Across 2018 and 2019, the first Trump administration’s tariffs impacted around $380 billion worth of products. The second time around, however, the administration has already levied duties against products worth north of $1.4 trillion as of this April… just months into a second term.
Any dropshippers that currently deliver to the US from any of that nation’s closest trading partners — Canada, Mexico, and China — have already been slapped with some big changes, and likely have plenty of changes ahead.
Just how big a problem are the latest tariffs on your dropshipping operational costs? And how is the dropshipping community handling the shift? Here’s the lowdown.
The Biggest Problem: Loss of De Minimis
Tariffs are making all the headlines right now. The latest announcements include a 10% baseline tariff across all imports; extra taxes on autos, steel, and aluminum; and some surprisely high tariffs on Vietnam (46%) and Cambodia (49%) among plenty of other countries. The stock market lost $2 trillion in 20 minutes when they were announced April 2.
However, they’re far from the only abrupt, shocking trade policies that the Trump administration has rolled out since January.
In fact, when it comes to freaking out dropshippers everywhere, tariffs are second to another looming tax change: the potential removal of the de minimis tax exemption.
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This extemption allows any shipments that are heading towards American businesses or consumers and are valued at less than $800 per person, per day, to enter the US duty-free and tax-free. It’s a bipartisan law, aimed at helping small businesses and lower-income consumers.
Now, it looks likely to leave, at least for imports from China and Hong Kong. President Trump eliminated the de minimis provision for China and Hong Kong on February 4, before reinstating it on February 5, and now it’s officially set to be lost again on May 2. Since most dropshippers operate on a model that relies on de minimis in order to process cheap shipments, they’re currently scrambling to reorient their businesses.
Dropshippers are dropping Chinese imports
The fastest solution is to find another source for whatever product you sell. Any country other than China is, for now, a relative improvement, given China has suffered some of the harshest announced sanctions. One dropshipper has switched to a local supplier in Pakistan, citing a cheap product and lack of tariffs.
Many dropshippers don’t have these connections, however. Those who rely on retail websites such as the China-based AliExpress still haven’t found a clear replacement. Plus, some products simply can’t be sourced from other countries, let alone inexpensively.
Will US production increase?
The point of the tariffs is to discourage foreign imports, under the assumption that the laws of supply and demand will push US companies to bring creating the cheap products that up until now could have been purchased from Temu, Shein, AliExpress, or a dropshipping intermediary. But will this actually happen?
As one commenter on the Entrepreneur subreddit breaks it down, possibly not:
“As a US business, the higher the cost of import the more likely you are to consider moving manufacturing, and in Trump’s worldview that means more manufacturing in the US. In theory this is a good idea. In practice, many companies have tried to get US workers to do manufacturing and found the skill and interest lacking.”
Businesses who had previously imported will likely eat the costs or raise their prices in order to pass the cost along to the consumer.
Potential US dropshipping alternatives
However, this remains an avenue worth exploring: Dropshippers may want to start with SaleHoo, a New Zealand based e-commerce company that manages US sellers through its website. At the very least, domestic shipping speeds won’t be disrupted as much as international shipping is soon likely to be.
Syncee is a similar site, and is also focused on US-based sellers.
What Changes Should Dropshippers Expect?
Dropshippers who still rely on China imports will face higher costs on the products themselves. But that’s not all the warning signs they should be aware of.
Expect higher costs
China tariffs are increasing 10%, on top of the pre-existing tariffs. This means that the costs for passing through customs will increase for traders, and traders will boost brokerage fees to pass the costs along. The total cost to dropshippers? Many are estimating an increase of between 10% and 30%.
Expect shipping delays
Should the de minimis provision be cut entirely for China, Hong Kong, or other locations, anyone ordering products from these countries will face a range of problems, whether the good would have qualified for de minimis or not. Either way, the shifts will likely cause shipping delays and supply chain disruptions, none of which will lower operational costs.
How long will the delays be? It’s tough to predict, and varies based on the products. One business owner has noted an increase in their supplier’s shipping time from 8 to 10 days to 24 to 28 days.
Order cancellation impacts
In the short term, orders may be cancelled by suppliers who can’t handle the sudden change in their own operational costs. Those cancellations will leave the dropshippers who rely on them up the creek. Customer complaints might be inevitable.
Trust issues
The discussion of tariffs comes with a lack of clarity on multiple fronts. We don’t know when additional tariffs may be imposed, how large they’ll be, or even how other countries may retaliate with their own tariffs. That uncertainty is leading plenty of traders and suppliers to attempt to hedge their bets, either by frontloading shipments or, in some cases, demanding 30% deposits upfront.
Why High-Margin Dropshippers Might Be Okay
All right, so it’s a lose-lose situation for dropshippers. However, that doesn’t mean that the business model will collapse entirely: If the costs of buying the product were low enough in relation to total sales revenue, even a 10% tariff increase might not add up to very much.
Dropshippers have already been putting up with tariffs on China imports, and anyone who buys in bulk likely hasn’t been benefiting from the de minimis provision, either. Businesses who already pay a 20% tariff for their products might not blink when it jumps up to a 30% tariff.
One dropshipper shared their personal experience on Reddit: Their product costs them just $0.36 in raw material, and they’ll be selling it at $9.99, which they consider low. With these margins, a business can keep profits up — even if the extra tariffs aren’t exactly welcome.
The Biggest Dropshipping Winners and Losers of 2025
One silver lining to the cloud of uncertainty surrounding the threat of tariff increases? All changes will impact everyone, including all the dropshipping competitors. But that doesn’t mean we can’t pick out a few (projected) winners and losers.
The winners: High-margin dropshippers and domestic dropshippers
As we mentioned earlier, dropshippers with business models that prioritize very high margins are shielded from the worst of the impacts. In fact, with higher prices expected from direct competitors like Temu or Shein, these dropshippers might be able to further increase their already sky-high margins to meet demand.
Similarly, the trade war with China is relatively good news for any domestic dropshippers — those who mostly sell to Americans and who already source their products from the US or take survive making a shift to US suppliers. They’ll be able to avoid the price hikes entirely, while benefiting from the hit to their competition.
The losers: Chinese ecommerce and US consumers
The clear losers here are likely all the China-based retail websites, which will be losing many US customers. Sorry to Temu, Shein, and AliExpress. Don’t expect Amazon Haul to come out on top, necessarily, either: It currently sources its products from outside the US as well.
Ultimately, though, US consumers will lose out, too. Domestic products will now be the cheaper option, and with international alternatives priced out of the market, the lack of competition means that US suppliers can deliver sub-par products.
Dawn of the Chinese century?
Finally — and somewhat ironically, given the stated goal of Trump’s trade war — China might win big in the brave new world of 2025. They’ll lose their base of US consumers, but thanks to retaliatory tariffs, US businesses will lose their Chinese customers as well. The EU has recently announced “strong plans” to retaliate, while Canada has vowed to respond as well.
As more trade wars escalate with other countries that previously relied on US consumers, they’ll all be more likely to replace the US with another major trade partner, and China may be the most attractive choice. Say what you will about China, but it’s not rolling out new tariffs on a seemingly weekly basis.
