Tariffs are currently on everyone's mind. Your dedicated team at H&A wanted to see how the tariff implementation would unfold. The situation is vastly different than it was a week ago. Protecting your profitability through your sustainable sales channel (Authorized Sellers) and your brand perception is still key.

 

The quick version: Tariffs will affect brands differently depending on the product category and country of origin. For some, this will be a speed bump in 2025, and at the moment, for others, it could be a significant hurdle that requires strategic adjustments to maintain profitability and competitiveness. Brands may need to adapt by diversifying supply chains, renegotiating supplier contracts, and exploring new markets to mitigate the impact of these tariffs - not something that happens overnight.

 

Categories such as electronics, apparel, and toys, which struggle to find alternative sourcing options outside of China, are experiencing smaller-than-expected price increases. This trend is occurring amid recent discussions about the U.S.-China trade war, with the U.S. Treasury Secretary recently stating that the trade conflict is unsustainable and anticipating a reduction in tariffs between the two nations.

 

The good news: The De minimus loophole allowing shipments under $800 to come into the country duty-free expires on 4/25 for brands. This loophole was heavily exploited by factory direct platforms like Temu and Shein.  These shipments are now subject to normal country tariffs plus 30% or $25 per item. The expected reduction gap in value should push brand awareness back into the purchasing decision. Marketplace best practices are similar to what they have always been, with a couple of areas of increased focus.

 

The extended version: Giving this time to unfold has allowed us to converse with clients in all industries we serve. Those conversations and questions are different now than they were the beginning of the month :

 

What does this mean for MY brand?

What is best for my team and me to stay informed without getting lost in the hearsay?

Where can I ask questions or voice concerns? Is this an additional cost?

How will the changes I propose cause more harm or risk to my channel overall?

If you were in my shoes, what would you do?

Is it all doom and gloom?

Is your strategy at H&A different depending on the industry or product category?

What can I expect to happen next, and what is the team at H&A watching out for?

 

Drive demand through your authorized distribution partners - this is critical! As we navigate this uncertainty, retailers will be as margin focused as you are.  Protecting your shared business profitability will be under a microscope.

 

Pay more attention to the buy box activity and watch trends. The grey market is shifty and seeks to find loopholes.

 

Consistently enforce Distribution agreements and MAP. If retail prices increase, consumers will more easily accept prices going up if they are not already discounted in the market.