Surviving the Tariffs

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Just a heads up: today I’d like to focus on Trump’s Tariffs, since I know many brands are impacted by it.

Topics we'll cover today:
💠 Surviving the Tariffs
💠 Overcoming Challenges in Product Development

Surviving the Tariffs

Tariffs are here, whether you like it or not.

Let's break down what it means for brands.

De Minimis loophole eliminated on goods from China and Hong Kong

As of April 2, 2025, a new executive order has officially removed the de minimis exemption for imports under $800 coming from China and Hong Kong.

This change takes effect on May 2, 2025.

However, the exemption still applies to shipments under $800 from other countries, like Vietnam.

That’s great news for brands already manufacturing outside of China and shipping directly to customers or through non-US 3PLs (like those based in Mexico). These businesses won't be affected by the new policy.

Here’s how that might look in practice (example by Jonathan Snow):
⤷ The brand produces goods in Vietnam
⤷ It sends bulk shipments to a Mexican 3PL
⤷ Orders are fulfilled individually from Mexico to the US
⤷ Each customer order stays under the $800 limit

No added fees. No disruption.

On the flip side, brands still manufacturing in China or Hong Kong will face steep costs. Any shipment under $800 will now be hit with a 30% duty or a $25-per-item fee (whichever is higher). And come June 1, 2025, that fee increases to $50 per item.

Global Tariffs

Trump’s April 2, 2025 tariff update just changed the game for global trade.

It introduced two new layers of import duties:

⤷ A flat 10% baseline tariff on all imports

⤷ An additional “reciprocal tariff” that varies by country

This new tariff structure stacks on top of any existing tariffs, like the 20% already applied to Chinese goods.

So, what’s the reciprocal tariff?

It’s based on how imbalanced trade is between the US and each country.

Formula:

Reciprocal Tariff = (US trade deficit with country / total imports from that country) 2

Example:

If the U.S. imports $800M from Country Y and exports only $200M to them:
⤷ $600M deficit ÷ $800M = 0.75
⤷ 0.75 ÷ 2 = 37.5% reciprocal tariff

Even countries with no deficit still pay the 10% baseline tariff.

What can brands do now?

A few years ago, I adopted a saying that has served me well: "Focus on the solution, not on the problem."

So, once you understand how this impacts your brand, it's time to see how you can adapt.

Before going into that, here's how other brands will respond to this, according to this survey by the DTC Newsletter:

In the end, it all comes down to these options:
⤷ Cutting expenses
⤷ Increasing prices
⤷ Boosting AOV & LTV

While most people focus on the first two (and it's OK), I love the last one.

Let's go through each of them and you'll see why:

Cutting expenses

Times like this are a reminder to remove the fat and to negotiate everything you can (ie. payment terms) with your suppliers.

Think of services, tools, low-margin SKUs, and even team members (I know...) that you could live without.

This is something you probably need to do, and it's OK.

The catch?

There's a limit to how much you can decrease costs without sacrificing product quality, customer experience, and business growth.

There's no perfect scenario, but be careful with what you cut.

Increasing prices

This is something many companies are doing (see the survey results I listed above).

However, you need to monitor how it affects demand.

After all, keeping margins is great, but not if volume radically decreases and customers go to your competitors.

If you do it, make sure communication with your customers is clear and follow demand levels closely.

Boosting AOV & LTV

Now we're talking!

I love this because it focuses on strategies to increase revenue AND profits.

Plus, it's a great "evergreen" strategy, regardless of Tariffs.

Want some examples of things you can implement right away?

Pre-cart AOV boosters:

⤷ Incentivize larger orders: for example, select by default more quantity of a product (when applies…ie. “2 packs”), or offer a discount for buying more.

⤷ Bundles: mix and match. Choose 3 products or more and get a discount. The more products, the higher the discount.

⤷ Free Shipping thresholds: don’t base this on AOV. Set the threshold a few dollars over the biggest cluster of customers’ AOV + the cost of shipping. Be careful with this one, as it could backfire.

⤷ Gamified cart: ie. "You're $1 away from a free bottle of wine".

⤷ Discount ladders: the more you purchase, the more you save.

Post-purchase upsells: 

⤷ MORE of what they bought

⤷ High-affinity products

⤷ Leads: offering a complementary service/product in the industry (ie. promoting pet insurance if you sell products for pets, and getting paid by each email sent to them)

⤷ Thank-you page offers.

Email flows:

⤷ Post-purchase: one-time deals, high-affinity products, education on what they bought.

⤷ Customer win-back: reduce the time between purchases and increase the LTV.

⤷ Replenishment flow: automatically identify opportunities for up-selling your customers.

⤷ Loyalty: remind them to redeem points, or to refer a friend in exchange for a benefit.

Partner up with non-competitive brands targeting your same audience.

I can keep going...

But as you see, there are no excuses to be working on increasing your revenue & profits with these strategies and more.

Anything else you'd add?

--
If you own or work for a DTC brand and need help growing and boosting profitability, feel free to book a call with me and I'll see how we can be of help.

Didn't Hit Your Q1 Goals?

Many brands enter the new year with big goals, only to fall short in Q1.

Without the right strategy, it’s easy to end up in the same cycle, missing targets and leaving revenue on the table.

We’ve helped hundreds of brands break this cycle since 2013, including one that turned their 2nd worst month of 2023 into their BEST post-BFCM in 2024.

Don’t let another quarter slip by.

Let’s chat.

Overcoming Challenges in Product Development

This brand used to reject 23% of the products their manufacturer delivered.

Now, it’s down to just 0.04% thanks to one change.

Tune in to this episode of The DTC Insider podcast to find out how, featuring Paola Shah, founder of Tucketts.

We discussed:

👉 The evolution of Tucketts from concept to market over three years.
👉 The importance of validating product-market fit before launching.
👉 How cultural influences shape product design and branding.
👉 The impact of sustainable manufacturing on communities and the environment.
👉 The role of patents in protecting innovative product designs.
👉 How organic influencer marketing drives authentic brand growth.
👉 Overcoming manufacturing challenges through perseverance and problem-solving.
👉 Effective communication with manufacturers for better product outcomes.
👉 The power of user-generated content over traditional influencer promotions.
👉 Enhancing workouts through barefoot training and improved foot sensation.

Tune in:

📺 YouTube
🎧 Apple
🎙️ Spotify
🌐 Website

More episodes our listeners love:

💎 How BRĒZ is Disrupting the Beverage Industry with Aaron Nosbisch
💎 Bootstrapping a $100M E-Commerce Empire with Bear Handlon
💎 The Secret Sauce Behind BattlBox's Success with John Roman
💎 IQBAR’s Journey to 10,000 Locations And $50 Million with Will Nitze
💎 Supplement Brand Bootstrapped $10,000 and Built It Into Sales of $30 Million in Three Years with Ronak Shah

Also Happening in the DTC Space

📰 Who’s trying to buy TikTok’s US business?
📰 Navigating Tariffs: Your Guide to International Shipping on Shopify
📰 Instagram Tests Lockable Posts to Enhance Engagement

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