6 Tariff Strategies for Resilience

The Tariff Challenge for Ecommerce Merchants & 3PLs 

Since February 2025, the United States has implemented a series of tariffs on imports from China, Canada, Mexico, and other global trading partners. This has sparked retaliatory measures, creating an unpredictable trade landscape where tariff rates can shift overnight. Keeping up with tariff changes has become a full-time job.  For ecommerce merchants and third-party logistics warehouses (3PLs), staying compliant and maintaining profitability in this volatile environment requires proactive tariff strategies and adaptability. 

To help your business build tariff resilience, consider these six key strategies to mitigate risks and optimize operations. 

1. Diversify Your Supply Chain & Explore Alternative Sourcing

If your supply chain relies heavily on China, Mexico, or Canada, it’s time to evaluate alternative manufacturing locations. While moving production to the U.S. may seem like an intuitive solution, it often leads to higher costs for consumers rather than tariff savings. Here’s why: 

• Rent per square foot: ~50% cheaper in Mexico 

• Labor costs: Mexico’s wages are about 15–30% of U.S. levels, translating to roughly 70% savings 

• Utilities: 2–3 times lower in Mexico, yielding potential savings of 200% 

Even with a 25% tariff, shifting production to the U.S. can still result in higher costs overall. Instead, consider alternative sourcing options: 

• Vietnam or India instead of China – These countries offer competitive labor costs with fewer trade restrictions, helping to maintain profitability while mitigating tariff exposure. McKinsey & Company mentioned Vietnam, in particular, as an attractive location for diversifying your supply chain.  

• Colombia instead of Mexico – With similar labor costs and lower tariff risks, Colombia is emerging as a viable alternative for certain industries. 

• Multi-supplier strategies – Partnering with multiple suppliers in different regions ensures greater flexibility and resilience against sudden trade shifts. This approach also minimizes dependency on a single country, reducing risk from future tariff fluctuations or supply chain disruptions. 

2. Leverage Nearshoring & 3PL Partnerships

For businesses seeking regional diversification while maintaining cost advantages, a nearshoring strategy may be the best approach. Nearshoring involves shifting production or warehousing closer to your primary consumer base, such as utilizing Mexico or U.S.-based 3PL providers. Key benefits include: 

• Reduced shipping times and costs – Shorter distances mean lower transportation expenses and faster delivery speeds, enhancing customer satisfaction. 

• Greater control over inventory management – Closer proximity enables better oversight and quicker response times to fluctuations in demand. 

• Risk mitigation through geographic diversity – By maintaining production across multiple locations, businesses can reduce the impact of supply chain disruptions caused by geopolitical instability or trade restrictions. 

Key Nearshoring Considerations: 

• Labor-intensive industries (e.g., textiles, furniture, consumer goods) may still find Mexico a cost-effective option due to lower wages and established trade agreements. 

• Nearshoring with a U.S.-based 3PL can help businesses maintain a domestic presence while keeping costs in check. 

• Utilizing Bonded Warehouses and Foreign Trade Zones (FTZs) allows companies to defer or eliminate duties when expanding direct-to-consumer (DTC) operations. 

You should conduct a thorough cost-benefit analysis before committing to a nearshoring strategy to ensure long-term financial viability.

3. Implement Tariff Engineering & Cost Optimization

Businesses can reduce their duty exposure through strategic product modifications and cost-sharing tactics: 

• Tariff engineering – Adjusting product specifications to qualify for a lower tariff classification. For example, altering a product’s material composition, assembly location, or packaging can shift it into a more favorable tariff category. 

• Strategic product classification – Ensuring HS codes are accurately assigned and exploring available tariff exemptions. Misclassification can result in unnecessary duties and penalties, so it’s critical to work with experienced trade compliance professionals. 

• Retailer-vendor collaboration – Working closely with suppliers to share the cost burden of tariffs can help stabilize pricing and maintain profitability. This may involve negotiating cost-sharing agreements, shifting production timelines, or re-evaluating logistics routes.

4. Optimize Consumer Pricing & Demand Planning

Tariffs inevitably impact pricing, but a strategic approach to product positioning can help preserve profitability while keeping customers engaged. Consider the following tactics: 

• Portfolio strategy: Rather than raising prices across the board, shift margin recovery to less price-sensitive products while keeping high-velocity SKUs competitive. You can incorporate tariffs into your pricing strategy for different markets by using localized pricing adjustments. 

• Smart pricing tactics: Implement bundling, multipacks, and tiered pricing strategies to minimize customer friction and maintain conversion rates. 

• Demand planning & inventory optimization: Advanced forecasting tools can help merchants better predict buying patterns, reducing the risk of overstocking or markdown exposure. By fine-tuning category mix and aligning inventory with demand trends, businesses can protect margins from sudden cost increases.

5. Conduct a Comprehensive Cost-Benefit Analysis

With rising input costs and tariffs squeezing margins, businesses must evaluate their entire cost structure—not just sourcing expenses. A Total Landed Cost (TLC) analysis should factor in: 

• Logistics and transportation costs – Tariffs may make certain shipping routes or carriers more expensive, requiring adjustments in freight strategies. 

• Compliance and duty rates – Staying updated on trade regulations can help businesses identify cost-saving opportunities. 

• Tax incentives in different sourcing regions – Some governments offer incentives for relocating manufacturing or using specific trade routes. 

• Distribution and handling expenses – Evaluating warehouse locations and order fulfillment strategies can uncover potential efficiencies. 

• Marketing and operational overhead – Identifying areas for cost reductions outside of product sourcing can help offset tariff-related increases. 

A data-driven approach to cost management ensures businesses remain competitive even as tariff policies fluctuate.

6. Explore Delivered Duty Paid (DDP) Strategies

For cross-border ecommerce, offering Delivered Duty Paid (DDP) shipping can enhance the customer experience by eliminating surprise duties at checkout. Merchants should evaluate whether absorbing tariff costs into pricing or leveraging duty-free fulfillment centers is a viable strategy. 

Why DDP Matters: 

• Improves customer satisfaction – Transparency in pricing builds trust and reduces abandoned carts due to unexpected fees. 

• Enhances operational efficiency – Managing duties in advance simplifies customs clearance and expedites delivery. 

• Strengthens market positioning – Competitors who don’t offer DDP may struggle to attract international buyers wary of hidden costs. 

To implement a DDP strategy effectively, businesses should work with logistics partners experienced in handling international shipments and duty payments. 

No single action will fully offset the impact of new tariffs, but businesses that implement a multi-pronged mitigation strategy will be better positioned for success. While margins may be squeezed and prices may rise, those who adapt proactively can gain market share and create long-term supply chain resilience. 

The key to thriving in this volatile trade environment is staying informed, agile, and strategic. By continuously evaluating supply chain options, leveraging cost optimization tactics, and refining pricing strategies, merchants and 3PLs can navigate tariff challenges with confidence. Interested in discussing your strategy for tariff resiliency? One of our global experts would be happy to help you – Connect with us today!