General
What Is Dropshipping & How Do You Get Started?
Understanding dropshipping and steps to launch your own online business
May 2, 2024
16 min read
President Donald Trump promised to target free trade during his second term in office. That’s a promise he kept during his first 100 days in office. In April, Trump announced that his administration would enforce sweeping new tariffs, claiming that they would make trade more reciprocal between countries and encourage more companies to bring their operations to the U.S.
During what Trump called “Liberation Day”, he imposed the biggest tariff on imports from China.
The ever-changing tariffs have created chaos for companies throughout the United States. At the time of writing, the U.S. imposes a 145% tariff on goods from Asia’s second-largest country.
These new China import taxes concern dropshippers. Many dropshippers earn money by sourcing products from China and similar countries that can make items inexpensively. The tariffs on goods from China could potentially take a large chunk of those earnings.
While this is a chaotic time for all businesses that import goods to the U.S., the tariffs will affect some dropshippers more than others. Additionally, dropshippers can make strategic decisions to remain profitable and grow their customer bases during these turbulent times.
President Trump believes that international trade has benefited other countries and hurt the U.S. for decades. His tariffs are an attempt to level the playing field. His perspective on “trade deficits” has encouraged him to target specific countries with the highest rates.
Keep in mind that Trump tariff policies can change at the President’s whim. While it’s possible to explain how they function now, they could evolve without much notice. That unpredictability has been particularly troublesome for many companies. Since they don’t know how to plan for the future, they don’t know how to respond in ways that help ensure ongoing success. Still, it’s possible for some e-commerce dropshippers in the USA to respond in informed ways.
The facts:
The vast majority of experts say that consumers will bear the brunt of these tariffs because the fees will force importers to raise their prices. Assuming that a dropshipper is unwilling to lose profits, it will increase its prices by the tariff’s percentage. That would mean the prices of most products imported from China would increase by 145%. For example, a shirt that cost $20 before the tariff would now cost $49.
The Trump Administration says its tariffs will encourage people to buy products made in the USA, but consumers won’t have such an easy decision to make. The fact of the matter is that many products made in the U.S. include components from overseas. After decades of free-trade agreements, manufacturers have become reliant on goods and services from around the globe. Even the prices of products “made in the USA” will likely increase.
Dropshipping customers, therefore, will have to decide whether they want to buy imports that now cost more than they did last year or pay considerably higher prices for products made in the USA.
It’s difficult to say exactly how Trump’s tariffs will affect individual companies that import goods from China and other countries. Until recently, the de minimis rule made it relatively easy for people to import small packages from other countries. As long as purchases were worth less than $800, they could enter the USA with minimal handling by Customs and Border Protection (CBP). People receiving purchases worth less than $800 also avoided duty fees.
The federal government eliminated the de minimis rule in April, so the new tariffs will likely apply to all imports, regardless of size or value.
Then again, trade negotiations have been so chaotic and fast that no one knows what tomorrow holds. Any rule could change at any time.
Those caveats aside, small and beginning dropshippers might have some advantages over larger companies.
Large companies that import from China to the USA will need to make significant bureaucratic and structural adjustments to keep up with changing tariffs. It could take some companies years to finalize those changes. By that time, the tariffs will have likely evolved. It’s uncertain whether large importers will even have the ability to adjust in real time.
Smaller and newer dropshippers, however, can adjust their strategies within hours or days. Uncertainty matters to them, but they’re much more nimble than the big companies with entrenched practices.
Even though the tariffs are meant to impact all importers equally, the reality is that some dropshippers can pivot more easily than others.
The tariffs on China create challenges for e-commerce dropshippers in the USA. They do not, however, make it impossible for dropshippers to succeed. It’s important for all businesses importing goods from overseas to take a strategic approach that helps them avoid unnecessary fees and delays.
Customs will need to stop and investigate more packages to enforce the China import tax. Eliminating the de minimus rule will put an even greater strain on U.S. customs. CBP says that it receives about 4 million de minimis packages per day. It’s unclear how the federal government expects CBP to process and tax all of those packages.
Even if the Trump Administration expands CBP to process more packages, customers can expect delays. That doesn’t mean e-commerce dropshippers have to accept lengthy delivery times, though.
Choosing a reliable, experienced partner like Tradelee helps ensure that products reach customers on time. Tradelle provides meticulous documentation so packages don’t get stuck at the border. Although you can’t completely eliminate the new challenges of importing products from China, you can make the importing process easier for CBP. That will play a critical role in e-commerce dropshippers’ success over the next few years.
President Trump’s trade war started without a clear focus. On Liberation Day, it looked like the USA had declared a trade war on the entire world.
Trump has narrowed his targets since early April. Currently, he has trained most of his ire on China, which accounts for about 14% of all imports. President Trump has cited several reasons for levying higher tariffs against China, including the nation’s alleged lack of respect for the USA.
China has long been a source for Americans seeking inexpensive goods. Now, it might make sense for e-commerce dropshippers to look for suppliers in other parts of the world. For example, the USA currently charges a 46% tariff on products from Vietnam. While that’s higher than the typical 10% tariff most countries face, it’s considerably more affordable than importing products from China.
Other countries that export a lot of products to the USA include:
It’s worth exploring options in these and other locations to avoid the high cost of importing from China. In fact, e-commerce dropshippers should consider importing from several countries instead of betting on a single option. No one knows which countries will be charged higher tariffs in the near future. If you diversify your sources now, you can build relationships that help you pivot as tariffs evolve.
It also makes sense for e-commerce dropshippers to avoid the China import tax by finding customers outside of the USA. While some countries have responded to the Trump tariff policy by increasing their tariffs on imports from the United States, tariffs levied against other countries have largely remained constant. For instance, someone in Australia buying a product from China doesn’t need to worry about paying a higher tariff.
An established dropshipping platform should make it easier for you to attract and retain customers around the world. Many will want to focus on English-speaking countries like New Zealand, Canada, Australia, and the United Kingdom. Multilingual dropshippers, however, might want to diversify their customer base even more.
Tradelle can help you decide which countries you choose to ship from and to. Furthermore, Tradelle provides tools that let you:
Armed with this information, you can make data-driven decisions that let you earn profits during Trump’s trade war.
President Trump says his tariffs will bring more manufacturing jobs to the USA. Currently, no one knows whether that will happen. It’s clear, though, that it would take years for the United States to build new manufacturing facilities that make goods typically imported from countries like China.
During this delay, American consumers will still need to purchase products. Many of them simply cannot come from within the USA. This fact becomes increasingly apparent when you follow supply chains. For example, China is one of the few countries that can manufacture EVA, a rubber-like material used in yoga mats, flip-flops, handbags, and many other products. There are factories that make EVA in Vietnam, but they’re primarily owned by Chinese companies.
International supply chains with ties to Asia are also critical for manufacturing shoes and many electronics. When the United States started relying on inexpensive labor and materials from Asian countries, it also stopped investing in the technologies needed to compete in certain areas. At this point, the USA is so far behind China that it cannot catch up.
Even when American companies can make products commonly sourced from China, they usually have to charge higher prices because of minimum wage laws, stricter regulations, and higher costs of living. It might seem reasonable that a product made within the United States could compete with a similar product made in faraway China, but the USA products almost always cost consumers much more.
Instead of worrying about how Donald Trump’s tariffs force e-commerce dropshippers to charge higher prices, concentrate on the savings consumers still get by choosing products imported from China. Consumers might not like paying higher prices right now, but they will soon accept that they still get a better deal from imports.
Tariffs on China give dropshippers a lot to think about. You might ask questions like:
Expect the tariffs to cause some disruptions, but don’t expect them to last forever. It’s only a matter of time before tariffs normalize and become predictable again. That might happen when President Trump yields to pressure from American consumers. Then again, it might not happen until he leaves office.
As a dropshipper, you certainly wish that the tariff war would end as soon as possible. Unfortunately, you can’t control the Trump Administration. In the meantime, you can make smart choices by diversifying product sources, targeting consumers in other countries, and partnering with an established supplier that knows how to comply with customs requirements.
Create a free account with Tradelle today so you can take greater control of your dropshipping business during these turbulent times.
Understanding dropshipping and steps to launch your own online business
Discover top strategies to identify high-demand, profitable products on AliExpress
Learn about strategies that drive traffic to your store, including effective advertising practices
Learn about several proven methods to increase your store sales
