Dynamic Pricing for U.S. B2B Distributors: Managing Tariff-Driven Volatility

Since the beginning of 2025, tariffs have become part of the daily operating environment for US businesses. The Manufacturing PMI (Purchasing Manager’s Index), which tracks production, new orders, employment, supplier deliveries, and inventories, stood at 48.7 in August 2025, indicating ‘contracting’ economic activity for the sixth consecutive month.

While the Prices Index stood at 63.7, signaling that input costs remain elevated, analysts at Goldman Sachs now estimate that nearly two-thirds of tariff costs will be passed through to businesses and consumers by the end of 2025.

These shifts matter most to B2B distributors. Margins are thin, contracts are inflexible, and digital systems often update too slowly to reflect new costs.

A 3 – 5% duty increase can erase an entire quarter’s profit. Catalogs and storefronts that lag ERP systems by even a week create hidden losses.

The result is the same each time: margin erosion, strained sales relationships, and erosion of customer trust.

Dynamic pricing is emerging as a way forward. By linking ERP systems to eCommerce catalogs through rules and governance, distributors can adjust quickly and transparently when tariffs shift.

This blog explains why tariffs create unique challenges for mid-market distributors, how dynamic pricing addresses those challenges, and what a practical adoption plan looks like.

Why Distributors Are the Hardest Hit

The burden of tariffs falls unevenly across the supply chain. Global manufacturers and Fortune 500 enterprises often have multiple sourcing options and legal teams dedicated to trade compliance. Mid-market distributors—those in the $50 million to $500 million revenue range—operate with less margin for error.

Three factors make them especially vulnerable:

• Thin operating margins: Typical net margins of 5 – 8% mean that even a modest tariff increase wipes out profitability for entire product lines.
• Rigid contract structures: Agreements with key customers often include price floors or rebates that do not adjust automatically when costs rise.
• Disconnected systems: ERP software may record updated landed costs promptly, but eCommerce storefronts and price lists often lag by days or weeks.

The outcome is predictable: lost margin, reactive calls between sales and finance, and customers frustrated by price corrections after the fact.

Illustrative Sector-Specific Distribution Challenges

1. Industrial Supplies

A Midwest distributor importing fasteners would’ve faced a 12% increase in landed costs in July. ERP costs would’ve updated immediately, but if online catalogs did not change for 10 days, orders placed during that gap would be shipped at outdated prices, creating ~$180,000 in lost margin within two weeks.

2. Lighting

Let’s consider a national distributor of commercial lighting equipment, who faced tariffs on semiconductor components. Branches in tariff-exposed regions raised prices while others did not, leading customers to order strategically from lower-cost regions. The lack of coordinated pricing would undermine profitability and create channel conflict.

3. Consumer Goods

If a regional appliance distributor had multi-year customer contracts indexed to last year’s costs. When tariffs raised freight and parts costs by 8%, the contracts would’ve remained fixed. Sales teams would honor outdated rates to avoid confrontation. Finance would later identify an entire customer segment selling at a negative contribution margin.

These hypothetical examples illustrate how tariffs expose gaps in systems and processes that distributors can no longer afford to ignore.

Escalating Pressure on Margins

Recent research shows that supply chain costs are climbing faster than general inflation, adding another layer of stress for distributors already coping with tariffs. According to Kearney’s Supply Chain Navigator, global supply chain costs are expected to rise up to 7% above inflation by the end of 2025, compared to only 2% in 2024.

The drivers are clear: many companies relied on pre-tariff inventories earlier in the year but are now restocking at higher costs, compounding tariff-related pressures.

Kearney frames it bluntly: volatility is no longer a disruptor; it is the default setting. Their guidance is to redesign processes with adaptability embedded at every layer from scenario modeling and modular logistics networks to AI-led business reengineering.

For mid-market distributors, the implication is direct. If supply chains are becoming structurally more volatile, then pricing systems must evolve in parallel.

Static price sheets or manual overrides cannot keep pace when costs are rising at these rates. ERP-synced dynamic pricing, with rules and guardrails, becomes essential not just for efficiency but for survival.

What Dynamic Pricing Really Means

Dynamic pricing for distributors does not mean random fluctuations or opportunistic markups. Properly designed, it is a governed framework that aligns cost updates with catalog pricing while protecting customer relationships.

The essential components are:

• ERP-synced pricing, which ensures that landed costs recorded in ERP systems update catalogs and storefronts automatically.
• Rules and guardrails, including margin floors, contract indices, and geographic modifiers that enforce financial discipline while honoring key accounts.
• Approvals and transparency, giving sales teams flexibility within defined limits and providing customers with clear explanations for price changes.
• Simulation capabilities, allowing finance teams to model tariff scenarios in advance and understand their impact on margins before publishing new prices.

This combination ensures that cost shocks travel through systems in hours rather than weeks, reducing surprises for both sellers and buyers.

Dynamic pricing also protects margins at the point of sale, but true resilience also depends on how efficiently the rest of your B2B supply chain operates .

Forbes’ Recommended Pricing Strategies During Volatility

A 30-Day Playbook for Adoption

Distributors can begin implementing dynamic pricing without overhauling their entire stack. A 30-day phased approach creates momentum while containing risk.

Week 1: Establish the baseline

• Identify categories most exposed to tariffs or freight surcharges.
• Pull 12 months of landed cost and gross margin data for those categories.
• Draft pricing policies, including floors, tiers, and cadence for updates.

Week 2: Connect the pipeline

• Integrate ERP cost data with eCommerce staging environments.
• Configure initial approval workflows.
• Select one pilot category for testing.

Week 3: Run simulations

• Model a sample tariff increase, such as a 5% duty adjustment.
• Review projected margin impact with finance and sales leaders.
• Draft communication templates for customers.

Week 4: Launch and refine

• Publish updated prices for the pilot category.
• Track gross margin retention, quote turnaround time, and customer feedback.
• Expand to additional categories or regions based on results.

Common Questions from Distributors

Will dynamic pricing alienate customers?

Only if it is opaque. Buyers are more likely to accept price adjustments when they are explained clearly and applied consistently.

Do we need AI, or will rules suffice?

Rules combined with ERP integration deliver the majority of benefits. AI enhances elasticity modeling, competitive tracking, and forecasting, but governance comes first.

What happens if tariffs are rolled back?

Dynamic pricing systems can adjust downward as well as upward. Transparent reductions reinforce customer trust and demonstrate fairness.

How do we bring sales teams on board?

Sales professionals benefit from flexibility within guardrails. They gain the ability to negotiate confidently while avoiding after-the-fact disputes with finance.

What Success Looks Like

Dynamic pricing is not simply about recovering costs. Distributors who implement it effectively achieve several outcomes, such as:

• Stability for finance: ERP-to-catalog sync reduces the need for manual reconciliation.
• Clarity for sales: Reps negotiate within defined policies, avoiding conflict with finance.
• Trust for buyers: Customers see consistent application of pricing rules and clear explanations for changes.
• Resilience for the business: Tariff cycles, freight surcharges, or currency shifts are absorbed smoothly rather than through fire drills.

What to Watch out for in the Coming Months

Two near-term milestones will shape tariff exposure:

• November 29, 2025: Section 301 tariff exclusions are scheduled to expire. Unless extended, distributors will face another round of cost increases.

• Court challenges: Ongoing legal cases could reshape the tariff framework and create refund liabilities for affected firms.

Monitoring these developments will help distributors plan communications and adjust pricing cadences.

From Volatility to Control: The ewiz commerce Approach

ewiz commerce has been developed with these challenges in mind. The platform enables:

• ERP-synced pricing integrated with Microsoft Dynamics 365 Business Central or other ERP systems.
• Multiple price lists to support tiered, contract, and region-specific agreements.
• Dynamic rules engines to apply cost-plus logic, margin guardrails, and contract indices automatically.
• Approval workflows that balance sales flexibility with financial discipline.
• Catalog messaging that explains pricing adjustments to buyers transparently.

Distributors already using Microsoft Dynamics 365 Business Central can synchronize directly. Those seeking an ERP implementation can draw on ewiz’s expertise in deploying Business Central alongside eCommerce integration.

From Firefighting to Resilience

Fluctuating tariffs and supply chain costs look like operating reality for distributors in 2025 and beyond. As the wait toward more uncertainties narrows, mid-sized distributors need to quickly protect their margins, and upgrading their pricing systems should be an important priority.

A pricing framework that adapts at the speed of cost change and is systematic, transparent, and built for volatility can help weather the turbulence better.

With ERP-synced pricing, rules and guardrails, and approval workflows, ewiz commerce enables distributors to replace firefighting with resilience, and turn tariff pressure into a competitive advantage.

👉 Explore how ewiz Commerce helps U.S. distributors operationalize dynamic pricing.