There have been changes in 2025 for the United States with the recent presidential inauguration. These changes include the latest tariff developments. We are diving deeper into what these changes are and what they might mean for your business. Since we work with so many sellers who source from China, we understand this is an important topic, and we want to make sure all e-commerce have the best information to navigate these changes.
Latest Tariff Developments
The U.S. government has announced new tariffs on Chinese imports, adding an additional 10% duty on many goods. This policy aims to pressure Chinese manufacturers but directly affects businesses importing products from China. Additionally, there have been recent changes to USPS policies that could impact the cost and delivery times of small packages from China. We’re keeping an eye on these developments and will post here as more details emerge.
Another important factor to consider is the de minimis rule, which previously allowed goods valued under $800 to enter the U.S. duty-free. However, recent policy changes have removed this exemption, meaning that all imports, regardless of value, are now subject to applicable tariffs and customs procedures. This change directly impacts businesses that rely on the de minimis rule (such as drop shippers) to minimize costs and expedite shipping. If you ship small parcels directly from China to U.S. customers, this is an important shift that could affect your bottom line.
How This Affects Your Business
At first glance, a 10% tariff may seem like a 10% hit to your profit margins, but the actual impact depends on your cost structure. Let’s break it down:
Suppose you purchase a product for $3 and sell it for $9.
A 10% tariff increases your cost to $3.30.
Your previous gross profit was $6.00 ($9 – $3).
Your new gross profit is $5.70 ($9 – $3.30).
The margin impact is only 5%, not 10% because the increase affects just your product cost, not your entire revenue.
Understanding this math helps you make informed pricing and sourcing decisions rather than reacting with unnecessary price hikes.
Impact on Different Types of Sellers
This policy modification will have a different impact on your business depending on your operations and what sort of seller you are.
- Sellers Who Source Products from the U.S. You are likely unaffected by these tariff changes unless your suppliers rely on Chinese materials.
- Drop Shippers Sourcing from China
Alibaba & Other Marketplaces: Prices may increase as suppliers pass on costs.
- Sourcing Agents: Agents may be able to negotiate better deals with factories. Keep in mind that these sourcing agents make margins on your orders. Start a dialogue with your Chinese counterparts to assess how you will be affected and ensure that this cost burden does not fall entirely on you.
- Direct Manufacturer Relationships: There’s certainly room for negotiation here, but you will likely be directly impacted.
- De Minimis Rule Considerations: Since the exemption has been removed, all shipments will now be subject to tariffs, which could increase your costs.
- Sellers Who Buy Bulk Inventory from China & Store in the U.S.: If you already have inventory in the U.S., you won’t feel the impact immediately. Future restocking costs will be higher, so consider adjusting your pricing or negotiating with suppliers now.
Strategies for Relief
With these changes, there are things you can do to minimize the impact of these tariffs:
- Negotiate with Suppliers/Manufacturers
These tariffs are a tax on Chinese exports, not your business directly. Many Chinese manufacturers/suppliers will likely be willing to absorb part of the cost to maintain relationships with buyers.
Keep in mind that sourcing agents make margins on your orders. Start a conversation with your Chinese partners to assess how you will be affected and ensure that these changes do not fall entirely on you. There’s room for negotiation here.
- Analyze the Real Margin Impact
As we illustrated above, a 10% tariff does not mean a 10% loss in profits. Run the numbers before making drastic pricing or sourcing decisions.
- Consider Alternative Supply Chain Options
Large companies are diversifying supply chains, looking at manufacturers in Vietnam, India, or Mexico to reduce dependency on China. While this isn’t easy, it’s worth exploring alternatives.
- Adjust Fulfillment & Shipping Strategies
With the removal of the de minimis exemption, evaluate whether it makes more sense to ship in bulk to a U.S. fulfillment center rather than sending small parcels directly to customers.
Final Thoughts
Tariff changes can be challenging, but staying informed and proactive can help mitigate their impact. Additionally, discussions of potential federal tax cuts have emerged, which, if implemented, could offset some of these costs for American entrepreneurs.
Keeping an eye on these developments and adapting sourcing and pricing strategies will be key in the months ahead.
