Navigating New Tariffs: Strategies for U.S. Amazon and Walmart Sellers
The Impact of New Tariffs on E-commerce Sellers
With the latest round of tariffs imposed by President Trump on imports from China, Mexico, and Canada, U.S. e-commerce sellers on Amazon and Walmart are facing increased costs. These tariffs, which include a 25% tax on goods from Mexico and Canada and additional tariffs on Chinese imports, are forcing sellers to reassess their supply chains to remain competitive.
Rather than absorbing higher costs or passing them to customers, many sellers are seeking alternative manufacturing solutions. This article explores the best options and provides actionable strategies to help you adjust your sourcing strategy while maintaining profitability.
Tariffs are essentially taxes imposed on imported goods, which can lead to higher costs for sellers who rely on international suppliers. As these costs rise, sellers must find innovative ways to manage expenses without compromising their customer base or profit margins.
Top Alternatives to Traditional Manufacturing Sources
1. UNITED STATES
Local Sourcing and On-Demand Manufacturing
While the U.S. has historically been a more expensive manufacturing option, rising tariffs make domestic production more viable. Benefits of local sourcing include:
Faster Shipping – Reduced transit times and costs with domestic fulfillment.
Quality Control – Easier oversight of production processes.
Made in the USA Appeal – Many consumers prefer American-made goods and are willing to pay a premium.
Tip: Look into U.S.-based contract manufacturers, especially in regions with lower labor costs, such as the Midwest and South.
2. Vietnam: The Rising Manufacturing Powerhouse
Vietnam has become a major hub for manufacturing, especially in textiles, electronics, and household goods. Key benefits include:
- Lower labor costs than China
- Established infrastructure for exports to the U.S.
- Free trade agreements that reduce tariffs
Tip: Partner with Vietnamese manufacturers who specialize in your product category to maintain quality and reliability.
3. India: A Growing Alternative for Diverse Product Categories
India offers competitive manufacturing for textiles, home goods, and technology components. Sellers can benefit from:
- A vast, skilled workforce
- Competitive pricing compared to China
- Government incentives for export-driven businesses
Tip: Work with third-party sourcing agents in India to find reliable suppliers and negotiate favorable terms.
Offering bundled products or value-added services can also help justify price increases while maintaining customer loyalty. Additionally, exploring dynamic pricing models that adjust based on demand and competition can provide a strategic advantage.
4. Thailand & Indonesia: Cost-Effective Alternatives in Southeast Asia
Both Thailand and Indonesia have strong manufacturing sectors, with advantages such as:
- Lower production costs than China
- Growing expertise in apparel, furniture, and electronics
- Improving logistics and shipping capabilities
Tip: Leverage Alibaba and industry trade shows to connect with suppliers in these countries.
5. Eastern Europe: A Rising Player for High-Quality Manufacturing
Countries like Poland and the Czech Republic provide excellent quality manufacturing with benefits such as:
- Proximity to Western European markets for global expansion
- Skilled labor and advanced manufacturing technology
- Lower risk of supply chain disruptions
Tip: Consider Eastern Europe for higher-end or specialized products where quality and precision matter most.
6. Mexico: Nearshore Manufacturing Despite Tariffs
Even with the new tariffs, Mexico remains an attractive option for certain industries due to:
- Proximity to the U.S., allowing for lower shipping costs
- Existing trade relationships and infrastructure
- Lower labor costs compared to domestic production
Tip: Compare the full landed cost (manufacturing + tariffs + shipping) before deciding whether to keep operations in Mexico.
Strategies to Mitigate Tariff Costs
Diversify Your Supply Chain
Avoid over-reliance on a single country by sourcing from multiple regions.
Optimize Your Pricing Model
Adjust pricing strategies to absorb some of the cost while remaining competitive. Use market research tools to test pricing elasticity.
Leverage Duty Drawback Programs
Explore U.S. Customs' duty drawback programs, which can refund tariffs on certain re-exported goods.
Negotiate with Suppliers
Request bulk discounts, longer payment terms, or shared tariff burdens.
Automate Production Where Possible
If shifting to domestic production, invest in automation to offset labor costs.
Conclusion: Adapt and Stay Competitive
The latest tariffs are driving a major shift in the way Amazon and Walmart sellers approach manufacturing and supply chain management. By proactively seeking alternative suppliers, negotiating smarter, and diversifying manufacturing locations, sellers can reduce the impact of tariffs and continue to scale their businesses.
Staying informed and agile is the key to maintaining profitability in a rapidly changing trade landscape. If you’re considering switching suppliers, start researching and building relationships now to future-proof your business.