New tariff terms give retailers and brands 90 days to rebalance cost, sourcing, and availability.
The U.S. has lowered tariffs on Chinese imports from 145% to 30% for 90 days. China, in turn, reduced its duties on U.S. goods to 10%. This temporary reset applies primarily to goods sourced from China—a significant exposure point for many retailers. In apparel alone, over 30% of U.S. imports still come from China. While the reprieve may be short-lived, it creates a near-term window to stabilize product availability and manage costs.
Prioritize High-impact SKUs Sourced from China
Retailers should start by identifying which core SKUs are most affected by China-origin tariffs—especially those that are high-volume, seasonal, or central to customer loyalty.
Recommended Steps:
- Update landed cost models across three scenarios: 30%, 145%, and rollback. Walmart CFO John David Rainey recently noted that tariffs are too volatile to model in formal guidance.
- Work with suppliers to prioritize production and shipping of top SKUs while tariffs remain lower. Amazon sellers are already accelerating orders to beat potential duty hikes.
- Review small parcel exposure. An April Executive Order closed the de minimis loophole—meaning even low-value China-sourced items now face a 30% tariff or $25 per item.
Collaborate with Suppliers and Diversify Capacity
Tariff exposure is often concentrated in China-heavy categories. For these products, margin preservation depends on flexible sourcing and supplier coordination. TJX Companies, for example, expects only a modest impact thanks to their ability to pivot sourcing quickly.
Recommended Actions:
- Renegotiate supplier terms on payment timing, FX hedging, and shared duty costs for China-based production.
- Accelerate China-plus-one shifts. Move high-exposure SKUs to Mexico or Vietnam where feasible. Home Depot manages tariff risk at the SKU level and adjusts sourcing accordingly.
- Use customs optimization tools like foreign-trade zones, first-sale rule structures, and HS code reviews—tactics that can reduce duties by 3–8 points.
Align Price Planning with Customer Expectations
Even modest tariff increases can impact value perception. Price changes should be thoughtful and clearly tied to cost pressures—especially on China-sourced essentials.
Steps to Take:
- Model pricing outcomes tied to each tariff scenario. Best Buy warned a 10% tariff could reduce comps by a full point.
- Consider a short price hold on key SKUs during the 90-day window. Dollar General has already signaled plans to absorb duty costs in 2025.
- Update pricing and margin guardrails internally—and ensure board and investor decks include tariff sensitivity tables.
What to Expect Next
This truce mostly affects goods sourced from China—and only for a short time. But it offers a real chance to protect availability, margin, and customer experience.
Think of it like a shot clock in basketball: 90 days to set your play, get aligned, and move. The buzzer comes fast.
We’re seeing a range of approaches across retail—reach out if you’d like to gut-check yours.
