^nd. Since then, many countries and organizations have begun planning strategies to deal with the tariffs, despite US President Donald Trump announcing a temporary pause on the new rates for 90 days on all countries except China.

The relationship between the US and China continues to dominate conversations everywhere. With both countries implementing record high tariffs on products to and from each nation, the ones expected to face the biggest impact are the businesses and consumers that rely on products from both nations.

At the core of the impact of tariffs is the tech industry and its channel ecosystem. According to an IPED Consulting Study, prices will definitely go up as a result of the tariffs. The only question that remains now is how much and how fast this process will take. The findings is based on a survey conducted by IPED involving 34 solution providers, 9 distributors and 14 vendors globally.

As expected, most vendors surveyed are still in a “wait and see” moder but are actively monitoring the tariff situation. While vendors are actively investigating supply chain adjustments to minimize impacts, the reality is the impact of tariffs will see prices increase probably in Q3, which is also when the 90 day pause ends.

However, the planned price increase has received mixed reactions from the partner community. For starters, partners have stated that they can’t and will not abord any price increases. In fact, many partners stated that they have received notices from vendors announcing a 10% to 15% price increase.

At the same time, some partners feel the impact of the tariffs could be similar to the impact of the COVID-19 pandemic. During the pandemic, there was no impact to strategic projects as customers spent more on needs instead of “wants”. Partners also believe that the impact will vary by industry with some already buying ahead to avoid the impact.

As such, partners in the US, Europe and APAC are cautiously monitoring the situation and only focused on information collection at this time. Many don’t want to overreact, fearing the situation may change and staying very close to customers to understand their impact.

“These are exciting questions that we would very much like to answer. However, due to the currently very volatile decisions in the USA and Europe, we are currently not in a position to provide serious assessments and real answers,” said one distributor in APAC.

“The uncertainty is the obstacle. We are having conversations, we're sending information to our sales teams, we're asking for client input. But it's all just a lot of data points without any impact or anything to make a decision on,” commented a US MSP as well.

For vendors, they will also be very conscious of not over-rotating on channel pricing or stocking actions. The study also revealed vendors to be more aware of the impact to MSP business models with significant recurring revenue contract lock-ins. With AI a priority globally, vendors are anticipating growth but feel that there will be significant impact to AI related pipelines.

President Trump has already announced that the tariff rates with China will be lowered. Until this figure is confirmed, it will be a period of uncertainty in the channel. Nevertheless, the channel is prepared to deal with the situation no matter what the outcome.