08/04/2025
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If you watch Trump's Liberation Day speech, it's a pure nationalist leader speech, putting national economic interests first. For decades, big giants have been taking advantage of USA tariffs by putting manufacturing units in low labor cost countries and selling them to the great economy of the USA. 34% tariffs on Chinese imports are Trump's way of countering those trade imbalances. Is it the right move for the economy to force big giants to USA-based manufacturing and reduce trade deficits? I am not an economist, but concerned about its impact on Amazon USA PL's selling dynamics.
Letโs get real - you are an Amazon Private Label brand, you need to understand your tiny 6-7 figure brand can not dictate how tariffs are supposed to be. So, businesses need to adopt these surprises instead of being upset and complaining about how cruel these tariffs are. The EU has VAT, the USA got tariffs, so if your business can not have sustainable local manufacturing and you still want to sell in these great economies, you need to optimize.
The main concern for brand owners is how they will adjust to this cost? The fact is your margins will shrink if you keep doing the same what you have been doing before. As of now, from Chinese shipments, it's costing $0.2-0.28/Kg, depending on products and destination port; some products need an extra 0.45/Kg. To cover the cost, you must increase at least 8-12% of selling prices. You can only do that if your product has enough USPs to stand out even at relatively higher prices. You should only be worried if you are an Amazon PL seller, but copying the competitor products without any differentiation and value addition, and your only value is price. You need to work on your product offers harder than ever before. Other than this, you still have multiple optimisation points where you can work on to cover the cost.
You need to be prepared to have more Amazon PPC budgets to keep the same number of conversions. Inflation in the USA will go higher, and so will be your prices, your conversion rates will go down. Here, extra PPC spends will keep the blood flowing at same velocity.
The good thing is that dropshippers, resellers shipping directly from China to US customers, will be hit hard as the De Minimis customs benefit is ending on 02 May. So it will be more like PL sellers vs PL sellers, more equal playgrounds. I believe China is still the favorite among all low manufacturing cost countries, as Vietnam also got 46% tariffs. You can expect to US steel and aluminum industry to boom, so if your products are stainless steel, you can always have the option to locally source these products.
How do you plan to tackle these tariffs and Amazon PL selling? Share your thoughts
