Tariff Survival Guide: How DTC Brands Can Weather the Storm

Hey everyone,

Welcome back for another bite to chew on.

Well, the tariff news got real last week.

If you’re sourcing anything from China — or just relying on a global supply chain — your margins are about to take a hit.

Here’s the fast-and-clear breakdown on what’s happening, what we’re doing at Obvi to survive it, and how you can turn this pressure into a performance multiplier.

On the Menu:

• First - The Tariff Situation Right Now

• Second - Understanding Your Margins (The Foundation)

• Third - Our Action Plan

BONUS: 🧰 Operator Toolbox - platforms we’re using to weather the storm

📊 Do you know your TRUE costs? 

We’re not talking about what your supplier invoice says.

Right now, it is VITAL to understand your real margins. But so many brands are flying blind. We know. We’ve been there. 

Because your COGS aren’t just what you pay your manufacturer. 

They are:

❌ Those surprise freight charges
❌ Customs duties that keep changing
❌ Storage fees and fulfillment costs
❌ Fluctuating tariffs during a global trade war 😬

All these costs are probably living in 5 different places now, right?

That's exactly why brands like Truvani, HigherDose, Pat McGrath (and Obvi) use Settle to get clarity on their true costs.

🧠 Here's what makes Settle a difference maker→

✅ One platform for inventory, payments, and procurement (goodbye spreadsheet hell)
✅ Real-time landed cost tracking as expenses roll in (no more end-of-month surprises)
✅ AI-powered forecasting that gets smarter over time (because who has time for manual calculations?)

🔥 SPECIAL OFFER 🔥 

Settle is offering their Launch Plan (bill pay + inventory capabilities + landed costs) for FREE (previously $149/month), with bigger discounts on their Accelerate & Elevate plans too.

Why now? Tariffs are up, uncertainty is way down. The folks at Settle know small business operators could use a break. 

UNCOVER YOUR TRUE MARGINS → GET SETTLE FREE

The Tariff Situation: Where We Are Now

If you’ve been hiding under a rock (we wouldn’t blame you), here’s the update:

→ 10% Universal Tariff on all foreign goods, with specific provisions for Canada and Mexico:

• USMCA-compliant goods: Exempt from new tariffs.

• Non-compliant goods: Subject to a 25% tariff.

• Certain products (e.g., Canadian energy and potash): Face a 10% tariff. 

→ 54%+ Tariffs on Chinese imports, including key DTC categories
→ 25% Tariff on foreign-made automobiles

For DTC brands sourcing from China, this could be catastrophic. Some categories (like apparel, supplements, electronics) are now facing total tariff loads north of 100%.

At Obvi, we're taking this seriously. These tariff increases represent a significant threat to margins across the entire DTC ecosystem.

This is the kind of situation that keeps founders up at night.

🤬 The other challenge → The picture keeps changing. In fact, some of these details might be different when you read this.

This isn’t a frozen policy, it’s a global trade war where negotiations and counter-measures are constantly emerging in real time. So you need to keep your ear to the ground. 

Keep reading… The impact is real, but there are levers you can pull today.

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🧮 Fundamentals: Get Intimate with Your Margins

You can’t navigate what you don’t understand. Far too many brands are flying blind when it comes to their actual margins and true costs.  

Step 1: Don't Panic

Seriously. The worst decisions come from fear.

Take a deep breath, then start digging into your numbers.

Step 2: Get Granular with Your Costs

Forget those blended averages you pulled from your year-end P&L. That won't cut it.

You need:

• Real landed costs by SKU

• Complete breakdown including packaging, freight, warehousing, payment processing, components

• Your tariff impact layered on top 

Step 3: Analyze by Channel

Margins differ across Shopify vs. Amazon vs. retail. Tariffs expose those cracks.

Break down your analysis by:

• DTC (Shopify/website)

• Marketplace (Amazon, Walmart)

• Wholesale/Retail

• International

Step 4: Don't Forget the "Extras"

These bonus incentives you add to drive sales can become serious profit drains right now. Check to make sure “bonus bundles” are still profitable…

• Merch and SWAG

• Free gifts

• Bundle components

• Loyalty program incentives

• Samples

Step 5: Develop Your Game Plan

Once you have this clear picture of your SKU and channel impact, you can start making strategic decisions:

• Which prices need to increase?

• Which products might need to be discontinued?

• Should you shave or eliminate certain incentives?

• Does your sales channel mix still make sense?

Step 6: Ladder Up to Your P&L

Look at your channel revenue against new COGS+tariff costs. Determine your current percentage of revenue costs for key factors (beyond COGS):

• SG&A (Selling, General & Administrative expenses)

• Ad spend

• Shipping

• Labor costs (both in-house and outsourced)

• Vendor contracts and services

Now you know where your challenges lie and where you might be able to cut the fat.

Next, we’ll walk you through our current gameplan as well as what we’re seeing other operators do…

📝 What Obvi’s Doing Right Now

First, let's be clear: There's no silver bullet here. It’s a problem that requires a multi-faceted approach.

We’re attacking this from 4 angles:

1. Supply Chain

2. Product & Pricing

3. Cash Flow & Inventory

4. Strategic Growth & Optimization

🔀 Supply Chain Diversification

The fastest way to minimize tariff impact is to reduce your dependence on Chinese imports. 

• 25% of production moving to Mexico in 90 days

• Sampling new partners in Vietnam + Thailand

• Exploring U.S. 3PLs to cut double-duties and lead times

📦 Product & Pricing Optimization

Your product line and pricing approach need immediate adjustment to maintain margins.

• Pausing low-margin SKUs 

• Slimming packaging to reduce dimensional weight by 15%

• Cutting gimmicks from bundles, simplifying offers

• Testing 5–7% price increases bundled with loyalty perks + volume messaging

💸 Cash Flow & Inventory Management

The tariff impact on working capital can be just as damaging as the margin hit.

• Front-loading best-seller inventory to cost-average duties

• Exploring bonded warehouses to defer duty payments

• Partnering with Supliful to test new products with zero inventory risk

• Renegotiating terms with suppliers in exchange for longer commitments

📈  Strategic Growth & Optimization

Use this challenge as an opportunity to build a more resilient business.

• Auditing HTS codes with our customs broker

• Accelerating international sales via OpenBorder

• Launching proactive customer messaging around pricing shifts

• Using this moment to trim fat and drive focus

🔍 What Other Smart Brands Are Doing

We’re not the only ones responding in real time to this issue.

Other brands are using this crisis to reinvent their partnerships, pricing, customer communication, and product design.

👀 Top 5 Tactics We're Seeing:

1. Vendor Relief Programs

• SaaS tools offering "tariff pricing" packages

• Negotiating extended terms with all partners

• Requesting a one-time pricing reduction or discount

2. Creative Customer Communication

• Some are adding explicit "tariff surcharges" at checkout

• Others are focusing on value-first messaging

3. Strategic "Shrinkflation"

• Reducing quantities while maintaining price points

• Reformulating with cost-effective alternatives

4. Supply Chain Creativity

• "Tariff engineering" through product modifications

• Split manufacturing between countries

5. Transparency as Strategy

• The least customer pushback comes from the most honest brands

• Building trust that outlasts temporary adjustments

tl/dr: renegotiate pricing with your partners, be up front with your customers about tariff-caused price increases, and see if you can get creative with your supply chain.

This is unprecedented stuff, so there’s no universal playbook. Your brand will be impacted in unique ways, so it will take a unique combination of measures to survive.

BTW - We’re going to Miami for Commerce Roundtable!

This is one the biggest eCom events of the year. And we got you a special deal, so you don’t miss out!  

Promo code: CHEWONTHIS for 25% OFF

🍹 Fun in the sun with some of the best operators and thinkers in the business. 

🗓️  April 25, 2025
⏰ 8:00am - 7:00pm
🏬 Penthouse at Riverside Wharf

Hurry! Only a few tickets are left for Brands/Founders → Get 25% off with code CHEWONTHIS

🧰 Operator Toolbox – Platforms Helping Us Weather The Storm

🔹 Settle – Our financial nerve center. Makes it simple to track true costs in real time, manage procurement & payments while giving us access to growth capital. See how Settle works →

🔹 OpenBorder – Powering our push into international markets. Explore OpenBorder →

🔹 Supliful – Helping us launch new upsells or product lines with zero inventory risk. Try Supliful →

🔹 Aftersell – Optimizing AOV post-purchase with smart, flexible upsell offers — critical when margins are under attack. Start with Aftersell →

🔹 Gorgias – Our CX platform of choice. We’re already building tariff macros and training our AI agents to respond to pricing inquiries. Improve your CX game with Gorgias →   

Some of these are referral partners. We only share what we actually use or would recommend to a friend.