IN THE NEWS: In Middle of Trump’s Trade War, Importers Hold More Cash and Move Inventory off the Books

CNBC
July 14, 2025
Lori Ann LaRocco

FROM THE ARTICLE: President Trump’s trade war is leading importers to hold more cash and less inventory on their books as they seek to manage a series of tariff increases, additional threats from Trump, and temporary pauses.

Among both US and global firms, use of supply chain financing programs that allow importers to stretch out payment terms is up, according to Wells Fargo data, anywhere from 5%-10%.

Delays in the implementation of tariffs, set to expire by August if trade deals are not reached, have played a significant role in the management of inventory and cash in recent months.

From large retailers to auto parts stores and manufacturers, buyers of both finished goods and raw materials, tariff pauses allowed importers to bring in more inventory. But once the inventory arrives, it may be bound for financing rather than straight to market.

After an order has been shipped, an invoice is generated. Once that invoice is generated, an importer sends it to the bank where they maintain a supply chain financing program, and the bank pays the supplier. The importer then repays the bank under a timeline negotiated with the bank.

Companies that are bringing in goods under a higher tariff can move that inventory off their books by having a third party, such as a bank, pay for the inventory, making the third party the beneficial cargo owner, storing the goods on the importer’s behalf. The importer then pays the third party for the product and storage on an agreed timeline.
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Josh Allen, CCO of ITS Logistics, says the process of pushing inventory off the balance sheet—often referred to as “vendor managed inventory” — is also a common practice in the automotive industry and construction industries.

“It frees up the importer’s cash flow, and the third-party owner makes money through the storage and sale back to the importer. It’s a win-win for strategic partners,” Allen said.

Read the full article.