The global tariff landscape is shifting rapidly, creating uncertainty—and opportunity—for companies involved in product development, manufacturing, and import/export. From a “normal” world of historically low tariffs, brands are now navigating a surge of additional duties, country-specific regulations, and evolving trade relationships. In this post we cover what you need to know and identify several strategies to help you manage through the chaos, keep your supply chain resilient while over time turning it into a competitive advantage for your business.

The New Tariff Reality

For years, most consumer goods enjoyed low standard tariff rates (often under 5%), with textiles, steel, and aluminum as notable exceptions. Things changed dramatically in 2019, when the Trump administration in its first term implemented new tariffs—Section 301— imposed specifically on Chinese goods, introducing a 25% duty (on top of existing tariffs) for products listed in multiple “lists,” followed by additional tariffs for select product categories in later updates.

Recent developments in 2025 have further complicated the landscape:

• An added 10% tariff was implemented for all Chinese goods in February, quickly followed by an additional 10% in March, resulting in an added 20% tariff on all goods, in addition to what was already in place
• In February a 25% tariff was imposed on all imports from Mexico and Canada, excluding Canadian energy exports, which were subject to a 10% tariff.  Shortly thereafter the U.S. delayed tariffs on goods compliant with the United States–Mexico–Canada Agreement (USMCA), accounting for a significant portion of imports from both countries. 
• Also, in February, Trump imposed an extra tariff on steel and aluminum of 25% (Section 232), also impacting Canada and Mexico temporarily.
• Then on April 9, on Trump’s “Liberation Day”, so called “reciprocal tariffs” were imposed on 57 countries, with rates varying based on perceived trade imbalances and practices. 
• At the same time imports from China were subject to an additional 34% tariff, bringing the total to 54% on Chinese goods. China retaliated by raising its own tariffs on US imports to 84%.
• In response, the U.S. increased tariffs on Chinese imports to 125%, later clarified to 145%, and in response to that, on April 11: China announced further tariff hikes to 125% on all American imports, effective April 12.

Since then the Trump administration has signaled openness to reducing tariffs on Chinese imports to between 50% and 65% as part of potential negotiations, acknowledging the unsustainable nature of the current rates.

Bottom line: Tariff rates can now exceed 100% for some products, and trade restrictions are changing weekly—sometimes even daily.

Accurate Tariff Classification Is Crucial

Getting your tariff (or HTS) code right is the foundation for minimizing risk and cost. Here’s what you need to focus on:

• Don’t rely on Google or overseas suppliers for tariff numbers; different countries use different systems and U.S. Customs makes the final call.
• Reference official rulings and the US tariff database for up-to-date guidance.
• Work with licensed customs brokers or experienced partners to be sure. Misclassification can result in audits, penalties, or overpaying duties.
• A company that is found guilty of wrongdoing can be penalized for up to 5 years from when the violation occurred if it was an honest mistake, but if it’s found to be fraud or gross negligence it can be prosecuted up until 5 years after the fraud is discovered.   
• So to be safe, especially for or complex or ambiguous products, consider submitting a binding ruling to U.S. Customs.

With penalties increasing and audits more likely due to the high stakes, expertise is more valuable than ever.

Tariff Impact: Practical Examples

Products are affected differently depending on their category and country of origin.  Here are a couple of basic examples

• A Water Bottle imported from China: A product that used to be subject to a “normal” 2% tariff, could now be hit with multiple layers of additional duties, and the material it is made of can make all the difference.  For example if the bottle is made from Stainless Steel it would fall under the Section 232 tariff of 25% on steel and aluminum, which would eliminate the exposure to the reciprocal tariff of 145%. However, if the bottle was made out of plastics, it would be subject to the 145% reciprocal tariff.  Both would be subject to the 10% + 10% tariff implemented in February and March.
• Textile Backpacks: Textiles made from “man-made fibers” have been subject to tariffs since even before 2019. There is a base tariff of 17.6% from before 2019, then a Section 301 tariff from 2019 of an additional 25%, and with the new tariffs implemented in 2025 of an additional 145% you are looking at a total tariff of 187%. At that level of tariff it no longer makes sense to import from China.

As the examples highlight, product classification nuances mean even small changes—such as materials used—can significantly impact duties paid.

Calculating the Financial Impact

Once you clarify your product’s tariff code, calculate how new tariffs affect your bottom line:

• The tariff applies only to the product cost (not freight), so ensure your pricing and landed cost calculations reflect this. For example if you have a very high margin product, you may be able to assume a 100% price increase and still not have to raise prices.
• Adjust your pricing models to assess margin loss—if the price increase is too steep to absorb, and price increase may be the only option to maintain profitability, but look carefully at your product mix. Depending on your product mix and volumes per SKU, you may be able to accept lower profitability on some SKUs if you can make it up on others..
• Explore cost-cutting, renegotiating with suppliers, more efficient packaging, and creative pricing (e.g. bundling) to offset tariff increases. The factory is in the same boat as you. They don’t want to lose you, so they may be able to reduce their prices some. Don’t expect miracles here though. Most factories operate at pretty slim margins, often below 10%, so to expect them to reduce their prices to completely cover the tariffs is probably not realistic.

Remember to plan for current inventory, incoming shipments, and future orders—tariffs might change by the time your next container lands.

Building Supply Chain Resilience

This uncertain period requires flexibility and a proactive strategy. Key action points:

• Supplier Diversification: Relying on a single country or supplier, especially China, is now riskier than ever. Begin exploring alternative sourcing.
• Scenario Planning: Map out best, worst, and middle-case scenarios based on different tariff outcomes. Make decision timelines and contingency plans.
• Inventory Management: Consider forward deployment, safety stock, or multi-location stocking to ride out sudden changes.
• Total Cost of Ownership: Evaluate costs beyond manufacturing—packaging, shipping, warehousing, and capital tied up in inventory matter more as tariffs increase.

Evaluating Alternative Sourcing Regions

With China facing the highest and most prolonged tariffs:

• Southeast Asia (Vietnam, Bangladesh, Cambodia): Tariffs jumped, but Trump issued a delay and a smaller 10% interim tariff for 90 days. Many believe negotiations will soon lower duties for these countries (outside China). Monitor the news closely.
• India: Fast-growing and competitive for a range of products. Labor is cost-effective, but check if your product’s supply chain can be re-created there.
• Mexico and Nearshoring: Can offer advantages in lead time, logistics, and political risk, but often require larger order quantities (MOQs) and may have capacity constraints.
• USA: Domestic production is ideal for branding but is rarely cost-competitive for most categories.

No “one size fits all” solution exists—regional expertise, product complexity, and your business size will determine the right next steps.

Final Thoughts

While the tariff climate is challenging and changes rapidly, intentional planning can turn disruption into opportunity. Focus on mastering your product’s tariff classification, understanding the cost implications for your business, and building a more flexible, geographically diversified supply chain. The companies that adapt fastest will not only survive—they’ll thrive in the new global trade environment.

This guest blog post was written by Henrik Johansson, from Gembah, an all-in-one product design & manufacturing platform for entrepreneurs, businesses, and individual creators. Henrik not only co-founded and leads Gembah, but he is a former CEO and co-founder of several venture startups, most recently Boundless, a $100M promotional products company and platform. When he isn’t focusing on building Gembah, you can find him trail running or eating Mexican food. If you are interested in learning more about how Gembah can help you with manufacturer your program, click this link to schedule an intro call.