February 2025 Tariff Changes: What eCommerce Brands Need to Know & How to Adapt

Covering the China, Canada, and Mexico U.S. trade disputes, des minimis exemptions, duty drawback suspension, and Federal Trade Zones changes as of February 2025.

Last Updated: February 13, 2025

The landscape of U.S. trade policy is shifting in 2025, and for eCommerce brands—both domestic and international—these changes could significantly impact pricing, sourcing, and supply chain strategies.

Whether you're a DTC brand in the U.S. or an international seller shipping to American consumers, understanding the new tariff rules is crucial to maintaining profitability and compliance.

On February 1, 2025, U.S. President Donald Trump announced the enforcement of additional tariffs on imports from Canada, Mexico, and China, citing national security concerns related to unlawful migration, fentanyl flows, and excessive reliance on foreign exports.

Some of these tariffs were paused, while others remain in full effect:

Canada & Mexico

A 25% tariff was announced on certain imported goods and was set to go into effect on February 4, 2025 but was paused for 30 days. The delay gives leaders time to come up with a compromise and businesses additional time to adjust sourcing and inventory strategies.

China

A broad 10% tariff increase on all imports went into effect on February 4th, 2025 and remains fully enforced, making Chinese imports more expensive for U.S. businesses and international companies selling to U.S. customers.

De Minimis Removal

The previous $800 duty-free threshold for low-value shipments to the U.S. (de minimis) has been eliminated for Chinese goods, meaning every product originating in China and shipped to the U.S. is now subject to all duties and tariffs.

Duty Drawback Restrictions

Previously, companies could recover up to 99% of duties paid on imported goods that were later exported, unused, or destroyed. However, the new executive orders prohibit duty drawback on the 10% China tariffs introduced under the 2025 policy changes.

Foreign Trade Zone (FTZ) Limitations

Traditionally, FTZs allow companies to defer or eliminate duties on goods that are ultimately exported. However, under the new regulations, products assessed under these new tariffs must be admitted as privileged foreign status, AKA, the 10% tariffs will still apply to Chinese imports even if they undergo transformation in an FTZ

Tariffs are applied based on the country of origin, not the country of export.

This means that if a product is manufactured in China but shipped from Canada, U.S. customs will still assess tariffs as if it were a Chinese import. The rules of origin determine tariff application, which is why proper classification and documentation are essential for compliance.

No matter where you're operating in the world, if you're an eCommerce brand with a U.S. consumer base you're likely already feeling the impact of these tariff changes—or bracing for them.

Here's the main ways we're seeing new tariffs shaking things up:

• Shipping & customs delays: With the removal of Section 321 (de minimis exemption) on China imported products, U.S customs processing times have skyrocketed with more shipments forced through formal entry.

• Higher supply chain costs: Thanks to the 10% tariff increase on China goods, raw materials and finished products from China are now more expensive, forcing businesses to evaluate alternative sourcing and increase prices

• Cross-boarder selling pause: With so much uncertainty in how recent Executive Orders (EO's) play out, many cross-border sellers have paused DTC selling to the U.S. until duty costs are more understood.

• 3PL Partnerships: There's a huge surge in Canadian, Australian and UK brands exploring U.S. fulfillment solutions to help lower tariff and shipping costs.

• Cash flow constraints: The increased tariffs and removal of de minimis for Chinese goods mean DTC brands will need to pay more upfront in duties, potentially straining working capital.

While you can't control duty and tariff fees, you can take action to reduce their impact.

Being proactive can help minimize financial strain, streamline operations, and even reveal new growth opportunities. Consider the following actions:

If you supply products from countries with high import tariffs like China, the most impactful way to offset tariff costs is by moving manufacturing to regions with lower or no U.S. tariffs.

Since the vetting process can be lengthy and building relationships takes time, the sooner you start the better off your margins will be in the long-term.

Consider the following options:

• Southeast Asia: Countries like Vietnam, Thailand, India, Cambodia, and Malaysia offer competitive labor costs and favorable trade agreements with the U.S.
• Domestic Manufacturing: While potentially higher in cost, producing goods locally can provide faster turnaround times, better quality control, and a "made locally" marketing appeal that resonates with customers.
• Nearshoring Opportunities: Exploring suppliers in nearby regions such as Latin America or Canada (if tariffs remain on hold) can reduce logistics complexity and shipping costs while maintaing supply chain flexibility.

Taking a proactive approach in diversifying your supplier network can help safeguard your business from sudden tariff changes and keep your operations running smoothly.

For international sellers targeting U.S. consumers, bulk importing and fulfilling orders domestically is often a more cost-effective alternative to shipping individual DTC orders from overseas.

When shipping single orders, tariffs are calculated based on the customer’s transactional value, which includes retail markups, resulting in higher per-unit costs. Each package is assessed duties separately, increasing overall expenses.

In contrast, bulk importing applies tariffs based on the business’s cost of goods sold (COGS)—a much lower value than the retail price. Consolidating shipments into bulk imports enables businesses to pay a single tariff assessment, significantly lowering per-unit costs and improving overall profitability.

Despite the new FTZ limitations on the 10% China tariff, the benefits should remain intact for pre-existing China tariffs. This means importers can still strategically store, process, and distribute goods within an U.S. FTZ, leveraging cost-savings for re-exported goods and improve cash-flow through duty deferment.

👉 Duty deferrals until goods enter U.S. commerce.
👉 Lower duty rates for repackaging or modifications inside an FTZ.
👉 Exemption on re-exports, meaning you only pay duties on what you sell in the U.S.

Type 11 clearance is an informal entry process for low-value shipments under $2,500. While this process does not reduce tariffs owed, it can help reduce customs processing time and administrative costs for businesses by:

• Avoiding the need for a formal customs bond

• Reducing paperwork requirements.

• Speeding up import clearance for frequent, low-value shipments.

Note that Type 11 clearance is not meant for bulk inventory shipments to a U.S. 3PL, even if the total shipment value is under $2,500. Customs may flag such shipments as an attempt to evade formal entry requirements.

Having a strong handle on your inventory levels, demand forecasting, and sell-through data can significantly reduce the impact of tariffs on your business.

Knowing exactly what’s in stock and how fast products are moving allows you to:

• Avoid unnecessary overstocking or running out of key items.

• Plan purchases strategically to take advantage of lower tariff periods.

• Leverage bulk purchasing to offset costs.

Additionally, leveraging real-time inventory insights can help you:

• Pivot quickly if tariffs change suddenly.

• Adjust purchasing patterns and distribution strategies on the fly.

• Stay agile and protect your margins.

Partnering with a fulfillment provider, like Nice Commerce, that offers detailed inventory analytics and demand forecasting can give you the visibility you need to make data-driven decisions and keep your business running smoothly.

If you're a cross-boarder seller with a large U.S. consumer base, a domestic third-party logisitcs (3PL) provider can help minimize tariff expenses and improve fulfillment efficiency by:

• Reduceing overall tariff impact and duplicating duty fees through bulk imports.

• Take advantage of quicker shipping times and cheaper domestic carrier rates.

• Utilize 3PL inventory management tools to better align stock levels with demand and prevent overstocking or stockouts.

With 2025 off to a wild start, we wouldn’t be surprised if even more trade changes pop up as the year goes on.

Staying ahead of these changes is key for DTC brands—whether in the U.S. or abroad—to keep their operations running smoothly. While things are changing fast, brands that stay flexible, optimize logistics, and proactively explore cost-saving strategies can still find opportunities to grow despite new trade challenges.

President Donald Trump enforced new tariffs in 2025 in an effort to protect domestic industries and address trade imbalances. However, critics warn tariffs can lead to more trade tensions and affect global economic stability through increased prices.

The cost of tariffs is paid by the importer of record—the entity legally responsible for customs clearance. This means:

• U.S. or International brands importing goods in bulk is the importer on record and directly responsible for these added costs.

U.S. customers buying DTC products from international sellers via cross-border shipping is the importer on record. Tariffs are often calculated in duties and fees at checkout.

Tariffs are applied based on the country of origin, not the country of export. This means that if a product is manufactured in China but shipped from Canada, U.S. customs will still assess tariffs as if it were a Chinese import. The rules of origin determine tariff application, which is why proper classification and documentation are essential for compliance.

The full impact of tariffs on consumer behavior and pricing strategies is still unfolding, especially with recent developments in U.S.-China trade negotiations. If tariffs persist, online retailers will likely experience similar challenges in adjusting their pricing and maintaining customer demand.

Diversifying suppliers, improving logistics, finding cost-saving measures in other areas of your supply chain, and exploring tariff refunds are all great ways to keep costs down.

Southeast countries like Vietnam, Thailand, Cambodia, and Malaysia offer competitive labor costs and favorable trade agreements with major markets.

Domestic manufacturing in the United States, while generally higher in cost, can provide faster turnaround times, better quality control, and a "made locally" marketing appeal that resonates with customers.

No. Type 11 clearance is not meant for bulk inventory shipments to a U.S. 3PL, even if the total shipment value is under $2,500. Customs may flag such shipments as an attempt to evade formal entry requirements.