Navigating the New U.S. Tariffs - An Amazon Sellers Guide
Apr 28, 2025
News
Amazon
by Michael Giguere
What Do the New Tariffs Mean for Amazon Sellers?
The newly announced U.S. tariffs are shaking up the e-commerce world. With duties climbing up to 145% for most products, 245% in some extreme examples, and others being exempt altogether, Amazon sellers face a tough reality: rising costs, shifting supply chains, and the urgent need for smarter pricing strategies.
If you're wondering, “How do I protect my margins without doubling my prices?” you’re in the right place. This guide breaks down practical, proven strategies for staying profitable through today’s trade turbulence, whether you're adjusting for this quarter or building a long-term advantage.
How Tariffs Impact Your Brand (And What You Can Do About It)
Tariffs increase your costs by applying duties to the declared value of your imported products. Here’s where many newer sellers stumble: they assume only the raw product cost matters. In reality, if your invoice bundles services like packaging, logistics, or mold creation into the product price, you’re paying tariffs on all of it, not just the goods.
Quick Example of Tariffs in Action:
Let’s say your landed cost was $5/unit.
If you have your declared value based on DDP pricing, with a 145% tariff, that now jumps to over $12.70/unit, more than double.
Don’t worry, we’ll show you how to avoid this worst-case scenario and help you maintain your margin profile without doubling your prices.
The good news: You don’t have to accept this worst-case scenario. By restructuring your invoices (we’ll show you how), you could theoretically lower your taxable COGS and drop your effective tariffed cost closer to, say, $3.00/unit. Combine that with a few smart margin moves on Amazon’s end, and it’s entirely possible to recover a 30–40% gross margin, without alienating your customers with massive price hikes.
Curious how to make this happen? Keep reading.
How to Reduce Your Tariff Footprint
If you want to protect your margins, focus first on lowering the taxable cost of your goods.
1. Switch to EXW Terms for All Invoicing
Question: Should I change my shipping terms to EXW to lower tariffs?
Answer: Yes—switching to EXW (Ex Works) is one of the fastest ways to reduce your taxable import value.
Unlike FOB or DDP terms, EXW separates transportation and handling fees from your product cost. When goods hit U.S. customs, only the actual goods, not shipping or logistics, get taxed.
2. Separate Services from Goods in Your Invoices
Bundling kills your margins under tariffs. Break your manufacturing invoice into two clear parts:
Taxable Goods Cost (raw materials + labor)
Non-Taxable Services (packaging design, R&D, molds, quality control)
In practice, this looks like paying your supplier a separate invoice for shipping, molds, R&D, quality control, packaging design, etc, to keep your product cost as low as possible.
Concrete Example:
Let’s say your landing cost was previously $5. Instead of paying $5/unit all-in, restructure it like this:
$3/unit for the actual manufacturing of the product (taxable)
$2/unit for services like shipping, Q/C, molds, etc (not taxable)
Impact: On a 10,000 unit order, this simple shift could save you almost $30,000 at the 145% tariff rate most sellers are facing right now (based on 5/02/2025 rates).
How to Renegotiate with Your Manufacturer
Question: Can I renegotiate my supplier contracts because of tariffs?
Answer: Absolutely, and you should.
Here’s the reality: you aren’t the only one stressed about tariffs; Suppliers are feeling the pressure too. Everyone sourcing products from China is now facing a difficult situation, as they’re seeing their costs skyrocket, and some brands will simply throw in the towel. For brands looking out long term, this drop in demand will create a golden opportunity for you to renegotiate with your suppliers and help you create a business that’s far more profitable in the long run.
Ways to Negotiate Better Terms:
Double Down on your Commitment: For instance, let’s say you normally order 10,000 pieces every 3 months from them. Instead of business as usual, see what kind of discount they might be willing to provide in exchange for a 100,000 unit commitment over 2 years. Many factories will love this as it’s guaranteed cash flow during uncertain times and allows them to leverage economies of scale, making the orders more profitable for them. I’ve personally seen manufacturing costs drop by over 20% to secure these types of contracts.
Offer Profit-Sharing: Instead of negotiating pricing, some brands partner with factories by offering a share in profits in exchange for rock-bottom manufacturing costs. This type of relationship removes factory markup and brings your import costs much closer to true production costs.
Pro Tip: Focus your efforts on manufacturers who primarily export to the U.S. vs factories with more diversified supply chains. They’ll feel the tariff pinch most sharply and are more likely to cut deals.
Inventory Management Strategies to Delay Tariffs
Question: Can I store inventory somewhere to avoid or delay U.S. tariffs?
Answer: Yes, tariffs are only collected once goods enter U.S. commerce, so delaying entry can be a powerful tool. Here are a few of the best ways we’ve found to do that:
Bonded Warehouses (U.S.)
Ship goods into a bonded warehouse and post a bond against your COGS.
No customs clearance = no duties owed until goods are released.
Store inventory until tariffs change or trickle stock into the U.S. as needed.
Warning: Storage isn’t cheap. Run cost analyses to ensure it’s worth it compared to current tariffs or other storage solutions.
Canadian or Mexican Warehouses
Another great warehousing solution is to store your goods in Canada and Mexico.
Storing goods in these countries will allow you to store the bulk of your inventory there and avoid tarifs on all of your inventory and then drip feed product into the US as needed. This means you can delay or avoid duties by holding goods until tariffs are lowered or eliminated and only send inventory into the U.S. as needed.
You'll also have a first-mover advantage if tariffs ease, as your goods are already nearby so you can get them quicker than goods shipping from China. Additionally, you won’t have to deal with the super high freight costs that’ll envatably come with the tariffs lifting as everyone tries to rush product into the US.
As of posting this article (05/02/2025) there aren’t any major tariffs on Chinese goods into these countries. That being said if you want to use this solution, remember to check for any updates on tariffs on Chinese goods to ensure you aren’t exposing yourself to additional tariffs.
Chinese Warehouses
If you can afford to wait, ask your manufacturer to store finished goods in China.
This option is great as there are minimal holding costs, no duties triggered, and offers decent flexibility when trade conditions shift.
This is a great option if you have plenty of stock in the US and want to maximize cashflow.
The main downside here is that you’ll be looking at long shipping times to the US once the tariffs list and will have to deal with increased freight costs with tariffs lift.
How to Protect Your Margins on Amazon
Smart margin management is your best defense to stay afloat during this difficult period. Through a combination of getting your supply chain in line, decreasing ad spend and increasing price preserving margin profile becomes something that’s suddenly possible. Here’s how to accomplish this without nuking sales.
1. Change Prices Gradually (Not All at Once)
Sudden cost jumps can trigger Amazon price gouging flags, hurt Buy Box eligibility, or even get listings suspended.
Our Recommend Solution:
Once you’ve gotten the rest of your supply chain in order, use a profitability calculator to Identify the new price point you’d need to sell for maintain your margin profile.
Raise prices slowly, we recommend aiming for 5% per week to avoid any significant issues.
Plan ahead, start the process of increasing prices before your new, tariffed inventory arrives.
2. Maintain Ad Spend (At First)
For most Amazon brands, outside of inventory, ad spend is their next largest expense. This makes it a great lever to pull from during this period of time to avoid raising prices too dramatically. That being said there’s a smart way to go about it. We recommend establishing your new price point first and only after accomplishing that begin working towards reducing your ad spend. This will ensure sales don’t just fall off a cliff as you establish your new price point as pulling back too early could cause your sales velocity to crash, and with it, your organic rank.
8-Week Adjustment Plan Example:
Weeks 1–4: Increase price 5% per week
Weeks 5–6: Hold prices and ad spend steady to establish a history.
Weeks 7–8: Begin decreasing ad spend by 5% per week until you reach your desired spend threshold.
3. Use Coupons and Promotions Strategically
Something most sellers don’t think about as a piece of their price increase strategy is the strategic use of coupons and promotions. Amazon customers love a good deal, and in an environment where everyone is increasing prices, offering a coupon can be a good way to stand out. If sales are continuing to decline as you increase the price, running a coupon or promotion for a few days can be a good way to drum up extra sales and give you a quick boost in the algorithm to help you stabilize yourself without having to drop your list price.
Should You Use Black Hat Tactics to Avoid Tariffs? (Short Answer: No)
While it might be tempting to try and game the system the potential penalties you’ll face if caught simply aren’t worth it.
With U.S. tariffs rise, it's easy to feel backed into a corner. But before you consider cutting corners, ask yourself: Is it worth risking fines, audits, or even jail time?
It’s not.
While some sellers explore “creative” methods to lower their declared costs, anything that can’t be backed up by clear documentation puts your business at serious risk.
Here’s a breakdown of the most common tactics, and what’s safe vs. risky:
🚫 Black Hat Strategy: Falsifying Costs on Invoices
What it looks like:
You ask your supplier to list a lower cost on the invoice than what you actually paid.
Or worse, they do it without your consent—but you accept the paperwork anyway.
Why it’s risky (Black Hat):
This is customs fraud. If you're caught, you could face massive penalties, seized goods, or long-term import bans. Maybe you can get away with it in the short term but all it takes is one shipment to get flagged for the house of cards to come tumbling down.
⚠️ Gray Hat Strategy: Letting Suppliers Handle DDP Without Clarity
What it looks like:
Your supplier offers to ship DDP (Delivered Duty Paid).
They say, “Don’t worry, your total cost only increases 20%, we’ll take care of the rest.”
But you don’t get a breakdown of duties vs. product cost.
Why it’s risky (Grey Hat):
You’re blind to what’s really happening behind the scenes. If your supplier underreports costs or mishandles the paperwork, you’re still responsible as the importer of record. And if audited, you won’t have the documents to prove your case.
✅ White Hat Strategy: Reduce Declared Costs Legally
What it looks like:
You restructure invoices to separate goods from services.
You negotiate volume-based price reductions.
You choose EXW terms and document each cost component clearly.
Why it works (White Hat):
These methods create a defensible paper trail. If you’re ever audited, you can prove exactly why your declared costs are lower, with receipts, contracts, and matching wire transfers.
Bonus: Compliance, AI Sourcing & More
1. Cost Discrepancies Pro Tip
Big declared cost swings (>20%) are red flags for auditors. If legitimate cost-saving tactics push your COGS down more than 20%, we recommend creating a new SKU on Amazon and using the newly generated FNSKU for labeling. This new SKU should then be treated as a new product being imported into the US. This new product won’t have an import cost history, which should minimize the risk of the price change leading to an audit.
2. Consult Legal Experts (Always)
This guide shares ideas we’re seeing other businesses implement, but your specific business conditions matter. Before making structural changes to invoices, contracts, or imports,we highly recommend consulting with a customs attorney or compliance specialist.
Best Practice: Keep detailed paper trails for all sourcing, invoicing, and margin changes. Audits are on the rise.
3. Bonus Tips & Tricks
Use ChatGPT: Ask for alternate sourcing countries for your product type.
Diversify Manufacturing: Vietnam, India, Mexico, and parts of Eastern Europe are expanding their export capabilities. It could be worth exploring if you can source any of your products from these countries to further protect your brand.
Spy on Competitors: Tools like ImportYeti show where major brands source products.
