5 Ways to Protect Your Profits If (and When) US Tariffs Hit

The looming prospect of U.S. tariffs has the ecommerce industry locked in debate over whether they’ll happen and who will face the brunt of their effects — brands, consumers, or both?

With President Donald Trump back in office, the possibility of tariffs is now on our doorstep. Although tariffs remain a moving target, Trump has consistently proposed 25% tariffs on imports from Canada and Mexico and anywhere from 10% to 60% on Chinese imports. 

For brands, this means seizing every opportunity to stay profitable. And for consumers (who already feel like everything is too expensive), this could spell even higher prices. 

But regardless of what the future holds, there are clear-cut steps brands can take to prepare their customers and protect their profits. Follow along as we break down five proven strategies for preserving — and boosting — your bottom line if and when tariffs hit. 

How tariffs could impact ecommerce brands

There’s no doubt that tariffs introduce a unique set of challenges for consumer brands. Should tariffs go into effect, they could face higher costs, supply chain disruptions, pricing pressures, and, ultimately, lower net profits.

How do tariffs work exactly?

Before we dig into the details, a quick primer on what tariffs are and how they work. 

Generally, a tariff is a duty on a foreign import. There are multiple ways to calculate tariffs, but most are calculated based on the import’s transaction value (the price paid or payable for a product sold for export). However, the amount the importer pays depends on whether the product is shipped straight to the end customer from overseas or to the U.S. first. 

If shipped from abroad, the transaction value is then the full retail price the customer paid. If imported to the U.S. first and distributed domestically, the tariff will only be levied on the product’s wholesale price.

In other words, shipping directly to the end customer can have a much bigger tariff implication. The retail value — reflecting packaging, handling, shipping costs, and your markup — is also factored into the total being taxed. 

Historically, low-value (de minimis) shipments under $800 have been exempt from these tariffs — this is how Temu and Shein can ship goods for so little. But these are in discussion to be removed as well.

How their effects trickle down your supply chain

Although tariffs theoretically only apply to the importer — i.e., consumer brands — their effects end up rippling through every touchpoint in the supply chain:

• Brands: They pay a tariff on all goods they import.

• Suppliers: Whether they have to pay their own tariffs on imported materials or anticipate a drop in demand from their brand partners, suppliers are likely to raise their prices, too.

• The supply chain at large: The frenzy may also cause suppliers and brands alike to reassess their sourcing strategies, leading to inventory shortages or bottlenecks that hit everyone.

• Consumers: With costs increasing all around, brands will likely pass some of the burden onto consumers through higher prices. Consumers may also experience delivery delays.

Beyond their immediate effects on the supply chain, tariffs could also impact the economy in unseen but palpable ways. Most notably, they could fuel more uncertainty among consumers and exacerbate their already fragile view of the economy as a whole. 

Luckily, there are ways to stay vigilant: Prioritize strategies that mitigate risk and foster growth.

5 ways to safeguard your profits against tariffs

From optimizing your supply chain to testing your prices, here are five ways to keep revenue flowing if tariffs go into effect.

1. Optimize your supply chain to fill efficiency gaps proactively

As tariffs’ repercussions travel from abroad to the end customer, your supply chain will feel the shockwaves. However, this is nothing it hasn’t seen before. 

The pandemic laid bare every possible logistics vulnerability, and today’s supply chains are more prepared than ever to weather new uncertainties. But you can’t overhaul your supply chain overnight. Supply chain shifts require incremental, systemic changes, not just a few optimizations. Know what’s possible before you set plans in motion.

To cover your tracks this time, consider diversifying your risk across new regions and multiple suppliers. So, instead of sourcing your goods from China, source from places with lower tariffs, like South Korea or Bangladesh. Or, if you’ve intended to start sourcing domestically but haven’t gotten around to it, there’s never been a better time.

To decide which locations overseas make the most sense, zero in on countries with free trade agreements (FTAs) with the U.S. — taking into account the potential new tariff rates between Chinese, Mexican, and Canadian suppliers. And to avoid putting all your eggs in one basket, aim to secure several suppliers in these new regions.

Meanwhile, if you ship goods directly to the end customer from abroad, explore options for importing your goods to a 3PL and distributing them domestically. This will also lower the tax base.

2. Be prepared to make price changes — A/B test to discover your customers’ elasticity

As with any increase in shipping costs or wholesale prices, tariffs will force you to reassess your pricing baseline. Chances are the prices that drove conversions and protected profits last year won’t be the ones that do it again this year. Plus, other players in your market — i.e., competitors and complements — are also likely changing their pricing, giving your customers a totally new buying landscape. 

Ideally, you’ll already know how your customers will react to different price points before you're forced to make a change. A/B price testing is the best way to uncover this. 

First, build a robust testing roadmap to decide which optimization levers to pull — most likely starting with these three: 

• Prices

• Offers

• Shipping costs

Tools like Intelligems make it easy to conduct these experiments and act on them fast. Whether you’re testing all of the above or even more creative elements like copy and images, Intelligems’ rich profit optimization features provide granular insights to understand what drives conversions in every economic circumstance — tariffs included. 

These results will give you a realistic sense of how high of price increases you can sustain without jeopardizing your bottom line. You might discover that the winning combo includes the same base price with higher shipping costs, but you may also surface some surprising — and encouraging — results.

Just take Original Grain, for example. To find out just how much the brand could charge for their very popular hero watch, they looked to Intelligems. While they’d assumed customers wouldn’t pay more than $500, profit optimization tests revealed that the watch was most lucratively priced at $799. Thanks to the carefully calculated increase, Original Grain has since increased profit per visitor (PPV) by 50%.

Pro tip: It will generally be easiest to raise prices on high-velocity, less-price-sensitive SKUs. If some SKUs are already slow to move, you may have an even harder time selling them at higher price points. 

3. Personalize your offers and site content to speak to every audience

Like with any major economic shakeup, tariff-induced price changes could mean many customers will soon need an extra nudge. 

To continue capturing their attention, look for new opportunities to meet their evolving needs. The best way to give everyone a bespoke experience? Tailor your site to different segments. Personalization creates happy, high-intent customers who boost your bottom line.

You can also pull several profit levers here. Offers, product discovery content, and even landing pages are all great candidates for customization. And with Intelligems Personalizations, you can test these variants individually or customize every aspect of your onsite experience at once.

Celebrated wellness brand Scale used this feature to take personalized offers for a successful test run. Rather than presenting every visitor with the same blanket discount, they segmented customers based on visitor type, traffic source, and device, then created a distinct offer experience for each group. This enabled Scale to launch varying discount tiers based on the lowest threshold it took each group to convert. As a result, the brand drove 94% higher revenue per visitor from a single image test while doubling their testing velocity.

4. Build transparent tariff talk into your brand messaging to establish trust

Testing prices and offers is proven to uncover exactly what makes your customers tick. But there are also other (more creative) ways to reach them. 

Transparent tariff messaging clearly defines what this change could mean for you and your customers. That way, you build trust and equity even as you roll out potentially unpopular updates, like price increases. The honesty will strike a sympathetic chord — after all, they’re worried too — and prevent customers from seeing the changes as a betrayal.

To reach as many people as possible, try running these messages across multiple channels: Website banners and landing pages, email, and social media are all great options.

And if you’re looking for a best-in-class example, take a cue from the viral showerhead purveyor Jolie:

Jolie’s email doesn’t just strike the perfect balance between sympathy and honesty; it includes a compelling call to action. Even if customers don’t take to the price increases, they’ll still be highly motivated to convert before those prices go through. 

5. Prepare for the unknown with scenario model planning

You probably know this already — but big economic changes like tariffs may compel a deeper look into your brand’s future financial plans.

Scenario planning helps you confidently face the unknown and prepare for what’s next.

This can help you further evaluate the effects of price changes and give you a more holistic view of other big-picture possibilities. Brands often use this method to model upside and downside scenarios and plot their impact across the P&L.

In our current situation, for instance, you could compare what 25% tariffs would mean for your brand’s financial health against a no-tariff scenario.

But it doesn't end there. You can even create scenarios that account for both tariffs and their range of secondary effects — like what might happen if they also drive down marketing budgets and, in turn, CPCs.

Then, once you have a sense of the future, you can start setting contingency plans — and, you guessed it, modeling those effects too. You might see how preemptively lowering your ad spend or increasing your shipping costs could protect your profits in the event of tariffs.

Although scenario planning isn’t foolproof, it can still ensure you prioritize profitability at every turn. Luckily, Intelligems can help on this front, too.

Intelligems is your profit shield

Intelligems is the ultimate Profit Growth Platform for Shopify brands. Its advanced A/B testing and personalization tools help you unlock smarter, data-driven profit opportunities for sustainable growth — regardless of what happens with tariffs. 

High-growth brands like Original Grain, Scale, Fulton, Dossier, and many others trust Intelligems with their profit optimization needs. In joining them, you can stand up to economic uncertainty with features like:

• A/B test pricing, promotions, shipping rates, and more

• Granular testing analytics and insights

• Personalized on-site experiences that cater to every customer

Ready to protect your profits at all costs? We’re ready to help. 

Book a free demo to start optimizing every aspect of your website for maximum profitability today.