TD Synnex, Partners Prioritize Flexibility Amid Tariff Environment

‘Right now, we’ve seen a couple of pull-ins, or partners who rush to take orders from end users. But overall, it’s a moving target. It’s hard to really say how this is going to influence our business for now. We’re just going to keep an eye on it and see how things change or stay the same,’ says Gary Palenbaum, TD Synnex’s executive vice president of revenue and customer success.

With the Trump administration imposing a minimum tariff rate of 10 percent on imports from every country and up to 145 percent on products coming from China, the IT channel is working to understand the implications.

That was evident at a TD Synnex channel partner meeting last week where the distributor and its partners discussed the impact on IT products, a large amount of which are imported from China.

Gary Palenbaum, TD Synnex’s executive vice president of revenue and customer success, said that tariffs are a moving target.

“It’s tough to pinpoint anything today,” Palenbaum said. “But I think more importantly, tariffs are causing some uncertainty at the partner level. We’re getting a lot of inquiries from customers. But we just try to maintain policy. Whatever the vendor policy might be, that’s what we need to enforce. Essentially, everything we do is a pass-through from the vendor side. But you know, like anything else we’ve seen this thing change overnight.”

TD Synnex has to be extremely conscious of how tariffs are going to affect demand, Palenbaum said.

“And we’re keeping a close eye on that, whether it slows down demand today and perhaps picks up demand in the second half,” he said. “But right now, we’ve seen a couple of pull-ins, or partners who rush to take orders from end users. But overall, it’s a moving target. It’s hard to really say how this is going to influence our business for now. We’re just going to keep an eye on it and see how things change or stay the same.”

Despite the tariffs, Palenbaum said, it is a good time to be in the IT business.

“We’re certainly seeing new technology that’s driving demand,” he said. “I don’t know how the tariffs are going to affect any of this. The latest tariff changes impact the outlook on a lot of things from the endpoint perspective. But vendors are all trying to figure it out themselves. It’s tough from a worldwide manufacturing point of view. There’s no place to hide these days. It’s tariffs on180 different countries. I think that’s the number right now. There’s a lot of moving parts.”

The potential for hardware price increases resulting from tariffs is a concern regardless of whether hardware is or is not a large part of solution providers’ business, TD Synnex channel partners told CRN.

Anthony J. D’Ambrosi, CEO of Abacus Group, a New York-based platform MSP and MSSP, a FinTech company and a TD Synnex partner, told CRN that while hardware is not a big part of his company’s business, hardware is amortized and embedded in all its services deployments.

“Some of my users are in the hedge fund world and the private equity world, so we’re involved more on the endpoint side,” D’Ambrosi said. “From an infrastructure perspective, we provide Network as a Service. So we are involved with hardware. It’s not a material part of my revenue, but it’s a mission-critical component of the as-a-service part of our business.”

Tariffs are a hot topic at the TD Synnex event, D’Ambrosi said.

“The OEMs here—Dell, Lenovo—are all being asked about it,” he said. “It’s funny. In some cases, we’re hearing that some price increases have already been baked in. In other cases, we’re hearing TD Synnex has stocked a voluminous amount of forward-bought inventory to do short-term offsets. We’re hearing multiple versions of the story, but make no mistake: In this forum, it’s a hot topic. It’s a very hot topic.”

D’Ambrosi said his company has not yet seen an impact from the tariffs, although some clients are starting to get nervous.

“Clients expect us to help partner with them and communicate,” he said. “But so far so good. And I’ll say this, I’m a pretty big Microsoft partner. Microsoft had already signaled some new pricing structures, even in advance of the tariffs, on the software and cloud side. So we’ve kind of minimized disruption because, with cost increases in software and the cloud, clients are reimagining their move to the cloud. So for us, tariffs on hardware is a bit of a tailwind for off-premises, cloud-based services. So we’re packing into that opportunity as well.”

No one wants to see a full-blown trade war with China, D’Ambrosi said.

“Last week I was down in Grand Cayman to speak in front of the Global Alternative Investment Management Council,” he said. “It was a room full of financial professionals and investors. Geopolitical risk and market volatility was a hot topic. The level of volatility we’re seeing emboldens bad actors on the cybersecurity side. But I think eventually the hardware matter will normalize itself. It’s an inflationary tax, and we’re all going to have to get used to some level of uplift. I don’t think it’ll be at the levels we’re talking about now, but I think everybody’s been prepared for the worst, and I think the outcome will be better than the worst-case scenario.”

Michael Sheil, president of Whalley Computer Associates, a Southwick, Mass.-based solution provider and TD Synnex partner, told CRN that some customers had placed large orders just as tariffs started being implemented. Whalley fortunately in September opened a new 85,000-square-foot facility on its campus, 80,000 square feet of which is warehouse space, giving it the ability to bring those products in and roll them out for customers.

“We have seen some delays based on the uncertainty,” Sheil said. “Tariffs are going up and down, and you just can’t time it. But we’re working with TD Synnex to take advantage of products they have in their warehouse that haven’t maybe been affected by some of the tariffs. That has really helped us. We’re working with them to try to pivot our clients slightly away from what might be their standard to something that’s still very, very acceptable that we can get from TD Synnex that may not have been affected because it’s in their warehouses now. Having that flexibility really helps us.”

TD Synnex is also providing availability information to Whalley’s sales team, which is especially important as the end of Windows 10 support gets closer, Sheil said.

“Customers have to upgrade, and so they’re trying to understand, like all of us, what does this mean with the tariffs and when can they start,” he said. “Because now we’re down to the last six months. The window is getting shorter and shorter every day. So we’re trying to work with TD Synnex on those solutions. We’re working to bring that product into our facility and roll it out to them as they need, so they can meet the demand coming by October when Windows 10 goes end-of-support.”

Preparing inventory in advance can be expensive, Sheil said.

“But we work very closely with our customers,” he said. “And there are times where, depending on the order, TD Synnex may offer us extended terms. In turn, we’ll work with customers to extend our terms slightly based on what TD Synnex is doing and then go from there. But again, we’re not looking to bring in product and hold it for the next six months. We’ll work with a road map of when we can bring product in. And our new facilities allow that flexibility for our customers, which is so important.”