How eCommerce businesses can survive tariffs and thrive in a new trade landscape
Global trade dynamics are shifting, and the implications for marketplaces and eCommerce businesses are significant.
In the last few months the United States and European Union, the world’s largest and second-largest economies, respectively, have made changes to their de minimis customs rules — ushering in major changes to the way online goods are bought and shipped.
Additionally, the U.S., under the new Trump administration, is issuing new tariffs targeting major trading partners like China, Canada and Mexico.
As this new trade landscape is established, the need for businesses to understand and adapt to these challenges has never been greater.
Retailers, brands and manufacturers can adapt to the changes and thrive by leveraging technology that provides efficient seller management and onboarding.
Understanding the tariff landscape
Tariffs are taxes imposed on goods as they move across international borders. Typically, tariffs are used to protect domestic industries, generate revenue or retaliate against trade policies; and therefore, tariffs can significantly impact global trade patterns.
Recently, the U.S. government, under President Donald Trump, imposed tariffs on goods from major trading partners like China, Canada and Mexico. This included specific actions targeting the "de minimis" provision.
What is "de minimis"?
The de minimis exemption allows packages worth less than $800 to be imported duty-free into the U.S., and for packages of less than €150 into the EU.
While this provision once supported the flow of small-value goods into the US and European countries, it has now become a focal point in trade negotiations.
One reason for this is due to perceived abuses of the exception. For example, the exemption has led to a surge in low-value shipments in the US, swelling from 600,000 in 2020 to over 1.3 billion annually by 2024.
In the US, the Trump administration's recent tariffs aim to curtail this provision, imposing taxes on many of these previously exempt products. This move could significantly affect global eCommerce businesses, particularly those reliant on Chinese exports or marketplaces like Temu and Shein.
The impact on eCommerce
Tariffs bring rising costs for eCommerce businesses and their customers — especially those dealing with international sellers and low-cost shipping.
They also present challenges for delivery services, potentially disrupting express shipping models.
Conversely, tariff adjustments may lead to benefits for local sellers, fostering a more competitive environment and providing them opportunities to sell on new distribution channels.
Rising costs for eCommerce businesses
Tariffs inevitably increase the cost of imported goods. For marketplaces and eCommerce businesses stocking goods from international sellers, these costs may be passed on to consumers through price hikes.
Retailers relying on the once-lucrative "de minimis" provision to ship low-cost goods now face additional expenses, threatening their competitive edge and putting some business models, like fast fashion, on alert.
A shift in strategy away from international sellers brings with it its own challenges, such as new seller and catalog onboarding that — without the right technology — can bring on additional cost and resource constraints.
Challenges for delivery services
Express delivery companies like FedEx and UPS, which handle a significant volume of cross-border shipments in the US, have advocated for maintaining the de minimis exemption due to their reliance on this trade framework.
Other companies like DHL, who have a larger footprint in the EU, have begun charging customers extra fees to cover the costs associated with these new tariffs.
Any changes to these provisions could cause long-term disruption to their operations and shipping models. In the near-term, however, customers are already feeling the pinch.
Local seller opportunities
On a brighter note, reducing imports under the de minimis threshold could level the playing field for local sellers.
For example, research from the National Bureau of Economic Research reveals that anywhere from 22-48% of parcels processed under the de minimis rule in the U.S. originate from Chinese platforms. Because these cheaper parcels are able to skirt customs, they’ve been able to disrupt and displace local sellers that might have higher domestic production costs.
As a result, some larger marketplaces are looking for ways to substitute international sellers with those who keep stock domestically, while others still see this as an opportunity to identify and onboard new, local sellers to their platforms.
In that regard, tariff adjustments may present an opportunity for businesses to regain their market competitiveness within their origin countries.
The key to thriving amid tariff chaos
Adapting to the new tariff environment hinges on two key capabilities: efficient seller management and rapid seller onboarding.
Efficient seller management
Marketplaces need robust seller management strategies that allow them to pivot swiftly and limit exposure to high-tariff markets. There’s a number of ways technology can help, including:
Data-driven insights: Using AI tools and integrated platform analytics, marketplaces can analyze seller performance and inventory origins, enabling them to manage and prioritize sellers effectively. This also allows Marketplaces to have an overview on both catalog and seller performance, and create action plans faster.
Selective exposure: Technology can restrict products from tariff-affected countries and promote local or tariff-exempt goods, maintaining cost efficiency. This tech can also help promote local sellers or premium sellers.
Risk mitigation: Advanced platforms flag high-risk sellers or products, enabling swift decision-making to reallocate resources.
Efficient seller management ensures that platforms are poised to adapt to new economic realities without compromising their user experience.
Rapid seller onboarding
The globalization of supply chains requires marketplaces to onboard local sellers quickly to meet new consumer demands. A streamlined onboarding system is essential and can provide important capabilities, like:
Proactive scalability: Tools that automate Know Your Customer (KYC) processes can accelerate onboarding times while maintaining compliance and security.
Expanding domestic networks: Establishing relationships with domestic sellers ensures continuity in supply, especially when international imports slow down.
Enhanced user experiences: By onboarding local sellers more effectively, marketplaces can reduce shipping times, increase product availability and maintain seamless customer service.
Platforms that master these capabilities will help eCommerce businesses weather the shifting trade landscape more effectively.
Adaptation is the path to success
Navigating the complexities of tariffs requires eCommerce businesses and marketplaces to rethink their strategies.
From efficient seller management to rapid onboarding and leveraging technology, those who adapt won’t just survive, they’ll thrive. By proactively addressing these challenges and focusing on innovation, you can position your eCommerce business to lead in the new trade landscape.
For more help and insights on running a successful eCommerce business in today’s shifting landscape, download our 11 best practices eBook, here.
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