Tariff Tsunami: How New 2025 Trade Policies Are Shaking Ecommerce Supply Chains

Overview of the Tariff Situation (Post-April 2, 2025)

On April 2, 2025, the U.S. introduced sweeping new tariffs as part of an aggressive new trade policy: a 10% baseline tariff on nearly all imports, with higher rates targeting countries like China. 

Crucially, the U.S. also eliminated the de minimis exemption for parcels under $800 from China, meaning every small package now faces customs duties and full inspection. 

These changes have direct implications for all ecommerce businesses in one way or another, especially those who rely on complex international supply chains.

To illustrate the real-world impact, we examined three types of hypothetical T-shirt brands across different U.S. ecommerce models to show how different models are being impacted. 

We used:

• Realistic pricing assumptions based on typical T-shirt manufacturing and retail models
• Current U.S. tariff policy updates (April 2025 onward)
• Data from our April 3 DTC survey of 500+ brand operators

Each scenario includes a before-and-after breakdown of unit economics and highlights who will bear the cost, along with strategies for adapting.

Let’s get into it!

Example: A DTC apparel brand based in California selling graphic tees manufactured in Guangzhou, China.

• Headquarters: California, USA
• Product: Graphic T-shirts
• Sourcing: Factory in Guangzhou, China
• Fulfillment: U.S.-based 3PL or in-house
• Volume: Moderate (10,000–100,000 units/month)

Strategic Implications: 

1. Import Duty Shock

• The jump from $0.60 to $2.16 per unit in duties is significant — over a 260% increase.
• This impacts cash flow: a brand importing 10,000 units/month now pays $21,600/month in duties, up from $6,000 — a $15,600 difference.

2. Retail Pricing Pressure

• A $2 increase in retail price (from $25 to $27) softens the blow but doesn’t fully protect the original margin.
• Consumers in the $25 price range are price-sensitive; brands must justify this increase with stronger positioning, added value (e.g., better packaging, messaging), or bundling.

3. Margin Compression Risk

• Margin drops from 78.6% to 74.4% — a meaningful shift for any brand running paid media.
• Additionally - as you increase cost to the consumer, that may impact acquisition costs. 

🛠 Response Tactics

• Source Outside of China
  
  • China has been hit especially hard by tariffs, other countries can offer similar apparel manufacturing at lower or no tariff exposure.
  • Obviously that takes time
    
    
• Negotiate at the Factory Level
  
  • Some Chinese suppliers are open to absorbing part of the tariff hit or reducing FOB costs to maintain orders.
  • Request updated price quotes that factor in current political/economic conditions — they’re losing U.S. clients and may be flexible.
    
    
• Redesign for Tariff Efficiency
  
  • Shift to more U.S.-sourced trims/extras (for this example, labels, packaging, etc.) to lower overall tariff if you can qualify for partial domestic content credits.
    
    
• Reconsider Fulfillment Strategy
  
  • Consider shifting some orders to bulk import and use a U.S.-based screen printer for final customization (final customization).
  • This hybrid approach might reduce dutiable value if blanks are cheaper and the value-added steps are done domestically.

TL;DR Summary

A 54%+ effective tariff rate on Chinese-made goods pushes landed unit costs up nearly 30%, forcing U.S. brands to raise prices and accept margin compression. Sourcing alternatives, smarter product redesigns, and transparent pricing communication are key to staying competitive.

We also did this breakdown for: 👇 

• A US-Based T-Shirt Brand Manufacturing Domestically
• A US-Based Dropshipping T-Shirt Brand (Temu-Style)

Example: A Midwest-based brand using U.S.-grown cotton but importing dyes, trims, and packaging.

• Headquarters: Midwest, U.S.
• Product: Premium T-shirts (100% U.S. cotton, sewn in the U.S.)
• Imports: Dyes, trims (e.g., labels, threads), packaging (e.g., poly bags, printed boxes)
• Market Position: Sustainable, ethically-made brand with $35–$45 price point

💸 Detailed Cost Breakdown (Per Unit)

Strategic Implications

1. Why Are Domestic Brands Still Affected?

• Even though the product is sewn and assembled in the U.S., imported components like:
  
  • Dyes (often sourced from India, China, or Germany)
  • Trims (labels, care tags, neck tape)
  • Specialty packaging (foil-stamped boxes, recycled poly mailers)

Many of these elements are now subject to new blanket tariffs. These typically weren’t subject to high duties, but post-April 2, they now carry a 10%+ base duty, with higher surcharges depending on origin country.

2. Impact Is Manageable but Not Invisible

• The ~$0.80 increase in cost per tee seems small in isolation, but… At 10,000 units/month, that’s $8,000/month in additional costs. 
• Over a year, that’s $96,000 off your bottom line — or 1–2 salaries.
• The brand raises prices from $38 → $40 to compensate. With loyal or value-conscious customers, this can work, especially with proper messaging.

3. Margin Preservation Through Price Increase

• This brand is one of the few able to raise prices without eroding gross margin, because their unit economics already assume a premium price point and lower cost sensitivity (many brands that are manufactured in the US have premium positioning and price in the market)
• The $2 bump is a ~5% increase — well within the tolerable range for most customers of ethically made apparel. Especially if the price increase is explained transparently.

🛠 Response Tactics

• Source Domestically
  
  • Look for domestic dye houses and trim suppliers, especially those with automated/low-waste production processes to keep costs close to parity - however these are traditionally more expensive already.
  • USMCA countries (Mexico, Canada) are alternatives with lower risk of further tariff expansion - however as we all know, the market continues to shift
    
    
• Design for Domestic Simplicity
  
  • Reduce reliance on imported specialty trims (for this example., branded neck tape, rubber labels) by switching to elements that can be fully manufactured in the US (screen printing vs. woven labels for example)
  • Eliminate extra packaging layers (sleeves, tags, inserts) that contribute to tariff costs if importing those.
    
    
• Lean Into Premium Positioning
  
  • Use this opportunity to justify price increase through storytelling: “We proudly manufacture in the U.S. using sustainable, ethical practices. Rising global input costs haven’t changed our commitment to quality — only our price, by $2.”
  • Reinforce brand identity through marketing that focuses on transparency and craftsmanship.
    
    
•  Improve Internal Efficiency
  
  • Tighten up production yields, inventory forecasting, and warehouse processes to offset cost increases without cutting corners.
  • Consider investing in more automated cutting/sewing tech to lower domestic labor costs per unit over time.

TL;DR Summary

Even Made in USA brands are feeling the ripple effects of the April 2025 tariffs due to imported inputs (for these examples, like dyes and trims). While the total unit cost increase is modest (~5.5%), it adds up over time. Smart pricing strategy, tighter production, and transparency with customers allow these brands to protect margins and stay resilient.

• Business Type: U.S.-based Shopify dropshipping brand
• Product: Printed T-shirts sourced via AliExpress or CJ Dropshipping
• Fulfillment: Direct from China to U.S. customer
• Average Order Size: 1 unit, shipped individually under $20
  
  

💸 Updated Cost Breakdown (Per Unit — With 54% Tariff)

Strategic Implications

1. Margins Have Collapsed

• That $3.24 in new duties erodes one-third of your profit per shirt.
• If you’re selling 1,000 units/month, that’s $3,240/month gone — nearly $40K/year in unexpected cost.
  
  

2. No More De Minimis = No More Loopholes

• Every single parcel now must clear U.S. customs. 
• Tariffs, delays, inspections, and paperwork — even for a single $6 T-shirt.

🛠 Response Tactics (With 54% Tariff Reality)

• Move to U.S. Fulfillment
  
  • Bulk ship 500+ units to a U.S.-based 3PL and clear customs once.
  • Duties still apply, but you reduce the cost per unit via volume consolidation.
  • Faster delivery = fewer refunds = better CAC:LTV.
    
    
• Raise Prices (Carefully)
  
  • Consider bumping up to $20–22 to offset the new duty.
  • Pair with a stronger brand story, bundled offers (2 tees for $35), or free shipping threshold.
    
    
• Change Sourcing Country
  
  • Without Deminimus, China is no longer as viable for low-margin DTC dropshipping.
  • Although the landscape is changing quickly, search for other countries who can fulfill the product with lower tariff rates
    
    

How Temu and Shein are Navigating the Tariffs:

Big platforms aren’t immune, but they’re adapting fast:

• Establishing U.S. Warehousing and Fulfillment Centers: By setting up distribution centers within the United States, these companies can store products in bulk domestically. This approach allows them to handle customs duties at the point of bulk importation, potentially reducing per-unit costs and improving delivery times to customers.
  
  
• Diversifying Supply Chains: To mitigate the impact of increased tariffs on Chinese goods, Temu and Shein are starting to source products from countries not affected by these tariffs. This diversification aims to reduce reliance on Chinese manufacturing and explore more favorable trade conditions elsewhere.
  
  
• Adjusting Pricing Strategies: The additional costs incurred from tariffs may lead these companies to reevaluate their pricing models. This could involve absorbing some of the increased costs to remain competitive or passing them on to consumers through higher prices. 

Small dropshippers or brands built around direct shipping from China, must either professionalize or pivot — the cheap, direct-from-China model is no longer a sustainable business on its own.

Dropshipping from China just got 30–50% more expensive. The U.S. has axed the de minimis exemption for Chinese imports, meaning every package now faces duties and delays. Dropshippers must now adapt by shifting to DDP fulfillment, warehousing inventory in the U.S., raising prices, or sourcing from non-tariff countries to survive.