The financial math behind why January 2026 will be more expensive than January 2025
When the tariff rates jumped from 1.5% to 10-35% during 2025, there was a pretty easy decision for importers to make regarding their order management strategy: absorb the higher landed costs or front-load inventory before rates took effect. Many opted for the latter, importing massive quantities months in advance at lower tariff rates through optimized order management.
But front-loading solves one problem, creating another in your inventory management approach. Yes, you avoided the immediate tariff hit on those shipments. But now you’ve committed enormous working capital to inventory at a time when carrying costs matter more than ever in effective stock management.
The carrying cost equation in inventory management
Here’s the math: assume you import 1,000 units of some product at $20 pre-tariff cost through your order management system. Using 1.5% tariffs, the landed cost is $20.30 per unit. Using the current 25% tariffs, the landed cost would be $25 per unit in your inventory management calculations.
If those 1,000 units sat in your warehouse for one quarter (Q1), the difference in carrying cost in your stock management becomes substantial:
Pre-tariff: 1,000 units × $20.30 × 25% carrying cost ÷ 4 quarters = $1,269 in carrying costs
Tariff scenario: 1,000 units × $25.00 × 25% carrying cost ÷ 4 quarters = $1,563 in carrying costs. That’s an extra $294 in carrying costs per 1,000 units, per quarter. For companies carrying 5,000-10,000 units of seasonal inventory across their assortment in their stock management systems, the tariff amplification in inventory management means tens of thousands in additional carrying costs per quarter for the same physical inventory.
Order management: the game has changed
This is not just academic theory for the inventory management professional; it fundamentally changes the financial penalty for being wrong about demand in your order management approach. If you over-forecast and end up with 500 units of unsold inventory carrying tariff costs, that inventory now costs you more per day to hold than it would have in previous years. The math for carrying cost creates stronger pressure to eliminate underperformers faster in your processes for stock management.
The deeper implication: tariffs do not eliminate the fundamental need to forecast. Companies with 6-8 week lead times must still guess several months in advance in their order management planning. But tariffs do alter the cost structure of being wrong in your inventory management. Every excess unit costs more to maintain. Every day of delay in clearing dead stock costs more in carrying charges tracked through stock management systems.
January cleanup for inventory management is now more urgent
That’s why January 2026 inventory management and stock management cleanup is more urgent than January 2025 was: the cost of keeping non-moving products in your range, by way of tariff-inflated carrying costs in your inventory management system, is measurably higher. The ROI calculation for aggressive assortment rationalization shifted to be in favor of elimination through improved order management.
