E-commerce Tariffs: Impacts, Challenges, and SMS Strategies for Shopify Merchants
What if a single policy change could add thousands to your annual business costs overnight? That’s exactly what happened when the Trump administration implemented a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China, according to the official White House fact sheet.
While these may seem like abstract policy discussions, for eCommerce businesses, they are direct hits to profit margins, supply chain stability, and customer relationships.
The landscape shifted dramatically in 2025. The suspension of the Section 321 customs de minimis entry process means shipments valued under $800 will no longer be duty-free and will now be subject to tariffs. This majorly impacts China-imported goods, effective May 2, 2025, as detailed by DCL Logistics.
This change, combined with new tariffs, has created a perfect storm that many eCommerce businesses are still learning to navigate.
This article provides a comprehensive overview of how eCommerce tariffs impact online retailers and offers practical strategies—including innovative SMS marketing approaches—to help your business not just survive, but thrive during these challenging times.
Understanding the Impact of Tariffs on E-commerce
Tariffs are taxes imposed on imported goods, typically designed to protect domestic industries by making foreign products more expensive. For eCommerce businesses that rely heavily on international trade, understanding tariff impacts is crucial for long-term success.
The current tariff landscape affects businesses through multiple channels, from raw materials sourcing to final product pricing.
According to the Brookings Institution, the 25% tariffs on Canada and Mexico and 10% tariffs on China represent a significant shift in U.S. trade policy. Additionally, the National Foreign Trade Council notes that changes to the de minimis threshold particularly impact small businesses that previously relied on the $800 duty-free exemption to navigate complicated trade laws.
Increased Costs
Tariffs directly increase the cost of imported goods and raw materials, creating immediate pressure on business operations. When tariff cost increases hit your supply chain, they ripple through every aspect of your operation, from inventory purchasing to final customer pricing.
For example, if you’re importing textiles from China for your apparel line, the new tariff rules mean you’re now paying significantly higher costs for the same materials. The Tax Foundation reports that China faces escalating tariffs, with initial 10% rates increasing by another 10% as of March 4, 2025.
The math is stark: If you previously imported $100,000 worth of goods from China monthly, the escalating tariffs could add $20,000 or more to your monthly costs. For small eCommerce businesses operating on thin margins, this represents a significant challenge to maintaining profitability.
According to White & Case, these are additional ad valorem rates of duty imposed on top of existing tariff structures.
Pricing Pressure
The fundamental dilemma facing eCommerce brands today is whether to absorb increased costs or pass them on to customers. This decision impacts everything from customer retention to competitive positioning.
These eCommerce tariffs simply raise your costs, diminishing margin, and thus you’re often kept wondering whether to increase your prices and risk losing customers or absorb the cost and risk losing money/reduce your profit instead.
How SMS can help:
Proactively communicate potential price changes to customers with transparent messaging that builds trust
Use personalized SMS campaigns to explain the reasons behind price adjustments, giving your brand a competitive advantage over competitors who choose not to openly disclose pricing changes due to tariffs
Offer targeted discounts or promotions through SMS automation to offset price increases and maintain sales volume
Supply Chain Disruptions
New tariffs create significant supply chain disruptions that extend far beyond simple cost increases. When fulfillment models change due to tariff exposure, businesses must quickly adapt their operations to maintain customer experience standards.
The impact on products abroad and international shipping costs has been particularly severe. Supply Chain Dive reports that changes to trade policies have forced companies to reconsider their supply chain strategies, particularly those utilizing the de minimis exemption for fast-rising e-commerce marketplaces. Many suppliers are struggling with unexpected duties and longer processing times, creating delays that ripple through the entire supply chain.
According to Avalara, duty-free, low-value shipments have been inundating U.S. customs, and changing the de minimis exemption is impacting the flow of imports. These disruptions affect inventory planning, order fulfillment, and ultimately, customer satisfaction.
How SMS can help:
Provide timely updates to customers about shipping delays or inventory changes through automated notifications
Offer alternative product suggestions via SMS when certain items are unavailable due to supply chain disruptions
Use SMS sales tools to maintain customer engagement when primary products face delays
Potential Order Cancellations/Returns
Higher prices and shipping delays directly correlate with increased customer dissatisfaction, leading to more order cancellations and returns. When customers face different scenarios, from delayed shipments to unexpected price increases, their loyalty can quickly erode.
The customer experience suffers when businesses can’t maintain consistent pricing or delivery expectations. This is particularly challenging for DTC brands that have built their reputation on reliable service and stay competitive through pricing.
How SMS can help:
Proactively address customer concerns through personalized SMS messages that offer solutions before cancellations occur
Provide clear return policies and streamline the return process through SMS communication to minimize friction
Use SMS engagement strategies to maintain customer relationships during uncertain times
Retaliatory Tariffs
The concept of retaliatory tariffs creates additional complexity for international trade policy. When other countries impose reciprocal tariffs in response to U.S. actions, it creates a cycle of increasing costs and trade barriers.
Reuters noted that the tariff implementation likely will trigger retaliation and risk igniting a trade war that could cause broad economic disruption for all countries involved.
According to PBS News, Canada, Mexico, and China have indicated they are preparing retaliatory measures. These reciprocal tariffs create additional layers of complexity for businesses serving international markets.
Canada’s response has been particularly impactful, with planned retaliatory tariffs on products like wine, beer, coffee, appliances, apparel, footwear, and cosmetics. For automotive imports specifically, economist Arthur Laffer estimated car prices would increase by $4,711 due to the closure of USMCA exemptions. This creates challenges for eCommerce businesses that serve both domestic and international markets.
How SMS can help:
Keep customers informed about the evolving trade situation and its potential impact through regular updates
Offer reassurance and build customer loyalty during times of uncertainty with transparent communication
Use SMS to segment customers by location and provide relevant information about how tariffs might affect their orders
Strategies for E-commerce Businesses to Navigate Tariffs
Successfully navigating the current tariff environment requires proactive strategies that address both immediate challenges and long-term business sustainability.
Proactive Communication and Transparency
Being upfront with customers about tariff-related changes builds trust and manages customer expectations effectively. Transparency in communication helps customers understand that price changes aren’t arbitrary but result from external economic factors.
Many successful eCommerce brands have found that customers respond positively to honest communication about challenges. Rather than hiding behind vague explanations, clear communication about how tariffs increase costs helps maintain customer loyalty.
How SMS can help:
Send personalized SMS messages explaining potential price adjustments or shipping delays with clear, honest explanations
Maintain open communication channels through SMS marketing automation to build trust and manage expectations
Use SMS to provide regular updates on how your business is adapting to protect customer interests
Diversification of Sourcing
Exploring alternative suppliers, including domestic manufacturing options, helps reduce tariff exposure and supply chain vulnerability. This strategy requires careful evaluation of quality, cost, and reliability across different sourcing options.
Some businesses are discovering that while domestic manufacturing may have higher base costs, the elimination of tariff costs and reduced international shipping expenses can make it competitive. Additionally, shorter supply chains often mean faster response times and greater flexibility.
The challenge lies in finding suppliers that can meet quality standards while providing cost-effective alternatives to traditional overseas sourcing. This often requires building relationships with multiple suppliers to ensure continuity.
Customer Retention Strategies
Retaining existing customers becomes even more critical when acquiring new customers grows more expensive due to higher prices. Customer retention strategies must evolve to address the new economic realities while maintaining value propositions.
Focus on enhancing customer experience through improved service, exclusive benefits, and personalized attention. Loyalty programs delivered through SMS can help offset the impact of necessary price increases.
How SMS can help:
Offer exclusive rewards or loyalty programs through SMS to retain customer loyalty during challenging times
Provide personalized recommendations and offers via SMS to enhance customer experience and justify higher prices
Use SMS to create VIP experiences that make customers feel valued despite market challenges
Personalized Marketing
The value of personalized messaging increases significantly when customers face higher prices and uncertainty. Generic marketing messages fail to address individual customer concerns and needs during challenging economic times.
Successful personalization requires understanding each customer’s purchase history, preferences, and price sensitivity. This data enables targeted approaches that acknowledge individual circumstances while presenting relevant solutions.
How SMS can help:
Use customer data to send targeted offers and product recommendations that demonstrate understanding of individual needs
Provide personalized explanations of how tariff changes affect specific products that customers typically purchase
Leverage SMS benchmarks and best practices to optimize message timing and content for maximum impact
Feedback and Adaptation
Actively soliciting customer feedback on tariff-related changes provides valuable insights for business decisions and strategies. Understanding how customers perceive and respond to changes helps refine approaches and identify opportunities.
Customer feedback often reveals unexpected concerns and preferences that can inform and adjust pricing strategies, product selection, and communication approaches. This feedback loop enables continuous improvement during uncertain times.
How SMS can help:
Conduct SMS polls or surveys to gather customer opinions quickly about pricing changes and product preferences
Use two-way SMS communication to address customer concerns and answer questions in real-time
Implement feedback collection systems through SMS to continuously improve customer experience
Industries Affected by E-commerce Tariffs
The eCommerce industry as a whole faces challenges, but some sectors experience more severe disruptions than others. Industries heavily dependent on goods imported from China face particularly significant cost increases due to the high duty rates now in effect.
Fashion and Apparel
The fashion industry faces some of the most severe tariff impacts, particularly affecting fast fashion and businesses that rely heavily on imported textiles and finished garments. Tariffs on textiles and clothing significantly increase costs while putting pressure on already competitive pricing structures.
Fashion eCommerce businesses must navigate not only raw material cost increases but also finished goods tariffs that can add 25% or more to landed costs.
SMS Solution:
Promote alternative domestic brands or highlight the value and quality of higher-priced items through educational SMS campaigns that help customers understand the superior craftsmanship and materials that justify pricing.
Beauty and Cosmetics
The beauty industry faces tariffs on both raw materials and packaging components, potentially impacting product formulations and availability. Many cosmetic ingredients and packaging materials come from countries affected by new tariff rules.
Beauty brands often have complex supply chains that source ingredients from multiple countries, making it difficult to avoid tariff impacts entirely. This complexity requires careful supply chain management and potentially reformulating products to use alternative suppliers.
SMS Solution:
Communicate transparently about any changes in product ingredients or pricing through educational SMS campaigns that emphasize product quality and safety standards that justify any necessary price adjustments.
Food and Beverage
Food and beverage eCommerce faces tariffs on both imported ingredients and specialty foods, creating challenges for businesses that rely on international sourcing for unique products. Import taxes on agricultural products can significantly impact costs for specialty food retailers.
Many food and beverage brands built their differentiation on unique imported ingredients or products that are now subject to significant import duties. This forces difficult decisions about product reformulation or pricing adjustments.
SMS Solution:
Promote local sourcing alternatives or highlight the unique value and cultural significance of imported items through storytelling SMS campaigns that help customers understand why certain products justify higher prices.
Electronics
Electronics face some of the highest tariff rates, particularly for products and components imported from China.
Many electronics retailers face two categories of challenges:
Increased costs for existing inventory
Difficulty sourcing alternative suppliers that can meet technical specifications and quality requirements
SMS Solution:
Provide detailed information about product availability and price fluctuations through proactive SMS notifications that help customers make informed purchasing decisions and understand market conditions.
The Future of E-commerce Under Tariffs
The current tariff environment represents a fundamental shift in global trade, requiring businesses to adapt their operations and customer communication strategies. The elimination of the de minimis threshold for many products fundamentally changes international eCommerce economics.
While it would be optimistic to believe there would be lower tariff rates soon, success requires embracing transparency, leveraging technology for communication with consumers, and developing resilient supply chain strategies despite the added fees.
The best way to weather this storm?
View these challenges as opportunities to differentiate through superior customer service and innovative problem-solving.
Ready to enhance your customer communication strategy?
Explore how Postscript’s SMS marketing platform can help you navigate market challenges while building stronger customer relationships. Our AI-powered messaging tools enable transparent communication, expectation management during supply chain disruptions, and loyalty maintenance despite necessary price increases.
