Expanding to the U.S.: Is Your Business Model Still Viable?

The latest tariff dynamics in the U.S. are reshaping the game for European tech companies. A recent article by Noah Smith highlights key shifts that are directly impacting profitability and expansion strategies.

🚨 Key takeaways:
✔️ Rising costs: Importing strategic components and raw materials is becoming more expensive, squeezing margins and forcing price adjustments.
✔️ Supply chain shifts: Companies are relocating production to Southeast Asia and Latin America to bypass increased costs—an effective long-term move but one that can lead to short-term delays and quality variations.
✔️ Strained international partnerships: European companies may need to renegotiate terms with U.S. partners to maintain competitiveness.
✔️ Innovation slowdown: Increased costs are restricting R&D budgets, potentially slowing the introduction of new solutions and weakening competitive advantage.
✔️ 💡 Taking advantage of U.S. tax incentives: Acquiring a smaller U.S. competitor could help avoid import duties, secure local patents, and accelerate market entry.

🎯 My top recommendations to adapt your strategy:
1️⃣ Test the waters: Start with a limited-market entry before making a full-scale investment.
2️⃣ Leverage U.S. tax benefits: Structure your business to optimize tax advantages.
3️⃣ Diversify suppliers: Look for domestic alternatives to mitigate tariff risks.
4️⃣ Automate operations: Reduce reliance on external suppliers with internal efficiencies.
5️⃣ Stay ahead of regulations: Implement proactive monitoring of policy changes.
6️⃣ Establish a local entity: Setting up an LLC can help navigate trade barriers and streamline financial flows.
7️⃣ Adopt flexible business models: Consider SaaS subscriptions, modular services, or adjustable contracts.

While these challenges may seem daunting, they present real opportunities for those who know how to adapt.

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