How to Mitigate Trump Tariffs As a Small Ecommerce Business

In January 2025, after months of prototyping and development, I ordered 500 pickleball paddles from a Chinese manufacturer.

Six weeks and one long boat ride later, five weathered boxes of 50 each arrived at my doorstep in Los Angeles, with the rest shipped directly to Amazon warehouses.

The inventory cost my business partner and me a little over $11,000. Had we ordered the product a little later, when President Donald Trump announced tariffs on all imports from China to the US, our bill could have been much steeper. Tariffs on China started at 10% in February, peaked at 145% in April, and were 30% as of May 12.

It was good timing for us. We’d already dealt with unexpected costs launching our brand, Peak Pickleball, and the tariffs would have sent us even further over budget. While we shouldn’t need to order more inventory anytime soon, I couldn’t help but wonder, as a novice in the e-commerce space, should I be worried about working exclusively with suppliers in China?

I called up Tyler Walter, who co-founded a supply chain services company for brands in the US in 2021. The mission of the company, 330 Trading Co., is to help smaller, US-based e-commerce companies diversify their supply chains. In other words, they help connect business owners like me with manufacturers — and they specialize in moving companies beyond China to suppliers in Taiwan, Vietnam, and other regions in Southeast Asia.

Years ago, the 330 Trading co-founders noticed a trend — big brands like Nike, Adidas, and Lululemon were transitioning away from Chinese suppliers — and saw an opportunity to help smaller brands that didn’t have the resources to connect with factories in other countries.

“China is really good at marketing their factories and managing relationships with outside companies. They’ve been doing it for 40 years,” Walter, who lives in Taipei and is on the ground building relationships with factories in Southeast Asia, told me back in 2023. However, “there are a lot of good factories in places like Vietnam or Thailand or Malaysia that can make those baseball caps or those hoodies that you want to sell. They just don’t have any way of finding customers in the US, and the US brand owners have no way of finding those factories because of cultural and language barriers.”

Now, more so than ever, it’s important for businesses to have diverse supply chains, which is why my business partner and I are prepared to make a key strategic shift: transitioning to a supplier outside China.

How to mitigate tariffs

With hundreds of pickleball paddles still to sell, I won’t be placing a second inventory order anytime soon. However, due to a misprint on our first round of inventory, the manufacturer agreed to send us 250 complimentary paddles. Those are still in China. And while we don’t have to pay for the paddles, we would still pay tariffs.

Walter recommended we hold that shipment, anticipating that tariffs would eventually drop. Four days after our conversation, the Trump administration said it would reduce the 145% tariff to 30%.

As for our second order, assuming we work through our initial inventory and tariffs are still in effect, I asked him to explain what that would look like and mean for our business. How much would tariffs actually cost, and is there anything we can do to mitigate them?

He told me that, first, it’s key to understand exactly what we’re being taxed on: the cost of the product, not the sales price.

“Say you bought these paddles for $20 and then you’re selling them for $60. Some really novice rookies will actually get taxed on that $60 because they don’t know that’s how it works,” he said. “You’re getting taxed 145% based on the $20 value, not the $60 value.”

He said we could likely get taxed on even less than the $20 value because included in that cost is the profit that the suppliers of each of the paddle’s components (the carbon fiber, the plastic, the wrap that goes around the handle, etc.) took home, meaning the product itself is valued at less than $20.

“So it might end up being $15 or even $10 on the official invoice when the products come into the country, and then you’re taxed based on that,” said Walter, which can make a big difference. Assuming a 145% tariff, “if you put $60 on the invoice, you would pay a $90 tariff per paddle; if you put $20 on the invoice, you would pay a $30 tariff per paddle; but if you put $10, you would pay a $15 tariff.”

Once I understand exactly how much I’d owe per paddle, I can decide how to move forward, my two main options being: eat the tariff or find a different manufacturer in a different country with lower tariffs.

Some of Walter’s customers are choosing to eat the cost because they can afford it, and it outweighs the expense of going out of stock or moving supply chains.

“There are products where they might be paying $5 for it out of China, and they sell it for $50,” he said. “Those types of businesses exist, and if they have to pay an extra $5 in tariffs per item, it’s not going to break their business.”

But for small businesses with smaller profit margins, it’s not that simple.

The other option, transitioning manufacturers, is also not that simple.

E-commerce entrepreneur Shan Shan Fu told me that switching suppliers isn’t feasible. She sells over 100 products on Amazon in the women’s clothing and accessory space.

“The 100 products come from all different factories, so to change and have another factory in, say Vietnam, replicate what many, many factories are already making, and making it at the same quality and level, is going to take years and years and years, and it would cost more money,” she said.

Most factories require a minimum order quantity, she explained: “So they’ll say, ‘We can’t custom-make anything for you unless you order 2,000 pieces.’ But if you’re a small business, often you can’t buy 2,000 pieces right away; you might buy 200, then 500, then 1,000, and you scale up slowly.”

For most small businesses, suddenly having to place a large order with new suppliers “just isn’t doable,” she said. “So, we don’t have a lot of flexibility to leave China.”

Fu says she’s in a holding pattern, waiting and hoping for tariffs to lower or, ideally, disappear. She doesn’t want to wait too long, though, or else she’ll have empty shelves.

Transitioning away from China

Unlike Fu, I have a single product, which should make switching manufacturers less complex. Walter said my business partner and I should consider it.

He also assured us that we shouldn’t have done anything differently — it’s generally much cheaper and faster to get a product off the ground with a Chinese supplier.

“China just makes a lot more sense for the development of a product. Their efficiency is unrivaled. They’re so fast at turning around the development samples and opening molds,” he said. But, “once you guys have sales and a little bit more appetite for risk and money to spend, then we can we can reevaluate where you might want to do this.”

Once we sell our first couple of hundred paddles, it may be time to consider a different supplier — and we likely won’t be the only ones looking to transition.

“After this 90-day pause that we’re currently in, I think that regardless of where we’re at, Southeast Asia is still going to be way more attractive than China,” said Walter.