How tariffs affect landed cost, margin, and required retail price.
Inputs
Packaging, QC, etc.
Cost change
Landed cost increase—
Old landed cost
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New landed cost
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Margin impact
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Pricing options
Strategy
Retail Price
Margin
Customer impact
About this calculator
Tariffs have become one of the most volatile inputs in DTC economics. A trade deal change announced on a Tuesday can add 25 percentage points to your COGS by Wednesday. Brands that import from regulated origin countries — China, Mexico, Vietnam, anywhere with active trade negotiation — are exposed to this volatility.
This calculator does the per-unit math when tariffs change. New landed cost = FOB × (1 + new tariff%) + freight + other costs. Subtract from retail price to get new margin. The decision tree from there: absorb the cost (margin contracts), pass through to customers (volume may contract), or split (partial pass-through, partial absorption).
The strategic implications go beyond pricing. Long-term tariff exposure forces decisions about country diversification (split production across 2-3 countries to hedge), MOQ commitments (don\'t lock in 12-month supply at higher tariff if rates may fall), and product mix shifts (move toward SKUs with lower tariff rates).
Pair with the COGS Calculator (where tariffs are one input) and the Landed Cost Calculator (which captures full inbound costs). Most successful import-heavy brands recompute landed costs quarterly and adjust pricing accordingly — set-and-forget pricing in tariff-volatile categories destroys margin invisibly.
Frequently asked questions
How are tariffs calculated?
Tariffs are a percentage of the declared customs value (typically the FOB factory price + sometimes shipping). Different products have different rates per HS code — bicycles 11%, apparel 16-32%, consumer electronics 0-25%. Country of origin matters enormously for current 2026 trade policy.
Should I absorb tariffs or pass through to customers?
Mixed. For commodity-priced products in competitive categories, absorbing tariffs is required to stay competitive — even if it crushes margin. For premium/branded products with pricing power, pass-through with a 1-3 month lag works because customers gradually accept new prices.
How do I plan for tariff volatility?
Three approaches. (1) Diversify country of origin — split production across 2-3 countries to hedge against any single tariff regime. (2) Build buffer margin — operate at 5-10 percentage points higher gross margin than competitors so you can absorb shocks. (3) Use tariff classification optimization — different HS codes can have very different rates for similar products.
Do tariffs apply to dropshipping?
Yes, when products cross borders. AliExpress dropshippers shipping from China to US customers pay US tariffs on each parcel above the de minimis threshold ($800 in 2026, but at risk of being lowered). Higher-volume dropshippers should explore consolidation (bulk shipping to a US warehouse, then domestic fulfillment) to optimize tariff exposure.
What's the de minimis threshold?
Under $800 per shipment imported to US, no tariffs are typically owed. This loophole has been contested in 2024-2026 trade negotiations and may be reduced or eliminated. Plan as if it's going away — assume duties on all imports of any size.