How Trump Tariffs Affect E-Commerce

As the world watches two of the most prominent political figures vie for leadership, concerns grow over what will happen if either Harris or Trump takes office. While I’m no political expert, there are a few key issues we need to be prepare for, especially in the event of a Republican victory.

[Kalshi Polling Data has Trump at 57% and Harris at 43%, October 23rd.]

The déjà vu we’re all expecting

On the surface, Donald Trump presents himself as someone who doesn’t shy away from policy or reform, even when it comes at the expense of others. He wears his defiance proudly, sending a clear message: “It’s my way or the highway.”

After months of debates and press conferences outlining his stance on policy and reform, Trump needed to prove to the American people that he could do more than just talk the talk. In 2016, after securing the Republican nomination, Trump saw no clearer message than a huge “screw China” initiative to have with his morning coffee. Shortly after, the Trump administration began rolling out, once a month, “The List.” This list contained all the goods being imported from China to the United States that had been placed on the tariffs list, where all U.S. importers dealing in that category of product would have to pay a percentage fee to receive their product.

While Biden’s administration kept a lot of the Trump tariffs in place, after the 2020 democratic win (read more), we are definitely expecting a similar introduction of new Trump tariffs in the event of a second term for the wealthy New Yorker. For starters, Trump talks about a 20% bump across consumer goods and 200% on some vehicles (read more). What he has prepared for main course, we’re yet to find out.

It’s ironic that, despite the Republican party's pro-business reputation, the introduction of tariffs hasn’t tarnished that image, despite their negative impact on domestic businesses. This is where I think Trump’s patriotism, though perhaps his greatest weapon during the electoral race, could be his Achilles' heel when it comes to winning over founders. I firmly believe that Trump wakes up with a vision of a 1920s America, where the U.S. leads an industrial revolution and reclaims its title as chief of manufacturing worldwide.

Sadly for him, reality outweighs ideology, and the natural tendencies of business owners will always drive them toward decisions that favor their bottom line. A shift in manufacturing to U.S. soil is a narrative that most founders and businesses can’t accommodate to meet their unit economics.

Today, China represents 16.5% of the $3.2 trillion (approx. $500 billion) in American imports per year and still exports goods at a fraction of the cost compared to foreign counterparts. So what does this mean, and what can we expect in the e-commerce landscape if we get Donald Trump 2.0?

What happens if I’m on “The List” in 2025?

I interviewed 46 e-commerce businesses to validate my thoughts on this issue, encompassing approximately 15 different sectors of consumer packaged goods (CPG) brands. Among these businesses, 39 source the majority of their products from China, 2 from Mexico, and 1 from India. Not one brand in that random cohort sources products in the U.S. Of the 39 China-reliant brands, 22 of the founders said they were affected by the tariffs introduced by Trump in 2016 and 2017, with all 39 admittedly affected by the logistics crisis. So I asked them one simple question to start:

“What was your process when tariffs caused the price of goods to increase?”

Unfortunately, every single candidate had one of two responses. Either:

“We ate the cost as a business” or “We had to pass the additional cost onto the consumer by raising our prices.”

It’s important to note that tariffs are often introduced or increased to protect domestic manufacturing interests and help stimulate employment. How effective has this been? Under Biden's Investing in America agenda, nearly 800,000 manufacturing jobs have been created, and new factory construction has doubled, reversing the decline seen under Trump’s administration (read more) - assuming the White House is giving us verified stats (eek). However, this data is somewhat unclear, as Trump's numbers are skewed by the pandemic, with 1.4 million jobs lost during his term, though 60% of those were recovered before he left office (Fact Check).

However, tariffs come at a price, and the goal of "creating jobs" often overshadows the net impact trade tariffs have on existing businesses sourcing products overseas, not to mention the downstream effect on consumers. While creating additional jobs for skilled workers at large entities (such as electric vehicle manufacturing) is beneficial, the direct-to-consumer sector, especially for start-ups, is so heavily reliant on overseas manufacturing that the reintroduction of tariffs could be detrimental to their survival. Brands will once again pass the increase in costs onto their consumers in a desperate attempt to retain margins. Harris talks about more initiatives to help start-ups get tax breaks (read more). The irony being 98% of start-ups don’t make any money…

I’m concerned we may experience a similar pattern to 2021/22, where rising costs of general consumer goods lead to inflationary pressures and, in turn, a significant drop in the consumer sentiment index (read more). As prices increase, consumers could pull back on discretionary spending, creating a ripple effect across various sectors and further dampening economic optimism.

Whether Trump or Harris claim victory in the election, one thing is clear: tariffs and e-commerce startups are fundamentally at odds, and the push to bring resources back to the U.S. is a strategy that ultimately will never support the growth of e-commerce businesses.