How Trump Reciprocal Tariffs will affect Amazon sellers
- Patrick Lum
- Apr 2
- 10 min read
Updated: 4 days ago
Last Updated: April 17, 10:54pm EST
Evolving situation. Not advice; for informational purposes only. To plan for your particular situation, connect with an Amazon strategist here: https://calendly.com/asteroidx-call/amazon-strategy-call
Tariff Basics
A tariff is a tax on imported goods. It raises their price to protect domestic industries or generate government revenue.
Who pays the tariff? (as Warren Buffett says: "the toothfairy doesn't pay 'em!"). The importer pays the tariff, then usually passes the cost to consumers via higher prices.
The White House hopes to revitalize US manufacturing, encouraging companies to make stuff in America instead of importing.
List of Reciprocal Tariffs (announced April 2, 2025)
April 2:
Here's a full list of countries and their tariffs from the New York times that came out April 2nd.
The numbers were determined with a simple formula: [imports] - [exports] / [imports], maxed out at this number, or 10%. This means that trade deficits (where the US buys more from a country than it sells) is also considered an uneven "tariff".
April 9:
Tariffs paused for 90 days, with a baseline of 10% for all countries in the meantime. China's tariffs of >100% stay on which, if continued, make profitable Chinese sourcing very hard.
Vietnam, Cambodia, Argentina & Israel (~70 countries in total) have begun negotiations with the US to reform their trade arrangements.
Target countries can remove the US-imposed tariffs in 2 ways:
(1) Make stuff in America instead, i.e. set up factories state-side (2) Arrange bilateral concessions. Dropping tariffs on US goods; buying more US goods. But what I think it's really all about is...
China
~70 countries have started negotiating with the US. Japan, South Korea, India, Israel, etc. No official deals announced yet. However, I think it's less likely that China will strike a deal. So, the question on my mind is:
Is it viable for Amazon brands to source products from China long term?
2 scenarios:
(1) A trade deal is struck. The US & China come to a consensus and trade resumes. Maybe things are more expensive to import from China, but tariffs are only 10-20%, so it's still doable. Things stay largely as-is.
(2) A trade deal is not struck (or a deal is struck but it's prohibitively expensive to import products from China). Chinese factories will move to different countries (Vietnam, Cambodia, India, etc.) in an attempt to keep their business going. A "silver lining" of this scenario for American sellers? Stories like this: "Chinese sellers on Amazon to hike prices or exit US as tariffs soar"
Unfortunately, I think scenario #1 is less likely because:
- the US is trying to rebuild its manufacturing capability
- the US will successfully strike trade agreements with Europe, North America, and other parts of Asia, meaning that China won't be the only game in town for goods
- China has a large pool of customers that can kickstart and sustain its businesses. For instance, car company BYD has now surpassed Tesla in car sales without selling into the US market at all
- China is an ascending power. The US is strong, too. So, we may be moving to a 'multipolar' world in the mid-term. Here's an interesting 5 min briefing from Ray Dalio on "the changing world order": https://www.youtube.com/watch?v=BB2r_eOjsPw
I hope to be proved wrong and a deal is struck. But, even if I'm wrong...
Diversity in an Amazon supply chain is never a bad idea ANYWAY. It's not a good idea to be 100% dependent on one country for product, China or otherwise.
Also worth noting that Latin America was largely left alone (at least for now). This is largely due to the fact that Latin America already does more business with the US, so the trade deficit isn't as significant as with other countries.
For example, I recently attended a Flexport webinar (on April 2, 2025) and they provided this helpful example. Since then, tariffs on Chinese goods will be even higher!
Here's another for the automotive industry:
Here's speculation on how Apple's prices may have to change:
Plus:
The de minimis exemption is getting cut, meaning that shipments from China valued under $800 (which used to enter the U.S. duty-free), will now be subject to tariffs and customs inspections. This hampers China-based fast fashion companies like Shein, Temu, etc. Silver lining to this: if fewer Chinese ecom packages are getting shipped, air freight might get cheaper.
That's the current situation. What now?
Amazon seller strategies:
Let's solve the problem in 2 parts: (I'll continuously update this page as we continue to drive results for our brands) (1) U.S. PROFIT MAXIMIZATION: increasing profitability on Amazon.com (US) to keep margins intact. (2) WORK-AROUNDS: on-shoring and near-shoring; getting more sales and profit from other markets (Canada, UK, Mexico). Up first...
(1) U.S. Profit Maximization
If you're importing products (especially from China or other Asian countries) on Amazon.com, this section deals with maximizing your profits in your home marketplace.
➡️ (1a) First, we need to answer this question: "how bad is it, really?" Like we saw above, tariffs will depend on country of origin and product type. Each of our SKUs is going to have a different profit margin than it did before. Tactically, it makes sense to map your entire supply chain ("from dirt to shirt"), map out points of origin, and calculate potential tariff exposure. File away all costs/Bill of Materials (BOM) in case US customs disputes any values.
➡️ (1b) Talk to your supplier. Re-negotiate terms. Perhaps they'll split some of the new costs with you to keep you as a customer. However, don't allow any supplier to serve as Importer of Record, cut any corners, or otherwise do anything that defies US Customs laws. The US government is likely ramping up Customs hiring to enforce these policies. Customs & Border Protection offers whistleblowers who report customs fraud 10% of the money they collect.
➡️ (1c) After completing 1a and learning each SKUs "new margins" (assuming the tariffs don't get taken down), then it's time to re-assess ad spend allocation. Some SKUs won't have enough profit margin to advertise anymore; optimize these listings for organic sales instead with Amazon SEO. Push ad spend to SKUs with enough margin.
➡️ (1d) A/B test a small price increase (selectively and carefully!). The "knee jerk" thing to do is raise prices to cover increased costs. However, if prices increase too high too fast, conversion rates fall, and kill Amazon ranking. Price increases should be A/B tested, small (a few %) and data-backed versus "a universal 20% increase". I'll also note: if competitors are raising prices, it's safer. If they're not, it will likely have an adverse effect on ranking.
➡️ (1e) Product refactoring. Thrifty packaging techniques. Breaking SKUs into parts, having consumers do some assembly IKEA-style, lessening packaging, shipping products without batteries included— these can help margins in the short term.
➡️ (1f) Bonus: if you do have some "made in USA" SKUs, make sure to put that in the listing photos and bullets! These terms are seeing a surge (heck, consumers are trying to avoid paying these prices too!) and we're getting GREAT results for sellers by including these in listings.
Those are some ideas on how to maintain profits when selling Asia-based goods on Amazon.com.
Next, how to avoid this situation entirely...
(2) Work Arounds
We've talked about how to make the current thing more profitable. Now, let's talk about how to grow through the problem. As they say: "never waste a good crisis!" ➡️ (2a) International Expansion. Amazon Canada (amazon.ca), Amazon Mexico (amazon.com.mx) and Amazon UK (amazon.co.uk) don't have these problems and your supply chain can stay the exact same. There are additional legal and logistical requirements for these countries (e.g. Canada has a French language packaging requirement). We've been helping sellers expand to international markets for years. Feel free to schedule a consultation about it here: https://calendly.com/asteroidx-call/amazon-strategy-call
➡️ (2b) Sourcing SKUs in the US. ThomasNet is a good fit for this. It's like Alibaba but for US suppliers. Is it possible to add some small runs of new, made-in-the-USA products? Absolutely. Tariffs avoided, and margins will be normal. ➡️ (2c) Sourcing SKUs in Latin America and elsewhere. If you look at the list of tariffed countries, Asia was hit hard. But (for now) Latin America wasn't. Colombia for textiles, beverages, processed food, petrochemicals. Brazil: aircraft, vehicles, steel, chemicals. Mexico: electronics, optical, medical, appliances. Note: just because they're tariff-safe now doesn't mean they'll be safe next week! Evolving situation. Ultimately, the Trump admin wants "made in America". ➡️ (2d) Adding some US-based distributor SKUs. Team up with folks who make stuff in the US (but who don't want to deal with selling on Amazon). This model is also "no money down"; just takes elbow grease. This is a great way to make additional revenue in the meantime. I outline the complete strategy in this article: https://www.asteroidx.com/post/amazon-business-model-consignment-distribution Re: 2c Here's a list of alternative countries (outside of China) to source from.
- Best case, US & China strike a trade deal and you just made your supply chain more resilient
- Worst case, tariffs from China stay high and selling Chinese-sourced Amazon products becomes impossible from lack of profit. And, these countries will pick up the slack
Chinese production capability is hard to replace in many instances. Depends on product type.
United States -- no tariffs!
Food
Grocery
Cosmetics
Supplements
Vietnam
Furniture and home goods
Textiles and apparel
Electronics (especially smartphone components)
Toys and sporting goods
India
Textiles and apparel
Handcrafted items
Home décor and furnishings
Jewelry and accessories
Mexico
Automotive parts
Electronics
Housewares
Furniture
Leather goods
Thailand
Beauty and personal care
Home décor
Kitchen products
Jewelry
Indonesia
Furniture and home décor
Textiles
Handicrafts
Sports equipment
Malaysia
Electronics
Home appliances
Rubber products
Furniture
Bangladesh
Apparel and textiles
Leather goods
Jute products
Home textiles
Philippines
Home décor
Furniture
Fashion accessories
Electronics assembly
And, here are the "Alibabas" of these countries according to AI:
For the US, there's ThomasNet.
Vietnam
VietnamB2B.com
VCCI E-commerce (vietnam-business.com)
VietnamExporters.com
India
IndiaMart.com
TradeIndia.com
ExportersIndia.com
Connect2India.com
Mexico
MexicoB2B.com
Thomasnet.com (includes Mexican manufacturers)
DIBS Mexico
Thailand
Thaitrade.com
ThaiETradeCenter.com
ThaiTradePoint.com
Indonesia
Indonetwork.co.id
IndonesiaYP.com
TradeKey Indonesia
Malaysia
MATRADE.gov.my
MalaysiaB2B.net
Exporters.com.my
Bangladesh
BangladeshYellowPages.com
BangladeshTrade.org
Bizbangladesh.com
Philippines
PhilippineCompanies.com
TradeKey Philippines
PhilExport.org
Multi-country platforms
GlobalSources.com (strong in Southeast Asia)
eWorldTrade.com
TradeKey.com
EC21.com
Conclusion
Here's added perspective from Ryan Petersen, CEO of Flexport, who spoke to a member of the US cabinet about the issue:
"Companies are looking for clarity but they should assume that this the start of the process, not the end. The administration wants to send a message to let everyone know they are dead serious. The tariffs on many of these countries are likely to come back down as they come to the table to make a deal. Businesses need more certainty to make investment decisions for their supply chains, and while today starts to paint a clearer picture about what the new rules of the game will look like, the reality is that we will have to wait for the process to play out before we can really understand the new landscape of global trade."
The closest analog to this that I've seen is COVID.
During COVID, Amazon FBA warehouse space became limited (reserved for "essential goods") and some sellers weren't permitted to use it anymore. We helped sellers find different 3rd party logistics companies and increase profitability, and the situation slowly improved.
The difference between 2025 tariffs and 2020 COVID? 2025 is a negotiation, not a disease. So, it can potentially begin and end much quicker.
BONUS: Trump Psychology
Trump's 1987 book The Art of the Deal helps to explain his approach to tariffs.
I read it a couple months ago.
Here's 4 passages that stood out:
“I don't do it for the money. I've got enough, more than I'll ever need. I do it to do it. Deals are my art form. Other people paint beautifully on canvas or write beautiful poetry. I like making deals, preferably big deals. That's how I get my kicks." (page 1)
"That really got me going. I said to the guy: ‘You listen to me. If you do foreclose, I'll personally bring a lawsuit for murder against you and your bank, on the grounds that you harassed Mrs. Hill's husband to his death.’ All of a sudden the bank officer sounded very nervous and he said he'd get right back to me. Sometimes it pays to be a little wild. An hour later I got a call back from the banker, and he said ‘don't worry we're going to work it out Mr. Trump.’” (page 5)
"My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I'm after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want." (page 45)
"I like thinking big. I always have. To me it's very simple: if you're going to be thinking anyway, you might as well think big. Most people think small, because most people are afraid of success, afraid of making decisions, afraid of winning. And that gives people like me a great advantage. My father built low income and middle income buildings in Brooklyn and Queens, but even then, I gravitated to the best location. When I was working in Queens, I always wanted Forest Hills. And As I grew older, and perhaps wiser, I realized that Forest Hills was great, but Forest Hills isn't Fifth Avenue. And so I began to look toward Manhattan, because at a very early age, I had a true sense of what I wanted to do. I wasn't satisfied just to earn a good living. I was looking to make a statement. I was out to build something monumental— something worth a big effort. Plenty of other people could buy and sell little brown stones, or build cookie cutter red brick buildings. What attracted me was the challenge of building a spectacular development on almost 100 acres by the River on the west side of Manhattan, or creating a huge new hotel next to Grand central Station at Park Avenue and 42nd Street." (page 46)
What I take from this:
- hiking tariffs up to historically high levels is a place to "aim high" from. This is called "anchoring" in negotiations. The tariffs are the start of a conversation, not the end of one.
- he identifies as a dealmaker. So, he's going to sit down with these countries and some deals will be struck (because that's what he enjoys doing). That's his art form. The tariffs aren't the last word; they're the first word.
- he likes making a splash for marketing purposes. He wants to "make a statement". This helps to bring global attention to the issue. In this case, the idea that the United States has been "ripped off" for decades.
And it's quite the statement when put in historical context:
Here's the new effective tariff rate if all of these tariffs stuck (which they likely won't).
Evolving situation. Not advice; for informational purposes only. To plan for your particular situation, connect with an Amazon strategist here: https://calendly.com/asteroidx-call/amazon-strategy-call
Very interesting. Thank you for sharing