Brands are doing ‘tariff math’ after US-China truce, rolling back surcharges and adjusting prices

“It’s a collective sigh of relief in retail,” said Sky Canaves, a retail analyst at eMarketer. “But at the same time, the 30% still creates substantial cost challenges that few brands can absorb for any sustained period of time.”

For now, brands are walking back previous price hikes or scaling down the “tariff surcharges” many had added at checkout. These fees — essentially line items tied to rising import duties — became a common tactic among direct-to-consumer brands trying to offset sudden spikes in cost of goods sold. But for brands that chose to raise prices outright rather than rely on a separate surcharge, the math gets more complicated, especially when it comes to deciding whether, and how quickly, to lower prices again.

Luke Barkley Young, CEO of home goods brand Outlines, said the tariff hikes pushed him into crisis mode. “We just don’t have spare working capital for the cost of our goods to 3x literally overnight,” he said. In late April, Outlines began charging customers a $4 tariff surcharge. Now, at least while the 90-day reprieve is in place, that surcharge is down to $1 to cover the existing 30% tariff on imports from China — this includes both a 10% reciprocal tariff rate and a “fentanyl tariff” that President Donald Trump has imposed on China. Young communicated the price reduction in an email to customers dated May 14. 

“[The administration] has walked back its tariffs from 125% to 10%. This means we can reduce our tariff surcharge,” Young wrote. “The tariff bill (which is all due at once when you import) would have possibly bankrupted us.”

From crisis mode to course correction

Other brands are following suit. Dame, a sexual wellness brand, said it is removing its Trump-era tariff surcharge and returning to “normal pricing,” according to CEO Alexandra Fine, who outlined the shift in a LinkedIn post. “This is a 90-day reprieve, not stability,” she wrote. “We can’t stockpile inventory to hedge against the next policy swing.”

Still, the moment represents a partial uncoiling of months of tension. Mike Jelliff, co-founder of GeekStands.com, which sells musical accessories online, said he had increased prices on 35% of his products since March in preparation for steep tariffs. Now, he’s rolling those increases back in phases, beginning with a 7% reduction in May, with further cuts planned for June and July — in part to monitor how customers respond and to avoid the whiplash of a sudden pricing swing.

“We’re actually decreasing prices,” Jelliff said. “It looks like we’re running a sale, even though what we’re really doing is adjusting back down from the tariffs.”

Meanwhile, fast-fashion giant Shein has slashed prices across its site in response to the tariff rollback, Modern Retail first reported. 

Some larger retailers are still planning price increases, including Walmart, whose chief financial officer, John David Rainey, told CNBC in an interview on Thursday that customers will begin to see price increases as early as later this month.

As of May 13, more than 4,300 of the top 0.1% of Amazon’s products are priced at all-time highs, according to an analysis conducted by e-commerce software firm SmartScout shared with Modern Retail last week.

Matthew Hassett, founder and CEO of Loftie, said the shifting tariff policy has whiplashed his business. After raising the price of Loftie’s China-made lamp from $275 to $450 to account for new tariffs, daily sales dropped from around 50 units daily to just one per day. Following the tariff rollback, Loftie dropped the price to $399 — but sales haven’t rebounded. “We’ve kind of just resigned ourselves to not being able to sell the lamp at this point,” Hassett said.

Sourcing woes and supply chain shifts

For sellers like Young, the volatility has implications far beyond product pricing. He said Outlines has paused new product development and struggled to find alternative factories outside China, many of which are booked into 2026. “I called our partners and asked if we could shift production to Cambodia or elsewhere. They said they were at capacity,” he said.

Young added that after the tariff reduction was announced, Chinese factories began reaching out again with modest discounts and available production slots, prompting a race to get orders in before the 90-day window closes. “We now have to act fast,” he said.

The speed of change has left some founders feeling burned. “The real tariff is the chaos and the uncertainty,” said Greg Shugar, owner of bow tie manufacturer Beau Ties of Vermont. “No one is able to plan, and people are going back and forth on whether to place an order or not.”

Shugar said his company is still grappling with how to price goods fairly while preserving margins. “It increases your prices, but it also decreases your profits,” he said. While the drop from 145% to 30% may seem like good news on paper, many textile products still face a combined 55% tariff due to overlapping duties, he said. “Nobody’s winning in this scenario.”

Brands based outside the U.S. are also adjusting. Kashif Zafar, CEO of e-commerce advertising firm Xnurta, which works with around 4,000 Chinese exporters and sellers, said those merchants are already adjusting their pricing strategies in response to the rollback after previously raising their prices as much as 25% because of tariffs. 

“A lot of our sellers are now recalculating and slightly reducing their prices,” he said. “They’re not dropping them dramatically, but they are starting to edge them back down to where they were before all this uncertainty.”

At Outlines, Young said he’s trying to build trust with customers through transparency. “In 90 days, if it goes back up, we’re going to have to put the surcharge back up,” he said. “We just kind of have to adjust like it’s the stock market.”