The Impact of New Tariffs: What E-Commerce Sellers Need to Know (and How Our Tariff Calculator Can Help)

Tariff Calculator: Take the Guesswork Out of Import Costs

In response to widespread disruption from the recent tariff implementations, we’ve engineered a precision tariff calculator exclusively for sellers, enabling them to face uncertainty with data-driven confidence.

Try The Calculator & Understand What Your Costs Are!

The Impact of the New Tariffs

Last month, Busy Baby, a small U.S. ecommerce business, faced a devastating blow when a new tariff on Chinese imports forced owner Beth Benike to abandon $160,000 worth of inventory. After years of growth, soaring costs made shipping and pricing unsustainable. Benike, along with many other brand owners are feeling deeply concerned with what the future holds.

These steep tariffs have unsettled many sellers relying on overseas manufacturing, threatening business models that were built on stable trade policies. Many brand owners are unsure how to calculate their new costs and some are making costly mistakes as they scramble to adjust pricing and sourcing strategies.

The purpose of this article is to help you:

• Understand tariffs and how they’re calculated
• Identify their impact on your ecommerce business
• Avoid common compliance errors
• Implement strategies to protect your margins
• Use our tariff calculator for data-driven decisions

You will walk away from it with practical steps to protect your margins through trade turbulence.

The Scope of the New Tariffs

Earlier this year, the U.S. government implemented the most sweeping tariff changes in recent history. Unlike previous targeted tariffs, this one fundamentally reshapes the state of global trade as we know it by imposing baseline tariffs on virtually all imports while adding retaliatory tariffs on countries whose exports to the U.S. exceed their imports from it. These changes were announced as part of an economic initiative to reduce trade deficits, promote domestic manufacturing, and pressure trading partners into more “reciprocal” trade relationships.

The current tariff structure includes:

• 10% baseline on ALL imports (effective April 5)
• Higher “reciprocal” tariffs on trade deficit countries
• Up to 145% on Chinese goods (combining multiple tariff layers)
• 25% on all imported automobiles (effective April 3)
• 25% on global steel and aluminum (effective March 12)
• 25% on auto parts including engines and transmissions (effective May 3)

Important Exemptions and Special Cases

Not all products face the highest tariff rates:

• Cell phones and certain electronics from China have received temporary exemptions from the highest tariff rates
• Various diplomatic negotiations have resulted in selective pauses or reductions for specific trading partners
• These exemptions are subject to change as trade negotiations continue

Stated Duration and Conditions

As it stands now, no specific benchmarks or timeline for removal have been announced, suggesting e-commerce sellers should prepare for these tariffs to be a long-term factor in their business planning rather than a short-term disruption.

What Are Tariffs?

In the most basic terms, tariffs are taxes imposed by governments on imported goods. Think of them as a toll booth products must pass through when entering a country. Unlike sales tax (which applies to all similar products regardless of origin), tariffs specifically target imported items.

Important Key Distinctions: Duties, Tariffs, and Import Fees

While they are often used interchangeably, these 3 terms have important differences:

• Tariffs: Government-imposed taxes on imported goods that are usually calculated as a percentage of the item’s value
• Duties: An all-encompassing term for any charges collected by customs authorities, including tariffs
• Import Fees: Additional charges beyond tariffs, such as processing fees, harbor maintenance fees, and merchandise processing fees

Understanding all of these distinctions is crucial because each component contributes to your landed costs in varying ways.

The HTS Code System: Your Product’s Tariff Identity

Every product that crosses international borders is assigned a Harmonized Tariff Schedule (HTS) code, which determines its tariff rate. Think of this as your product’s international tax ID number.

Practical Example: Let’s look at how wireless headphones would be classified:

• Basic classification: Electronic equipment (Chapter 85)
• More specific: Sound reproducing apparatus (Heading 8518)
• Final HTS code: 8518.30.20 – “Headphones and earphones, whether or not combined with a microphone”

This specific code determines the applicable tariff rate, and for products from China, it’s now potentially subject to the highest tariff rates, even while some electronics are receiving temporary exemptions.

All of this can feel overwhelming and complicated. For your convenience, we have included a quick reference guide as well as a link to the official HTC lookup tool below.

Quick Reference: Common E-Commerce Product Categories and Current Rates

Note: This table provides general guidance only.

 Always check the specific HTS code for your product.

Who Is Impacted By The Tariffs?

With the baseline 10% tariff on all imports, virtually every seller with an international supply chain will feel the effects to some degree. However, certain business models are particularly vulnerable:

• Importers of Chinese manufactured goods
• Automotive parts and accessories sellers 
• Dropshippers
• Private label brands 
• Materials importers 

Even sellers that source domestically may be indirectly affected as their U.S. suppliers pass along higher costs for imported materials or components. At the end of the day, if your supply chain relies on international goods, either directly or indirectly, it is a good time to assess your exposure to tariffs.

How Do the New Tariffs Affect E-Commerce Sellers?

The recent rollout of tariff increases represents one of the most significant shifts in import costs in years. For sellers that operate on platforms like Amazon, Walmart, and Shopify, these changes introduce several immediate challenges:.

Direct Financial Impact

To help demonstrate the effects of this, lets consider a wireless earbud that previously cost sellers $10 to import:

• Pre-tariff landed cost: $10 + (2.5% standard tariff) = $10.25
• Post-tariff landed cost (if no exemption): $10 + (10% baseline tariff) + (up to 135% additional China tariff) = $24.50

As a result, the seller’s product cost jumps by 139%. And that’s before factoring in storage, fulfillment, advertising, or platform fees.

The End of De Minimis Protection

Up until now, many sellers heavily relied on the “De Minimis” exemption, which allowed shipments valued under $800 to enter the US without paying any duties. Unfortunately, those exemptions no longer apply to products subject to the newly instituted tariffs. This change particularly impacts:

• Dropshipping models
• Small parcel importers
• Sellers using third-party fulfillment services that ship directly from overseas

Supply Chain Disruption

The tariff changes have caused several cascading effects throughout the supply chain:

• Manufacturing delays as factories face reduced orders and financial strain
• Shipping congestion as importers rush inventory to beat implementation dates
• Warehouse capacity issues as sellers stockpile inventory to postpone tariff impacts
• Extended lead times as products are rerouted through different countries

Common Tariff Mistakes E-Commerce Sellers Make

As many scramble to adapt to the new trade policies, a number of sellers are making costly mistakes that are making things worse. Here are the three most common mistakes we’re seeing:

1. Misunderstanding Mixed Shipments

A substantial number of sellers don’t realize that including even one heavily tariffed item in a shipment can affect documentation requirements for the entire shipment.

Example: When a seller adds just three units of a newly tariffed electronic component to their regular shipment of accessories not subject to tariffs, the entire container will be flagged for additional inspection, delaying delivery by three weeks and incurring storage fees that exceed the value of those three items.

Solution: Separate shipments by tariff category when possible, especially during this period of heightened scrutiny.

2. Confusing Country of Origin with Shipping Location

The country of origin is not where the product ships from. For the purpose of tariffs, it would be where the product was manufactured or substantially transformed.

Scenario: A seller sources products manufactured in China but ships them from a warehouse in Hong Kong or Singapore, incorrectly believing this avoids the China-based tariffs.

Solution: Proper documentation of the true manufacturing point of origin is essential. Authorities will be vigilantly watching for these types of misrepresentations.

3. Assuming De Minimis Still Applies

As we mentioned earlier, the De Minimis exemption no longer protects products subject to the new tariff rates. The size and value of the shipment no longer matters.

Consequence: Sellers continuing to rely on this strategy will face unexpected tariff costs as well as potential penalties for non-compliance. These penalties can be 2-4 times the tariff amount.

Solution: Recalculate all product costs to reflect the complete tariff charges, no matter the size or value of the shipment.

Why Sellers Shouldn’t Panic: Strategies to Adapt

While tariffs do present significant challenges, savvy sellers can implement several strategies to offset their impact and maintain strong businesses.

Short-Term Tactics

Inventory Management

There are certainly some quick-winning, low hanging fruit options to consider with your stock:

• Strategic stockpiling: If you have the capital and storage capacity, bring in additional inventory before tariff  implementation dates for phased increases
• Just-in-time optimization: For products with stable demand patterns, refine your reorder points to minimize carrying costs while ensuring availability
• SKU prioritization: Focus capital on your highest-margin and best-selling products that can absorb the costs of tariffs

Price Adjustment

Using our newly launched tariff calculator (more below), you can model various pricing scenarios:

• Partial absorption: Absorb a portion of the tariff increase while passing some costs along to consumers
• Tiered pricing: Create good/better/best product options at varying price points
• Bundling: Combine high-tariff products with low-tariff items to even out costs

Customs Documentation

Under heavy scrutiny, thorough documentation practices are essential:

• Systematically verify origin documentation and accurately assign HTS codes to all products. 
• Maintain records for at least five years and consider digital solutions that streamline compliance while minimizing costly errors during customs inspections.

Long-Term Strategies

Supplier Diversification

While not an overnight solution, beginning to diversify manufacturing sources is crucial:

• Research alternative manufacturing locations with lower or no additional tariffs
• Consider nearshoring options in Mexico or Central America for certain products
• Explore domestic manufacturing for high-margin items
• Build relationships with multiple suppliers to increase flexibility

Data-Driven Decision Making

Use data to proactively inform strategies and future-proof your brand:

• Implement real-time monitoring of tariff costs as a percent of revenue
• Create early warning systems for profitability thresholds
• Develop scenario modeling capabilities for future policy changes
• Benchmark your pricing against competitors to maintain market position

Strategic Partnerships

Look into finding allies to collaborate with that can reduce your costs and exposure to risk:

• Collaborate with logistics experts specializing in tariff mitigation
• Join industry associations that provide trade compliance resources
• Consider shared container arrangements with other sellers to reduce costs
• Explore direct sourcing relationships to eliminate middleman margins

Conclusion

These new tariffs deliver significant challenges for sellers, but with the right understanding, strategies, and tools, you can overcome these challenges. Remember:

• Monitor Trade Policy Updates
• Stay Compliant
• Diversify Shipping Options
• Make Data-Driven Decisions 

The sellers who distinguish themselves will be those who adapt quickly, make data-driven decisions, and stay flexible as policies change.

As always, we will remain committed to supporting your business through complications like these. Use our tariff calculator anytime, and sign up for our newsletter to stay current on trade updates and new features.