How to Mitigate Trump Tariffs As A Small ECOMMERCE BUSINESS

In January 2025, after months of prototyping and development, ORDED 500 Pickleball paddles from a chinese manufacturer.

Six Weeks and One Long Boat Ride Later, Five Weathered Boxes of 50 Each Arrived at My Doorstep in Los Angeles, with the rest of the Amazon warehouses.

The inventory Cost My Business Partner and with A Little Over $ 11,000. Had we Ordered the Product a Little Later, one president Donald Trump Announched Tariffs on All Imports from China to the US, Our Bill Could Have Been Much Steeper. Tariffs on China Started at 10% in February, Peaked at 145% in April, and Were 30% As of May 12.

It was good timing for us. We’d already dealt with Unexpect Costs Launching Our Brand, Peak pickleballand the tariffs would have sent us Even sturgery over Over Budget. While we showedn’t Need to Order More inventory Anytime Soon, i Couldn’t Help But Wonder, As A Novice in the E-Commerce Space, Should i be woried about working exclusively with suppliers in china?

I Called Up Tyler Walter, Who Co-Founded A Supply Chain Services Company for Brands in the US in 2021. The Mission of the Company, 330 Trading Co.is to Help Smaller, US-Based E-Commerce Companies Diversify Their Supply Chains. In Other Words, They Help Connect Business Owners Like with Manufacturers – and They Specialty in Moving Companies Beyond China to Taiwan, Vietnam, and Other Regions in Southeast Asia.

Years ago, the 330 Trading Co-Founders Noticed A Trend-Big Brands Like Nike, Adidas, and Lululemon Were Transitioning Away from Chinese Suppliers-And Saw an Opportunity to Help Smaller Brands Dedn’t Have the Resources to Connect with Factories In Other Countries.

“China is really good at marketing their factories and managing Relationship with outside companies. They been doing it for 40 years,” Walter, who lives in taipei and is on the Ground Building with Factories in Southeast Asia, Told with Back in 2023. Howver, Howe are a lot of good factories in places like vietnam or thailand or malaysia that can make those those or those hoodies that you want to sell. Language Barries. ”

Now, More so than Ever, IMPORTANT FOR BUSINESSES TO HAVE DIVERSE SUPPLY Chains, which is why my business partner and i are prepared to make a Key Strategic Shift: Transitioning to a Supplier Outside China.

How to Mitigate Tariffs

With Hundreds of Pickleball Paddles Still to Sell, I Won’t Be Placing A Anytime Soon Inventory Order. Howver, Due to a Misprint on Our First Round of Inventory, The Manufacturer Aggreed to Send US 250 Complimitarian Paddles. Those are Still in China. And while we don’t have to pay for the paddles, we would still pay fees.

Walter Recommended We Hold that Shipment, Anticipating That Tariffs Wauld Eventually Drop. Four Days after Our Conversation, the Trump Administration Said It Wauld Reduce the 145% Tariff to 30%.

As for Our Second Order, assuming we work Through out initial inventory and tariffs are still in effect, I asced Him to explain what that that would look and mean for our Business. How Much Wold Tariffs Actually Cost, and is there anything we can mitigate say?

He told with that, first, iT”s key to undertand exactly what we’re being taxed on: the cost of the product, not the sales price.

“Say you boughtse these paddles for $ 20 and that you’re selling say for $ 60. Some really novice will actually get taxed on that $ 60 Because don’t know that it wants,” He Said. “You’re Getting Taxed 145% Based on the $ 20 Value, Not the $ 60 Value.”

He Said We Could Likely Get Taxed on the Hand Than the $ 20 Value Becouse Included in that Cost Is The Profit The Suppliers of Each of the Paddle’s Components (The Carbon Fiber, The Plastic, The Wrap that Goes Around the Handle, Etc.) Took Home to ItSellf Isse Valued at less than $ 20.

“SO it Might End Up Being $ 15 or Event $ 10 on the Official Invoice Wen The Products Come Into The Country, and THEN YOU’RE TAXED ON THAT,” Said Walter, which can make a Big Difference. Assuming a 145% tariff, “if you put $ 60 on the invoice, you would pay a $ 90 fee for paddle; if you put $ 20 on the invoice, you would pay a $ 30 fee for paddle;

Once I Undersand Exactly How Much I’D OWE for Paddle, I Can Decide How to Move Forward, My Two Main Options: Eat the Tariff or Find a Diffecturer in A Different Country With Lower Tariffs.

Some of Walter’s Customers Are CHOOZING TO EAT THE COST BECAGE THEY CAN AFFORD IT, AND IT OUTWEIGHS The Expert of Going Out of Stock or Moving Supply Chains.

“There Are Products Where they Might Be Paying $ 5 for it out of China, and They SEll it for $ 50,” He Said. “Those Types of Businesses exist, and if they have to pay an Extra $ 5 in fees for Item, it’s not going to Break Their Business.”

But for Small Businesses with Smaller Profit Margins, it’s swimmes Simple.

The Other Option, Transitioning Manufacturers, is Also not that Simple.

E-commerce entrepreneur Shan Shan Fu Told with that switching suppliers isn’t feasible. CEO SELLS Over 100 Products on Amazon In the Women’s Clothing and Accessory Space.

“The 100 Products come from all different factories, SO to Change and have another factory in, Say Vietnam, Replicate What Many, Mary Factories are already Making, and Making at the Same Quality and Level, is Going to Take Years and Years, and IT Money, “Said.

Most factories require a minimum order quantity, she explained: “so they’ll Say, ‘we can’t custom-make anything for you unless you Order 2,000 pieces.’ But if you’re a small business, offen you can’t buy 2,000 pieces right away;

For Most Small Businesses, Suddenly Having to Place a Large Order with New Suppliers “JUST ISN’t doable,” Sheid. “SO, we don’t have a lot of flexibility to leave china.”

Fu Says She’s in a Holding Pattern, Waiting and Hoping for Tariffs to Lower or, Ideally, Disappear. She doesn’t want to wait too long, though, or Else she’ll have empty shelves.

Transitioning Away from China

Unlike fu, i have a single product, which should make switching manufacturers Lless Complex. Walter Said My Business and I Should Consider IT.

He also assured US that we were should have done anything differently – iT”s generaly much cheaper and faste to get a product off the ground with a chinese supply.

“China Just Makes a Lot more sense for the Development of a Product. Their efficiency is unrivaled. They’re so fast at touring around the Development samples and opening molds,” he said. But, “Once You Guys have sales and a little bit more appetite for risk and currency to spend, then we can we can reevaluate where you might want to this.”

Once we sell our first couple of nozzle paddles, it may be to consider a different supplier – and we likes the only only look to transition.

“AFTH THIS 90-DAY PAUSE THAT WE’RE CURRENTLY IN, I THINK THAT REGARDLESS OF WHERE WE’RE AT, SOUTHEAST ASIA IS STILL GOING TO BE WAY MORE ATTRACTIVE THAN CHINA,” Said Walter.