Wells Fargo's McKenna on EM FX, Trade Tariffs
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The cost of doing nothing: How tariffs could cut into peak season profits for e-commerce brands
The cost of doing nothing: How tariffs could cut into peak season profits for e-commerce brands Global e-commerce continues to expand—but profitability is under pressure. With new U.S. tariffs set to take effect Aug. 1 and more trade actions on the horizon, direct-to-consumer (DTC) brands are heading into peak season facing rising costs, stricter compliance requirements, and growing uncertainty. According to Passport's 2025 survey of e-commerce leaders, 81% of respondents say tariffs are one of their biggest international challenges. More than half have already experienced increased scrutiny from trade authorities in the past year. But many have yet to adjust their logistics or compliance strategies—putting both margins and customer experience at risk during the most critical sales quarter of the year. In fact, 7 in 8 e-commerce leaders say they've already raised prices (or plan to) during Q4 2025 to offset expected costs from tariffs and de minimis changes. It's a clear signal that brands are bracing for impact. The question is: Will those pricing moves be enough without operational changes behind them? Growth alone no longer guarantees profit. Brands that treat tariffs as a secondary concern may find themselves caught off guard. Passport shares what DTC teams need to know about the rising cost of inaction—and how leading e-commerce brands are preparing now to protect performance through Q4 and beyond. Tariffs Are Reshaping Peak Season Risk Tariff policy isn't just shifting—it's accelerating. Over the past several months, a series of trade developments have added real cost and compliance pressure for e-commerce brands. As we approach peak season, understanding what's already in effect (and what's coming next) is essential to protecting margins and customer experience. What's already in effect: Flat 10% tariff on most imports (effective April 10): A universal 10% tariff now applies to most U.S. imports, replacing country-specific rates for the time being and driving up landed costs across the board. 30% tariff on goods from China and Hong Kong (effective April 10): Chinese-origin products are subject to a combined 30% tariff—10% reciprocal plus 20% trade action—adding significant cost to many e-commerce supply chains. De minimis ended for China and Hong Kong (effective May 2): All shipments now require full customs clearance and are subject to duties, eliminating a key cost-saving mechanism and increasing documentation requirements. Stricter customs enforcement across global markets (ongoing): Authorities in the U.S., EU, and other key regions are stepping up audits and penalties for misclassification, undervaluation, and incomplete documentation—raising the compliance stakes. What's coming Aug. 1: New reciprocal tariffs of up to 50%: Without finalized trade agreements, imports from major U.S. partners—including Brazil, Canada, the EU, and others—could face steep duty increases just as peak shipping volumes ramp up. Together, these changes are driving up costs, complicating customs flows, and increasing the risk of surprise fees or delivery delays—right when brands can least afford it. Global Sales Remain Profitable, Even Amid Rising Complexity Cross-border e-commerce remains a powerful growth engine. In Passport's 2025 whitepaper, 91% of international merchants said global sales are a profitable revenue stream, with half reporting that international orders account for at least 21% of total revenue. But as tariffs rise and trade requirements tighten, that profitability has become harder to protect. Many brands still rely on outdated cross-border models—leaving them exposed to fluctuating costs, customs disruptions, and compliance risks during the most critical sales period of the year. How Leading Brands Are Getting Ahead of Tariffs To stay competitive this peak season, leading DTC brands are reevaluating their fulfillment strategies and approaching global sales with a sharper operational lens. Top-performing teams aren't just reacting to new tariffs—they're building fulfillment infrastructure that supports profit and performance in a more complex trade environment. 1. In-country enablement for high-volume marketsRelocating inventory into key destination markets reduces tariff exposure, improves customs clearance, and opens access to domestic-only sales channels like Amazon and Walmart. It also enables faster shipping, easier returns, and tighter inventory control—key advantages during the holiday rush, when customer expectations are at their peak. In many cases, in-country enablement has shifted from a cost-control tactic to a growth driver. Brands are using it to unlock new revenue streams, meet marketplace requirements, and deliver a better post-purchase experience. 2. Smarter cross-border strategies for emerging marketsFor regions where in-country warehousing isn't yet justified, brands are investing in tools to make cross-border shipping more predictable and cost-effective. This includes calculating landed costs more accurately at checkout, streamlining customs documentation, and collecting tax IDs in applicable markets to avoid delivery delays. Alongside operational improvements, many brands are also revisiting pricing strategies—testing duty-inclusive pricing and experimenting with different shipping configurations to offset rising costs without hurting conversion. These trends have emerged across recent industry research and reflect how leading e-commerce teams are adapting to a more complex cross-border environment. Rather than applying a one-size-fits-all approach, leading brands are segmenting their international strategy—localizing where the volume supports it, optimizing cross-border operations elsewhere, and adjusting pricing in response to evolving tariff and compliance pressures. This level of intentionality is what sets apart brands that grow globally and sustainably. Protecting Peak Season Performance Peak season is not the time to discover hidden tariff costs or compliance issues. With trade conditions changing quickly, brands that wait to adapt risk avoidable delays, margin loss, and customer frustration during their most important sales window. Now's the time to act. Whether through in-country fulfillment, smarter cross-border tools, or both, brands that take steps today will be better positioned to navigate uncertainty—and come out ahead this holiday season. This story was produced by Passport and reviewed and distributed by Stacker. Solve the daily Crossword
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Datadog, Palo Alto Networks, Sprout Social, Monday.com, and Braze Shares Are Falling, What You Need To Know
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Amazon.com (AMZN) Shuts Down Shanghai AI Lab amid AWS Job Cuts
Inc. (NASDAQ:AMZN) is one of the best AI stocks to buy, according to billionaire Stanley Druckenmiller. On July 23, the company announced it is shutting down its Shanghai artificial intelligence lab. The lab was established by its cloud services unit in 2018. christian-wiediger-rymh7EZPqRs-unsplash The shutdown comes on the heels of reports that the company has cut hundreds of jobs in Amazon Web Services. The cuts and shutdown follow warnings by the company's chief executive officer, Andy Jassy, of workforce reduction due to the adoption of generative AI tools. On the other hand, the shutdown of the Shanghai artificial intelligence lab comes amid heightened tensions between Beijing and Washington. The US has heightened scrutiny on companies operating in China. Inc. (NASDAQ:AMZN) is a technology giant that is increasingly investing in AI and integrating the technology to enhance its core business, which revolves around e-commerce, cloud computing, and advertising. It employs AI for personalized product recommendations, automated data extraction, and improved customer service through tools like Alexa. While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and 11 Best 52-Week High Stocks to Buy Now. Disclosure: None. This article is originally published at Insider Monkey. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
