In February, President Donald Trump first imposed 25% additional tariffs on Canada and Mexico and subsequently paused the move by 30 days. Trump also scrapped a duty-free exemption for small parcels, known as de minimis, but reinstated it until the Commerce Department has a proper system in place to collect tariff revenue per an executive order.
While the holiday season may have been a bright spot for the retail industry, the past few weeks have become a game of Whack-a-Mole for many companies.
Executives from three agencies that work with e-commerce brands selling across platforms like Amazon, Shopify, and TikTok Shop said the impact of policy changes on e-commerce remains uncertain. But overall, prices of some items sold online may go up, as Trump tries to influence global supply chains.
Recalibration period: The way Vinny O’Brien, producer and consultant at e-commerce agency RMW Commerce, sees it, the initial enthusiasm for Trump's presidency and its promised business-friendly approach has quickly turned to uncertainty.
“There was this great enthusiasm that Trump is going to come in and there was going to be this uncoiling of a spring,” O’Brien told Retail Brew. “Business was going to be so simple.”
“That excitement and that enthusiasm has now gone to nervousness again,” he added. “Do you make a knee-jerk reaction right now, or do you hold and see what changes in a few days?”
Katya Constantine, CEO of agency Digishop Girl Media, told Retail Brew that her clients are paying attention to the landscape and evaluating alternatives to their supply chain strategy.
“I would say that a lot of our clients are asking the questions of, ‘Hey, do we need to have a Plan B?’ But no one has taken action yet,” she said. “I think there’s definitely a fair bit of ‘Let us see what will happen,’ but we haven’t had anyone pull out of a manufacturing facility in China or change distributors based on everything that has happened in the last two weeks.”
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
To compensate for higher tariff costs, Ryan Craver, founder of commerce agency Commerce Canal, told Retail Brew about 20% of his clients are considering switching to Amazon’s warehousing and distribution (AWD) offering. With AWD, brands can ship goods from their factory directly to an Amazon warehouse in the US.
Craver said brands could potentially save “enough” to offset the increase in production costs due to looming tariffs.
De-minimis matters: After a severe package backlog at US customs, Trump suspended the hastily implemented ban on de minimis. Many e-commerce retailers have come to rely on the de minimis exemption and roughly 4 million packages enter the US under this trade practice on a daily basis.
“De minimus is the only big change,” Craver said. “Tariffs have happened on [and] off over the years, so I don’t think that that’s the big impact to e-commerce.”
De minimus changes are expected to be impactful; however, Craver was quick to add that brands have now become “quite flexible, and typically, will find a way to sell a product, some way, somehow.”
In terms of overall headspace, he said, this year is no different than others.
“I feel as if this is just another year,” Craver said. “This is another operational change that we may need to make…We adapt to change quickly, and it’s part of what we signed up for.”