How to Cope with Tariff Wars
For U.S.-based e-commerce brands that rely on overseas suppliers, tariff wars can significantly increase costs and disrupt supply chains. However, businesses can take strategic steps to mitigate these challenges and maintain profitability. Here’s exactly what to do and how to do it.
1. Negotiate Better Terms with Suppliers
Many suppliers are willing to adjust pricing or share tariff costs to maintain long-term partnerships.
How to do it:
Discuss bulk order discounts or extended payment terms with suppliers.
Negotiate shipping terms that minimize tariff costs, such as FOB (Free on Board) shipping.
Explore supplier alternatives in countries with lower tariffs on U.S. imports.
2. Diversify Your Supplier Network
Relying on a single country for sourcing increases vulnerability to tariff fluctuations.
How to do it:
Identify alternative manufacturers in tariff-friendly countries like Vietnam, India, or Mexico.
Split production between multiple suppliers to reduce dependency on one region.
Work with trade consultants to find competitive, tariff-efficient supply chain options.
3. Pass Tariff Costs to Customers Strategically
While increasing prices isn’t ideal, careful pricing adjustments can help offset tariff expenses.
How to do it:
Adjust pricing gradually and transparently communicate cost increases to customers.
Offer bundled deals, discounts, or loyalty rewards to soften the impact.
Introduce a premium product line that justifies higher pricing.
4. Leverage Tariff Engineering
Modifying product design or assembly locations can lower tariff classifications.
How to do it:
Change product components or materials to qualify for lower tariff brackets.
Complete final assembly in a country with lower tariffs instead of importing finished goods.
Consult a trade compliance expert to explore reclassification opportunities.
5. Optimize Shipping and Logistics
Efficient logistics can help offset increased costs from tariffs.
How to do it:
Consolidate shipments to reduce per-unit shipping expenses.
Partner with freight forwarders that specialize in tariff-reduction strategies.
6. Expand into Tariff-Friendly Markets
Selling in regions with favorable trade agreements can help balance lost margins.
How to do it:
Focus on countries with free trade agreements (FTAs) with the U.S., such as Australia, and South Korea.
Use international marketplaces like MercadoLibre (Latin America) or Rakuten (Japan).
Partner with local distributors to reduce direct export costs.
7. Monitor Trade Policies and Stay Agile
Tariff regulations frequently change, so businesses must stay informed and adaptable.
How to do it:
Subscribe to trade policy updates from government agencies and industry associations.
Work with legal and trade experts to adjust strategies based on evolving tariffs.
Be prepared to shift supply chains quickly if new trade agreements emerge.
By implementing these strategies, U.S.-based e-commerce brands can navigate the challenges of tariff wars while keeping costs under control and maintaining growth. Flexibility, supplier diversification, and smart logistics planning will be key to sustaining profitability in a volatile trade environment.
Verde Fulfillment USA has 11 fulfillment centers in six cities across the US. We help hundreds of brands with their direct-to-consumer orders, B2B retail orders, and large distribution center orders to some of the largest retailers in the country. If you would like to learn more about our capabilities and how we can help your brand grow, reach out to us.
