How Aussie brands are coping with Trump’s 10% China tariff
US tariffs on Chinese imports, and confusion over those changes, could force homegrown consumer brands to reconsider their US strategies.
Growing Australian businesses have long seen America as a land of opportunity.
But new tariffs on goods imported from China, and confusion over how they will be managed, could force homegrown consumer brands to reconsider their US strategies.
US President Donald Trump on Tuesday upheld his promise to impose a 10% tariff on all goods imported from China, with the White House declaring the import tax “leverage” against its geopolitical competitor and major trading partner.
Australian exports are not directly affected by Trump’s new plan, which includes a pending 25% tariff on goods imported from US neighbours Mexico and Canada.
However, Australian businesses that manufacture in China and ship to the US are likely to be affected, increasing costs for the brand or their American customers.
And direct-to-consumer brands shipping from China are particularly vulnerable.
President Trump also scrapped the ‘de minimis’ clause, which waives customs duties for goods worth less than US$800, allowing businesses to ship low-value items without buyers incurring significant fees.
Chinese juggernauts like Temu and Shein are likely to be hardest hit without the ‘de minimis’ clause, but it could put smaller businesses under similar stress.
Chinese imports iced out
Sarah Forrai is the co-founder of Contour Cube, a skincare tool used for ice-cold facial treatments.
Based in Sydney, the Contour Cube brand gained traction in the United States after social media endorsements from the likes of Kendall Jenner and Kourtney Kardashian.
Today, the United States represents a “substantial portion of our sales”, Forrai said, with those celebrity co-signs “making it one of our most important and fastest-growing markets”.
Half of the Contour Cube product range is manufactured in China, leading Forrai to investigate what the tariffs could mean for her business.
If the impact is severe, Contour Cube could explore manufacturing outside of China to mitigate potential cost increases, she said.
Bulk shipments into the United States — instead of individual deliveries from China that previously used the ‘de minimis’ exemption — could help the business absorb costs, she added.
Even routing shipments through Australia before the US is up for discussion, but Forrai said it is unclear if that would help Contour Cube avoid the new tariffs — if the diversions prove cost-effective at all.
“For small businesses, these tariffs could be highly significant,” she continued.
“Many don’t have the resources or flexibility to absorb sudden cost increases, which could affect their competitiveness in the US market.”
Beginning again
Beginning Boutique, the Brisbane-born online retailer of women’s fashion and former Smart50 finalist, is one of the local businesses opting to absorb costs.
Founder Sarah Timmerman said Beginning Boutique will cover the cost of any extra US customs fee faced by consumers as a result of the tariffs.
Taking to LinkedIn on Thursday, Timmerman said “unexpected” customs fees can be “frustrating” for consumers.
We’ll continue to adapt and find ways to put our customers first, no matter what challenges come our way.
Beginning Boutique has a US base in San Diego, California, and last month opened its new warehouse facility on American soil.
Directing bulk shipments to that warehouse before sending them to consumers may help consumers dodge some customs shocks in the future.
But businesses like Beginning Boutique would still face a choice: absorbing the tariff for its Chinese-made apparel, or indirectly passing it on to consumers in the form of retail price hikes.
SmartCompany has contacted Timmerman for comment.
Even though Trump’s announcement will complicate how Australian brands enter the US market, Forrai said Contour Cube is far from abandoning its American customers.
“These tariffs do not affect our long-term commitment to the US market,” she said.
“However, they encourage us to adapt more quickly by diversifying our supply chain and optimising our logistics strategy to remain competitive.”
But like other brands, it is trying to understand the full effect of the tariffs before totally overhauling its strategy.
“The biggest challenge right now is the lack of clarity on how these tariffs apply to Australian brands shipping from China,” she said.
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