A lot has changed since Donald Trump’s first term in the White House. E-commerce’s share of total retail sales has risen from 15% at the end of 2020 to 16.2%—a 1.2 percentage point increase, but a near-10% rise in real terms. The number of packages entering the United States that come under the $800 de minimis threshold that allows imports to enter the country without charge has gone from around 600,000 in 2020 to more than one million in 2024.
But the biggest change of all in the world of online retail is about to come, thanks to Trump himself, who has slapped a 10% tariff on goods coming into the country from China.
“This is all part of a bigger game of high stakes poker between the U.S. and China when it comes to trade negotiations,” says Dan Ives, managing director at Wedbush Securities. But in this case, the poker game could affect the 335 million citizens of the United States who increasingly rely on e-commerce.
Trump himself has admitted that Americans could feel “some pain” as a result of the tariffs, which include fees on imports from China. (Similar tariffs on Mexico and Canada were delayed after both countries agreed on Monday to send 10,000 troops to their respective borders with the U.S.)
“There are a lot of businesses that source from China that are going to have a lot of problems—and a lot of those brands go under the radar for how important they are to the wider e-comm ecosystem,” says Ben Graham, an independent e-commerce expert. “The random stuff that is non-premium is going to take a hit I think—and that’s the stuff that aggregators went pretty hard into.”
Michael Wieder of Lalo, a baby and toddler product company, sources and manufacturers’ products all over the world, but is “pretty reliant on China,” he says. “In our industry, durable goods in the baby space, that’s where it’s made, and that’s where there’s a sophisticated enough supply chain and a trustworthy enough supply chain.” Wieder points out that regulated products such as Lalo’s come from China by necessity—it’s where the knowledge base on how to build those products safely sits.
Wieder can’t say for sure whether his company will be hit by the tariffs because the regulation has been very vague. “There’s a lot of ambiguity right now, quite frankly, that we’re dealing with and learning about every minute to find out what our exposure is,” he says.
Besides first-party retailers selling through their own websites, the impact of tariffs on Chinese-sourced goods will be significant across the whole e-commerce industry. Around four in 10 third-party sellers on Amazon are exposed to Chinese-based sourcing of products, according to Bank of America—and therefore will likely see their costs rise as a result of tariffs that hit Chinese imports to the U.S. “Amazon particularly won’t want to suffer the losses, so will likely try and make up any short falls in seller or ad revenue by pushing up their fees,” says Graham, “which will push the prices even higher, and as Amazon doesn’t like to be the highest priced channel you sell on, brands will have to raise other channel prices accordingly.”
Wieder, for his part, has decided to take the hit on income temporarily—but says that it might not be possible in the long run. “We’re going to have to understand the long term impact, but for most people, you’ll first see the impact on your consumables, your groceries, that will start to take effect pretty quickly.” He believes the first inkling that prices are going up will appear within eight to 12 weeks, because businesses have enough stock in storage to last until then.
But those customers will have to stick with the businesses that remain, Wieder adds. “I think that there’s going to be a contraction of newer businesses and newer brands entering the market,” he says. “It takes more capital than ever to do that, and it’s going to be expensive to buy the inventory.”
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