Countermeasures and retaliatory tariffs add another layer of complexity for U.S. brands
As the tit-for-tat tariff battle between the U.S. and its key trading partners — Mexico, Canada, China and the European Union — intensifies, brands are scrambling to keep up with the constant changes and retaliatory measures.
On March 12, the U.S. imposed a 25% levy on steel and aluminum imports. The E.U. and Canada swiftly shot back with tariffs of their own. China had already retaliated against new U.S. tariffs, levying higher duties on many U.S. farm products.
Trump announced 25% tariffs in early February on all imports from Canada and Mexico. These were postponed for a month after backlash from both countries. Trump delayed 25% tariffs on many imports from Mexico and some imports from Canada until April 2. The U.S. also imposed a 10% levy on all imports from China that went into effect in February, and that was raised to 20% a month later.
What began as a trade crackdown under the Trump administration has spiraled into a relentless cycle of escalating tariffs and retaliatory countermeasures, with costs mounting for businesses caught in the middle. Wholesale partners are pulling back, international shipping is being shut off and companies are making tough, even knee-jerk decisions, from scrapping product launches to absorbing steep new costs just to stay competitive. With tariffs shifting by the week and economic uncertainty deepening, companies are no longer asking if they’ll be affected, but rather how much they can do to stay ahead of the financial strain.
Ripple effects
In February, the skin-care brand Borghese, which is headquartered in New York City, wrote to its customers, telling them that it had made the tough decision to turn off direct-to-consumer international shipping. But it wasn’t because demand had slowed. Rather, 30% of the company’s customers are based outside of the U.S., particularly in China. With the threat of retaliatory tariffs looming large in response to Trump’s sweeping taxes, it made more sense for Borghese to save customers from getting blindsided by massive duty fees, which could be higher than the cost of the product itself.
“We didn’t want someone to buy a $53 moisturizer and then get slapped with a $200 bill from DHL,” Dawn Hilarczyk, Borghese’s COO, told Modern Retail in an interview.
The company has directed international customers to retail wholesale partners that stock Borghese products and ship internationally. Despite this workaround, Hilarczyk said she still expects to see the company’s international sales take a hit.
Julie Longyear, the founder of Blissoma, an herbal beauty brand based in St. Louis, Missouri, is facing similar challenges as retaliatory tariffs from Canada and the E.U. are now adding another layer of uncertainty for brands with international customers.
Blissoma exports about 5% of its products to Canada and Europe. But Longyear is concerned the company’s ability to grow in the Canadian market could be hampered by reciprocal tariffs, on top of consumer-led boycotts against American products. Longyear has already lost one Canadian wholesale account because the client could not deal with the rapidly changing import tax and tariff status. And Longyear anticipates losing another account, which contributes roughly $15,000 to Blissoma’s annual sales.
Even individual buyers are making their feelings known. “One customer emailed us, and she was really apologetic, saying she loved our products but would be participating in Canadians boycotting American products,” Longyear said. “She couldn’t justify buying from an American company right now.”
For Blissoma, expanding into the E.U. was a long and costly endeavor — one the company can’t afford to see disrupted by shifting trade policies. Longyear said that the process of registering products for sale in the E.U. took years, as the company navigated complex paperwork, lab testing and compliance requirements. “We invested over 30 grand in getting set up to sell in the E.U.,” she said.
Blissoma’s European distributor, which had initially placed only small orders while waiting for approvals, has finally begun placing consistent, larger orders — almost monthly — based on growing demand. However, with the E.U. now weighing retaliatory tariffs against U.S. goods, Longyear worries about potential disruptions.
Uncertainty and extra costs tied to tariffs are consuming brands’ time and resources that would otherwise be spent on growing their businesses, including product development and marketing.
“If I’m investigating creative ways to get containers into the country, or ways to educate my customer on how to navigate these changing fee landscapes, then I’m not spending time on new recipes, I’m not spending time on marketing,” Longyear said. “It’s consuming real human capital just trying to put brain power toward navigating this in a reasonable way.”
The threat of reciprocal tariffs adds to the squeeze American brands were already feeling from tariffs Trump imposed on imports in February.
Borghese, which manufactures its products in the U.S., sources many of its components from overseas, including cartons and jars from Asia. When new tariffs against China took effect in March, suppliers raised costs by as much as 25%. Some vendors agreed to split the burden, reducing the impact to about 12.5% on certain items. Others refused outright, leaving Borghese with a dilemma: absorb the cost or pass it on to customers.
Price increases remain a last resort, but both companies admit they may have no choice. “We probably need another $1-$2 price increase per item just to offset costs,” Longyear said. “But we know that could turn away customers.”
Meanwhile, brands are keeping a wary eye on further developments.
“The hardest part is the uncertainty,” Longyear said. “If we knew this would end in six months, we could plan for it. But right now, we’re just trying to keep our heads above water.”