‘We’re already feeling a squeeze’: How U.S. brands are preparing for proposed tariffs
Tariffs were one of Donald Trump’s key policy proposals this election cycle, and consumer brands are already scrambling to prepare for their potential ramifications.
Under the upcoming administration, President-elect Trump is proposing new duties on imported goods from major U.S. trade partners, such as China and Mexico. During the campaign, Trump floated at least a 10% tariff on most imports and a 60% on Chinese-made goods. Moreover, Trump has also promised a 25% tariff on imports from Mexico, with Mexico already hinting it will hit back with its own tariffs on the U.S.
While these tariffs are meant to generate revenue and encourage U.S.-based manufacturing, retail brands say they’re bracing to feel the immediate effect of the extra cost to import anything.
Big brands like Steve Madden and E.l.f Beauty are already talking about plans to shift production to other countries or to focus more of their efforts on international sales in order to protect their business against any potential tariffs. Smaller startups, meanwhile, are examining how all of their packaging and raw material costs could increase as a result of new tariffs. Overall, all the brands that spoke with Modern Retail are starting to think through how they could be impacted by tariffs and are beginning to evaluate potential new suppliers. Some, however, are waiting to actually pull the trigger on these plans until the new administration offers more details on what exactly these tariffs could look like.
Tariffs aren’t an entirely new curveball. E.l.f Beauty, for instance, experienced a 25% import tariff that started in 2019 under President-elect Trump’s last administration. “We don’t like tariffs because they are a tax on the American people,” E.l.f CEO Tarang Amin told Business Insider. “And at that time, we pulled all the levers available to us to minimize the effects to our company and our community.”
Since then, E.l.f has grown international sales, which now account for nearly 21% of overall revenue. At its latest earnings, the company said it plans to further tap into the Asia and Europe markets to offset potential U.S. losses. For now, E.l.f is waiting until after the 2025 fiscal year to see exactly how new tariffs will impact its business. Meanwhile, shoemaker Steve Madden said it plans to cut its China-based production by half to reduce its reliance on overseas production.
The knock-on effects of tariffs
Even for companies that sell finished products made stateside, tariffs could impact the cost of raw materials. It’s the latest blow for consumer brands, which have had to continuously navigate shifting supply chain costs since the pandemic.
This is especially true for young brands.
Frozen dessert brand Pastazerts, which launched in 2023, imports all its packaging and some ingredients from other countries. Most of Pastazerts’ ingredients are sourced in the U.S., owner Stephanie Berwick said. But some, like peanut butter, are brought in from Canada due to competitive pricing for a high-quality variety.
Most importantly, Berwick said the company is in the middle of a wholesale expansion that requires the use of specific packaging material. “In retail, frozen food packaging has to be made of a certain food-grade cardboard that can sustain frozen food,” Berwick said. “We also import insulated shipping containers for shipping products to stores,” she said.
These materials are hard to find in the U.S., as there are only a handful of suppliers producing them. Currently, the company imports them from China. “But the pricing is also a hurdle, and we may not get our orders in time if we’re competing with big food manufacturers,” she explained. Right now, it’s difficult to tell how the cost of moving to a domestic material supply chain will shake out. Berwick said the company will consider doing so if it can keep the cost difference within 10% of the current rate. “This is now on the to-do list alongside a few big-ticket items, like moving to a new co-manufacturer,” she said.
Other startups are facing a similar challenge when it comes to finding an alternative to affordable raw materials from Asia.
David Jacobowitz, founder and CEO of chocolate startup Nebula Snacks, said he currently sources its packaging for Nebula Snacks overseas, including pouches and retail display boxes that are produced in China.
“As early as [last] June, shipping costs had already begun to spike with anticipation from my suppliers of the administration changing in 2025,” Jacobowitz said. As a result, the company already purchased supplies in bulk to tide it over the next year and build in a cushion for sales projections. “Pending final cost impact next year, I have a short list of U.S. suppliers that have shared quotes that would impact my profit margin,” Jacobowitz said, while still allowing the company to operate without adjusting prices.
As for increasing retail prices, Berwick said Pastazert’s distributor already wants the product at a competitive price point as it enters grocery chains. “We’re already feeling a squeeze there, so we’ll be increasing the prices sometime next year,” Berwick said.
On the other hand, Berwick said the proposed tariffs also forced her to think about new sales channels earlier than expected. “For example, getting more into food service since it won’t require all this retail packaging,” she said.
Navigating the uncertainty of trade wars
Joseph Firrincieli, sales manager at logistics service OEC Group, said while it is still too early to tell when these tariffs might go into effect, importers should at least have a strategy for whether they should start shipping early to avoid the upcoming rush for Chinese New Year cargo.
“We are recommending our customers to start looking for vendors outside of China in anticipation of the additional tariffs, and to ship earlier than usual,” Firrincieli said. While it’s unclear when these additional tariffs will go into effect, he said it is highly recommended to ship goods earlier — “so long as you have the warehouse space to do so.”
While many companies are creating these contingency plans to be ready to put into action, others are holding off on making any major changes.
Max Lemper-Tabatsky, co-founder of the urns maker Oaktree Memorials, said, “I definitely recognize that changes to trade policy could affect our supply chain and costs.” Oaktree’s products come from global manufacturers in Europe and Asia, and the company relies on monthly imports to ensure consistent availability for fluctuating demand for its end-of-life products.
“However, our current approach is one of caution and flexibility,” Lemper-Tabatsky said. Rather than committing substantial capital upfront based on hypothetical tariff scenarios, he said, the company is opting for a “wait and see” approach. “I will be closely monitoring developments over the next three, six or even 12 months,” he said. For now, that means placing larger orders over the coming month in preparation for the Chinese New Year in January, which is an annual challenge independent of the tariff changes.
“As we know by now, campaign promises often diverge from the policies enacted once a president takes office,” Lemper-Tabatsky said. “So until there is more concrete information, I strongly believe that avoiding upfront risks and remaining flexible is the best strategy.”