Navigating the New US Tariffs: How Small Businesses are Impacted and What They Need to Know
Recent executive orders from President Donald Trump targeting most goods imported from key United States trade partners–Mexico, Canada, and China–will reshape the U.S. economy, especially for businesses that rely on imported goods. The new tariffs and changes to de minimis will increase costs for large-scale importers but could create new opportunities for small businesses in the direct-to-consumer (DTC) space by reducing competition from direct international retailers.
Understanding Trump’s New Tariffs and De Minimis Rule
- 10% tariff on all goods from China (in effect February 4, 2025)
- 25% tariffs on imports from Mexico & Canada (paused temporarily, but still under review)
- De minimis exemption eliminated, meaning no more duty-free imports under $800 (temporarily reinstated)
What is a tariff?
A tariff is a tax imposed by a government on imported or exported goods, increasing their cost for businesses and consumers. Tariffs are often used to protect domestic industries and as leverage in trade negotiations.
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What is the de minimis loophole?
The de minimis exemption allowed imported goods valued at $800 or less per shipment to enter the U.S. duty-free when shipped directly to consumers. This rule fueled the growth of low-cost imports from China and helped platforms like Amazon, Walmart, Temu, and Shein offer cheap, cross-border shipped products.
Now, with de minimis gone, businesses relying on direct imports from China will see their costs dramatically rise—creating an opening for the U.S.-based brands that can adapt to the new market conditions.
How Tariffs and De Minimis Impacts Different Business Models
Wholesalers
For wholesalers that rely on bulk imports from China, Mexico, and Canada, the new U.S. tariffs and de minimis elimination mean increased import costs, and supply chain disruptions. Shifting trade policies will challenge traditional supply chain models, but they will also create opportunities for businesses that adapt quickly.
Wholesalers that optimize their sourcing, inventory, and fulfillment operations can position themselves as key domestic suppliers for retailers looking to reduce reliance on overseas imports and can expand into DTC themselves.
How Wholesalers Should Adapt
- Optimize Inventory: Improve inventory management and productivity with better predictive tools and insights
- Diversify suppliers: Seek alternative sourcing from domestic or non-tariffed countries
- Negotiate pricing: Work with suppliers and manufacturers to share costs or find lower-cost alternatives
- Build DTC fulfillment capacity: Be ready to start selling direct or provide dropship support to their retail buyers to grow business
Retailers
Retailers selling via DTC, marketplaces, and brick-and-mortar are at a major turning point. While higher tariffs and de minimis changes will disrupt supply chains and increase costs, they will also reduce competition from ultra-low-cost direct foreign retailers.
For retailers set up properly, this shift presents a huge opportunity to capture more market share, achieve better margin, build stronger customer loyalty, and expand U.S.-based fulfillment and sourcing strategies.
How Retailers Should Adapt
- Shift product sourcing: Work with U.S.-based suppliers or from lower-tariff regions
- Assess product lines: Identify which SKUs are most affected and find alternatives
- Implement smart pricing: Adjust pricing strategies to maintain profit margins while staying competitive
- Expand warehouse capabilities: Prepare for higher DTC fulfillment demand
Dropshippers
Dropshipping businesses that rely on direct-from-China imports are most at risk under the end of de minimis. With tariffs now applying to all shipments, margins will shrink significantly, forcing dropshippers to rethink fulfillment strategies.
How Dropshippers Should Adapt
- Shift to domestic suppliers: Eliminate cross-border suppliers with U.S.-based fulfillment partners
- Bundle products: Increase shipment values to make higher-margin sales
- Improve customer experience: Focus on fast shipping, unique branding, and value-added services
3PL Providers
With the elimination of the de minimis rule, cross-border e-commerce shipments from major overseas retailer platforms such as Temu, Shein, and Alibaba, will become significantly more expensive. This change will force many brands to shift their supply chains to U.S.-based fulfillment and logistics providers.
For 3PL providers, this isn’t just a challenge, it’s a huge growth opportunity. Brands that previously relied on cheap, direct imports from China will now be seeking domestic fulfillment partners to store, pick, pack, and ship their inventory. 3PLs that can scale efficiently will win big.
How 3PLs Should Adapt
- Expand DTC fulfillment: More domestic pick, pack, and ship services will be needed
- Optimize technology: Automate order management and warehouse operations to low operation cost and prevent errors
- Enhance customer experience: Better client interactions and superior order tracking will become major differentiators
How DigitBridge Helps Businesses Stay Competitive
As the market shifts, businesses need technology-driven solutions to navigate rising costs and supply chain disruptions and to capitalize on the new opportunities presented by the changing economic environment. DigitBridge’s all-in-one, cloud-based platform empowers business by offering:
- Product Information Management: Manage product data efficiently across all sales channels
- Cloud-Based Warehouse Management System: Optimize storage, fulfillment, and shipping operation
- Seamless Omnichannel Integrations: Sync inventory across marketplaces, DTC sites, and wholesale platforms
- Omnichannel Order Management: Complete management of your wholesale, retail, DTC business both online and offline
By leveraging DigitBridge’s solutions, businesses can streamline operations, offset costs, and remain competitive in a rapidly evolving trade environment.