Levies on imports will drive price increases — whether directly or as a convenient excuse. Vendors must communicate tariff impacts and pricing changes to partners with clarity and foresight.
While driving across the plains of Oklahoma, the head of sales at a large, family-owned reseller lamented an e-mail he had just received from his largest vendor regarding planned, across-the-board price hikes on its products.
“The e-mail said they’re increasing prices in two weeks in anticipation of tariffs,” he said, emphasizing tariffs.
Since the beginning of the year, Channelnomics has fielded numerous calls from vendors about the potential impact of tariffs on sales and channel partners. Following the November election, many business leaders anticipated levies on products produced in China — the country seen as having the greatest economic impact on the United States. The tariffs on strong, traditional trading partners such as Canada, Mexico, and the European Union surprised many.
The Trump administration’s approach to tariffs is chaotic. Some days they’re on; some days they’re off. Some days they’re targeted or include exceptions; other days there are no exceptions. Some days they’re just threats; other days they’re reality. The only thing the tariffs have accomplished thus far is destabilizing the market.
The United States entered 2025 with the world’s strongest economy and a GDP projected to grow from 2.0% to 2.5%. With tariffs, economists thought growth might slow to between 1.8% and 2.1%. Despite this, IT spending was projected to climb at least 9%, while channel partners expected sales growth of 10% to 14%, according to the Channelnomics 2025 Channel Forecast report.
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The destabilization of the U.S. and global economies is happening quickly. Not only is growth expected to slow, but economists and the Federal Reserve are warning that the U.S. could slip into a recession this year. Some economists believe that, between tariffs and massive cuts in government spending, the economy could contract by as much as 2.5%.
A decline in the macroeconomy will cause businesses to cut back on discretionary spending, including IT. Federal government spending reductions will also impact IT investments; the U.S. government is the world’s single-largest consumer of technology products and services. While businesses continue investing in digital transformation projects that automate processes and optimize or replace human labor, those investments won’t fully compensate for shortfalls in other areas.
Returning to the e-mail that the Oklahoma partner received: The key drivers of price hikes are anticipated tariffs. Many vendors are planning price increases to offset rising production and logistics costs. The threat of tariffs — or their actual implementation — provides convenient cover for price hikes, even if actual costs haven’t increased.
We’ve seen this scenario before. In the period immediately following the pandemic, when inflation spiked to 9%, strategists openly advised businesses to raise prices. They argued that inflation provided an excuse to increase prices — even when input costs remained unchanged. Many businesses followed that advice.
Tariffs will impact all technology products and spending. Hardware products are the most vulnerable, given that they're largely manufactured in Asia, with components crossing multiple borders before reaching U.S. distribution centers. Software and cloud products will also be affected, as their infrastructure depends on hardware. And if tariffs drive prices up significantly, customers may cut back on spending, impacting sales.
No one expects prices to remain static, but managing these increases presents a challenge for partners. In the Channel Forecast report, partners rated the management of rising business costs as their greatest challenge in 2025. When implementing price increases, vendors should support their partners through deliberate and transparent communication:
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Announce price increases as soon as possible and give partners enough time to prepare. Partners need to adjust quotes for pending proposals and determine how to absorb cost increases for services delivered under long-term contracts.
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Provide partners with clear justifications for the price increases. Partners will need to relay these explanations to their customers.
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Issue guidance on absorbing or offsetting price increases, such as introducing value-added services to mitigate impact.
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Maintain incentives and rewards. If prices rise and the economy weakens, partners will need every available tool to close deals.
In 2022, when inflation threatened to push the U.S. and European markets into recession, Channelnomics published the Channel Recession Survival Guide, a resource outlining how vendors could leverage partners to absorb costs, maintain market coverage, and generate sales despite economic downturns. Channelnomics is in the process of updating this guide, but most of its core tenets remain relevant. We recommend reviewing the Channel Recession Survival Guide and developing contingency plans for a potential economic downturn.
Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.
