How e-commerce brands can adapt to the 2025 tariff upheaval

A quick overview: What just happened?

In April 2025, the U.S. triggered a global trade shakeup with a sweeping tariff campaign dubbed “Liberation Day.” This move introduced:

• A 10% universal tariff on nearly all imports into the U.S., effective Apr 5, 2025
• A 145% tariff on imports from China
• A 25% tariff on all imported automobiles and parts
• An end to de minimis exemptions for shipments under $800 from China and Hong Kong, effective May 2, 2025, meaning even small parcels now face new import fees
• Retaliatory tariffs from China, including an 84% tariff on U.S. goods
• Other country-specific tariffs, however, on April 9, 2025, President Trump announced a 90-day suspension of newly imposed tariffs for over 75 countries that sought negotiations and refrained from retaliatory measures

The result? Importing goods into the U.S. just got significantly more expensive and complicated — and so did selling U.S. products abroad.

What this means for e-commerce brands

If you run a cross-border e-commerce business, you’re likely already feeling the impact—or bracing for it. The cost of doing business is going up fast, especially for brands reliant on international suppliers or selling abroad.

Merchants are grappling with tighter margins; inventory and cash flow challenges; increased friction in global sales; new compliance burdens like updated HS codes and origin labels; and customer churn when unexpected duties show up at delivery.

In short: the pain is real—but there are options. The rest of this guide outlines practical strategies to consider—from supply chain shifts to pricing and fulfillment adjustments—that can help ease some of the pressure tariffs are creating across operations and the customer experience.

Why DDP is becoming the new standard

If you sell internationally, DDP (Delivered Duty Paid) shipping is now the smart default.

Under DDP Incoterms (International Commercial Terms), the seller is responsible for handling import duties, taxes, and customs clearance before the goods reach the buyer. These costs are typically calculated and collected at checkout, so the buyer still covers them upfront. This contrasts with DDU (Delivered Duty Unpaid), where the buyer covers those costs upon delivery — often resulting in surprise charges.

Benefits of DDP:

• You calculate and collect import duties upfront
  
  
• Customers aren’t surprised with fees at delivery
  
  
• You avoid customs delays and abandoned packages
  
  

Shippo recommends DDP because it ensures transparency and a smoother customer experience. 

Learn more about DDP Incoterms from the International Chamber of Commerce.

Where to focus first: strategies to help mitigate tariff impacts

1. Rethink sourcing and supplier mix

In light of evolving trade policies and tariff structures, it's essential for businesses to evaluate their sourcing strategies. While the landscape is complex and each company's situation is unique, here are some considerations:​

• Diversify sourcing to countries with lower tariff rates: Exploring suppliers in nations with more favorable tariff conditions can be beneficial. For instance, India faces a 26% tariff, while Mexico offers potential advantages under the United States-Mexico-Canada Agreement (USMCA) for products that meet specific rules of origin requirements. It's important to note that the 0% tariff benefit applies only to goods that comply with USMCA's stringent criteria. ​
  
  Next Steps: Conduct a thorough analysis of your product classifications to determine eligibility under USMCA. Collaborate with trade compliance experts to ensure adherence to origin requirements.​
  
  
• Explore domestic manufacturing: Shifting production closer to home can help eliminate import taxes and reduce supply chain disruptions. However, this approach may involve higher labor costs and require significant initial investment.​
  
  Next Steps: Evaluate the cost-benefit ratio of domestic production, considering factors like labor expenses, infrastructure availability, and potential government incentives.​
  
  
• Implement nearshoring and reshoring strategies: Relocating production to geographically closer countries can enhance supply chain agility and reduce transportation costs. For example, many companies are considering nearshoring to Mexico to better serve the North American market. ​
  
  Next Steps: Identify potential nearshoring locations that align with your operational needs. Assess the political and economic stability of these regions to ensure long-term viability.​
  
  

2. Build inventory wisely

Some merchants front-loaded inventory before April to lock in lower costs, while others are continuing to stockpile high-risk goods in case of future hikes or supply shocks. This strategy could be employed for goods coming from countries other than China during the 90-day pause on tariff hikes announced on April 9 and is especially smart for:

• Non-perishable products
  
  
• High-margin items most affected by tariffs
  
  
• Goods under threat of further retaliation or restriction
  
  

For others, it may be time to pare back SKUs or discontinue products with prohibitively high landed costs. Of course, building inventory isn’t accessible to everyone — especially sellers with limited capital or storage space. But even small inventory shifts or phasing in higher-margin products can help ease the pressure.

3. Adjust pricing with care

Tariffs force pricing decisions—there’s no way around it. Sellers should consider:

• Raising prices selectively and clearly explaining why to customers
  
  
• Bundling additional charges into shipping or item cost rather than showing them as separate “fees”
  
  
• Using dynamic pricing tools to stay competitive as costs evolve
  
  
• Monitoring competitors to avoid pricing out of the market
  
  

Even a short explainer at checkout (“New trade tariffs have increased import costs — thank you for understanding”) can build customer trust.

4. Use trade and customs programs

There are several legal ways to reduce or delay duty payments, if you know where to look:

• Duty drawback: If you re-export goods or incorporate them into exported products, you may be able to reclaim up to 99% of the tariffs you paid.
  
  
• Foreign Trade Zones (FTZs): These are designated areas where imported goods can be stored, processed, or assembled without paying duties until the goods enter U.S. commerce.
  
  
• Use the USMCA or other Free Trade Agreements (FTAs): Products that meet the agreement’s rules-of-origin requirements can travel tariff-free between member countries.
  
  
• De minimis routing (legally): With the U.S. eliminating de minimis exemptions for shipments under $800 from China and Hong Kong, effective May 2, 2025, sellers should exercise caution. While other countries may still qualify for de minimis treatment, the U.S. administration has indicated plans to extend the removal of these privileges to additional countries in the future. Therefore, it's essential to accurately declare the product's country of origin and consult with trade compliance experts before considering such routing strategies.
  
  

Working with a customs broker or trade advisor can help uncover which strategies apply to your products and shipping flows.

5. Optimize logistics and fulfillment

Tariffs affect more than just procurement—they reshape your shipping model too. Brands are:

• Choosing DDP Incoterms to control duties and improve delivery experience
  
  
• Considering regional warehouses (e.g., shipping bulk to the U.S., then fulfilling locally)
  
  
• Testing fulfillment networks in Canada, Mexico, or the EU to bypass retaliatory import taxes
  
  
• Switching from drop-shipping to bulk import and local reshipment for better cost control
  
  

Mid-market brands can benefit from building a distributed, tariff-smart fulfillment model by working with trusted logistics partners. 

6. Communicate transparently with customers and suppliers

Especially for DTC brands, clear communication matters more now than ever—not just with your customers, but also with your suppliers. 

On the customer side, consider:

• Sending emails or updates to explain price changes
  
  
• Sharing behind-the-scenes efforts (e.g., “We’re moving production closer to home”)
  
  
• Clarifying shipping expectations upfront, especially around duties or delays
  
  

Transparency builds trust—and helps buyers view your brand as a reliable partner during turbulent times.

On the supplier side, open conversations can lead to shared solutions. Your suppliers are also aware of these tariffs, and in some cases, may be open to negotiating shared costs—especially if you’re a key customer. You might explore:

• Asking if they’re able to absorb part of the increase (even temporarily)
• Renegotiating pricing or terms based on new tariff impacts

7. Use tech to reduce friction

Digital tools and AI are now essential in tariff planning. Smart merchants are using:

• Duty calculators at checkout to ensure no surprises
  
  
• AI-powered HS code classification to avoid costly customs errors—this technology helps assign the correct Harmonized System (HS) codes for your products by analyzing descriptions, attributes, and trade rules. It reduces the risk of overpaying duties or triggering customs audits due to misclassification
  
  
• Forecasting tools to simulate pricing scenarios and identify new supplier options
  
  
• Integrated dashboards to monitor duties, taxes, and landed costs across all shipments
  
  
• Carrier integrations with UPS, FedEx, and USPS to automate declarations, prepay duties, and ensure real-time customs compliance.
  
  

Sellers who use technology to manage tariff complexity will scale faster—and more profitably—than those relying on manual processes.

How logistics and shipping are changing

Carriers, platforms, and fulfillment providers are racing to support merchants through the tariff turbulence:

• For goods sent through the international postal network from China and Hong Kong, the following duty rates will apply:
  
  • Starting May 2, 2025: A duty of 30% of the item's value or a flat fee of $25 per item, whichever is higher.​
  • Starting June 1, 2025: A duty of 30% of the item's value or a flat fee of $50 per item, whichever is higher.​ ​
• Platforms like Shopify are integrating duty calculators and checkout tools to show landed costs
• 3PLs and warehouse partners are helping brands use Foreign Trade Zones and bonded storage to delay tariff payments
• Marketplaces like Etsy are fixing country-of-origin label issues to avoid compliance risks for sellers
  
  

Overall, shipping is becoming more complex, more expensive, and more strategic—especially for cross-border e-commerce.

How Shippo can help

Navigating the complexities of international shipping, especially with the evolving tariff landscape, requires flexibility and efficiency. Shippo offers tools and integrations designed to assist businesses in adapting to these challenges:

• Access to multiple carriers—Shippo connects you with a global network of carriers, allowing you to compare rates and choose the most cost-effective and reliable shipping options for each destination. You can also use your own carrier contracts.
  
  
• Support for DDP shipping—Shippo’s platform supports DDP with select carriers (UPS, FedEx, DHL Express, and Canada Post), helping avoid customs delays and surprise delivery fees—especially important for cross-border fulfillment.
  
  
• Simplify API-based fulfillment flows—Shippo’s API automates how orders are routed, labels are purchased, and duties/taxes are managed—enabling smarter, scalable fulfillment strategies.

Want to learn more? Contact an expert.

What it takes to adapt—and where to start

Tariffs may stick around for months—or years. Trade tensions could ease, or escalate. But the reality is that most e-commerce businesses don’t have the luxury of pausing to wait and see. This is a tough moment, especially for brands already operating on thin margins.

We recognize that not every merchant has the tools, capital, or bandwidth to make sweeping changes overnight. And that’s okay. The goal isn't to do everything at once — it's to start somewhere.

This can be a catalyst for smarter operations over time. Even small steps now can ease the pressure and help protect your business. Some starting points to consider:

• Exploring smarter sourcing relationships
  
  
• Bringing more clarity to shipping costs and delivery expectations
  
  
• Identifying one or two areas in your logistics setup where you can reduce cross-border friction
  
  
• Getting marketing, ops, and finance aligned on how tariffs are affecting margins
  
  

The brands that focus on what’s within their control — and build resilience one step at a time — will be better positioned to weather the storm and grow on the other side of it.

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