New Tariffs Are Changing Ecom—Here’s What It Means for DTC
Summary
Rising tariffs = rising costs. DTC brands are scrambling to adjust. Here’s what’s happening.
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Transcript
The tariffs went into effect and then they didn't. And then they got rolled 30 days. But, you know, I think it's caused all of us here in e-commerce and DTC to rethink some things.
Anyway, you and I put our heads together and came up with five ways that these tariffs are impacting DTC brands, right?
Yeah, the first is this de minimis loophole.
There was a $800 duty free sort of threshold below which I guess if you brought product into the U.S you never had to a duty before. It enabled the, the TEMUs and the Sheins. So that loophole was closed as part of the new tariffs.
The second way DTC brands in the States are getting impacted, rising costs, obviously. So whenever you, whenever the government slaps a tariff on something, the brands actually don't pay that tariff. I mean, they just get passed on to the customer.
So I think it essentially has increased the cost of anything that falls under the tariff.
Number three, more and more brands are going to shift to U.S based warehousing and domestic suppliers.
Number four, increase in tariffs will lead to changed consumer behavior. Consumer demand is going to be curtailed a little bit if the prices go up. I think Trump has also signaled that he wants to offset the tariffs with cuts in income tax, which would then increase demand.
The fifth way tariffs are going to impact brands are if you are exporting because a lot of our trading partners have also put tariffs on goods coming into their country, Canada, Mexico. If you are exporting one of those countries, you'll just see the same in many ways, the same impact, but on the flip side.