It’s hard to miss the news about tariffs these days. Even if you’re not based in the United States, the news cycle on this topic has gone global.
And no matter the outcome, your political affiliation, or views on tariffs — it’s something all businesses should pay attention to in order to understand their impact.
By no means are we saying that we’re tariff experts here at RemoFirst.
But we do know how an Employer of Record (EOR) can become more critical for employment needs during potential tariff adjustments which impact global industries.
Key takeaways:
- A tariff is a tax that is imposed by a government on goods and services that are imported from other countries. This can trickle down and impact your business costs and hiring plans.
- If you want to preserve your global expansion or hiring plans, EOR can be a cost-effective solution.
- EORs can help reduce the risk of geographic concentration, enable your business to respond quicker to policy changes, and more.
What Is a Tariff?
Typically, we wouldn’t include the broad definition in a post like this.
But I think often there is some confusion to the basics of a tariff and how it impacts companies globally. So let’s touch on this quickly.
If you’re already well-versed on tariffs, then feel free to skip ahead to the section “How an Employer of Record Can Offset Tariff Risks.”
Tariff Defined:
A tariff is a tax that governments place on goods and services coming into a country.
It’s usually a percentage of the item’s value and is collected by customs when the product crosses the border.
Tariffs are often used to protect local businesses, raise government revenue, or influence trade relationships. But can also backfire if not approached strategically by governments.
Tariffs can be used for several reasons, including:
- Raising revenue: Tariffs are a source of income for the government.
- Protecting domestic industries: By making imported goods more expensive, tariffs can encourage consumers to buy locally produced goods.
- Retaliation: Tariffs can be used as a tool in trade negotiations or as a response to tariffs imposed by other countries.
- Addressing trade imbalances: Tariffs can be used to reduce the gap between a country's imports and exports
But Tariffs Can Also Hurt Businesses
While tariffs can have a positive impact on local economies, depending on the strategy and approach, there can also be many challenges for businesses.
And these tariffs can not only impact overall costs, but where companies do business and how they hire new talent. Tariffs can lead to:
- Increased costs: Tariffs make imported goods more expensive. Businesses that rely on imported materials, parts, or products end up paying more, squeezing their profit margins.
- Higher prices for customers: To cover the extra costs, businesses often have to raise prices — which can make them less competitive and hurt sales.
- Supply chain disruptions: Tariffs can force businesses to scramble for new suppliers or adjust their operations, leading to delays, added expenses, and operational headaches.
- Reduced global competitiveness: Companies facing higher costs at home may struggle to compete against foreign rivals who aren't burdened by tariffs.
- Uncertainty and risk: Constant changes in tariff policies can make it hard for businesses to plan ahead, invest confidently, or expand into new markets.
- Retaliation: Other countries may impose their own tariffs in response, hurting companies that export goods abroad or hire globally.
How an Employer of Record Can Offset Tariff Risks
Although an Employer of Record might not solve all the risks companies face with tariffs, it can alleviate some pain and reduce costs in other areas of the business.
Here’s a few ways that an Employer of Record like RemoFirst can support your company when it’s faced with tariff risks.
1. De-risk Geographic Concentration
When tariffs target specific countries or regions, companies heavily reliant on talent or operations in those areas can take a big hit.
With an Employer of Record (EOR), you can quickly test and shift talent to new markets — like India or specific countries in Eastern Europe or Latin America — without setting up costly entities.
This reduces your exposure to any single market, spreads your operational risk across multiple geographies, or can help you find additional talent in places less impacted by rising costs.
2. Faster Response to Trade Policy Changes
Trade regulations can change overnight. When tariffs are suddenly imposed, companies need to move fast.
An EOR enables you to adjust your hiring and employment strategy quickly — without getting bogged down in local labor laws or red tape.
You can pivot in days or weeks, not months, to respond to new trade realities.
3. Preserve Operational Agility
An Employer of Record gives you the flexibility to scale your workforce up or down across different countries without long-term commitments or sunk costs.
This is especially valuable in volatile economic environments where tariffs, supply chains, and consumer demand are constantly shifting.
You can adapt your talent strategy on the fly and stay ahead of disruption.
4. Convert Fixed Costs to Variable
Instead of opening entities and hiring full-time local teams, EORs allow for more flexible, project-based labor models that can shift as market conditions change.
Setting up a legal entity and hiring full-time employees in a new country is expensive to navigate on your own — and risky if market conditions change.
With an Employer of Record, you can explore new markets and work with international talent on a project-by-project basis.
This shifts fixed overhead to more flexible, variable labor costs that can scale with your business needs and tariff exposure.
Compliantly Employ Workers in 185+ Countries With RemoFirst
Navigating local employment laws in multiple countries can be a significant hurdle for a company's international expansion, but with the right partner, it doesn't have to be.
An Employer of Record like RemoFirst makes it simple to stay compliant, no matter where your team is based. And helps you employ the best talent at affordable rates, even during economic challenges.
With our all-in-one platform, you can hire employees in 185+ countries and manage and pay contractors in 150+, all without setting up a local entity. We handle everything from global payroll management to statutory benefits with rates as low as $199 per employee per month (depending on location).
Ready to hire internationally without the legal complexity? Schedule a demo to see how easy global compliance can be with RemoFirst.
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