Navigating U.S. Tax Changes: How Chinese Brands Can Adapt

The recent U.S. tax policies under the Trump administration have introduced higher tariffs and stricter regulations on Chinese businesses, making global expansion more complex. These changes impact pricing, logistics, and competitiveness—forcing brands to rethink their strategies.

Key Tax and Tariff Changes and Their Impact on Chinese Brands

Elimination of the De Minimis Exemption

As of May 2, 2025, the U.S. has removed the de minimis exemption, which previously allowed low-value shipments (under $800) from China to enter the country duty-free. This change means goods that were once exempt now incur:

• A 30% ad valorem duty or
• A flat fee of $25 per item, increasing to $50 per item starting June 1, 2025.

Increased Tariffs on Chinese Imports

Effective April 9, 2025, an across-the-board 34% tariff is imposed on all Chinese goods entering the U.S. This is in addition to an existing 20% duty on bulk imports, culminating in a substantial 54% total import tariff.

Universal Baseline Tariffs

A baseline tariff of 10% is applied globally, exempting Canada and Mexico, with additional country-specific surcharges targeting nations like China.

Implications for Chinese Brands Entering the U.S.

The new U.S. tariff regime under President Trump represents a seismic shift for Chinese brands seeking to enter or remain in the American market. The combination of steep tariffs, the end of the de minimis exemption, and retaliatory trade measures has dramatically raised the cost of doing business, undermined key business models, and forced Chinese exporters to reconsider their global strategies.

Higher Costs, Lower Margins

• Small-value shipments (e.g., fast fashion from Shein, Temu) become less profitable. For example, a $5 T-shirt now incurs at least $1.50 in import duties, significantly raising retail prices
• Price-sensitive U.S. consumers may shift to domestic or second-hand alternatives

Supply Chain Challenges

• Need for consolidated shipments or third-country distribution hubs
• U.S. warehousing reduces duties but increases logistics costs

Reduced Competitiveness

• Affordable pricing was a key advantage—now, higher retail prices may shrink market share

Retaliatory Risks

• China’s counter-tariffs create uncertainty for cross-border trade

How Chinese Brands Can Adapt

Chinese brands that act quickly—by diversifying sourcing, developing new markets and marketing tactics, optimizing logistics, strengthening compliance, and communicating transparently—can weather the tariff storm and even gain market share as less agile competitors falter

Market Diversification: Beyond the U.S.

• India: Example of Shein’s relaunch via Reliance Retail bypasses tariffs and taps a booming demand for budget fashion.
• Latin America/Middle East: Tariff-free hubs like Mexico (USMCA) and UAE attract warehousing investments.
• EU: Despite VAT thresholds, platforms like Alibaba’s AliExpress use bonded warehouses to delay duties.

Aggressive Affiliate Partnerships

To offset U.S. losses, brands are:

• Scaling performance marketing: Partnering with cashback sites, coupon platforms, and influencers to maintain volume despite higher prices.
• Leveraging Admitad’s ecosystem: Example:
  • Vevor saw a 13x sales surge via incentivized affiliate campaigns.
  • DHgate drives 30% annual growth through global publisher networks.
  • SHEIN’s partnership with Admitad since November 2016 facilitated over 9 million orders in three years in Poland, Canada, Saudi Arabia, and the UAE.

Hybrid Pricing Strategies

• Absorb costs temporarily: Eat 35% of tariffs initially, then phase in price hikes (e.g., +125% over 6 months).
• Bundle products: Offset duties by promoting higher-margin multipacks.

Why Affiliate Marketing Might Be a Great Tariff Workaround

Admitad’s data shows performance marketing mitigates 3 key risks:

1. No upfront costs: Pay only for sales, not failed ad spends.
2. Geographic flexibility: Shift traffic to lower-tariff markets overnight.
3. Bank/marketplace partnerships: Example: Co-branded campaigns with payment providers (like Admitad’s bank network with Cardlink product) boost conversion where margins are thin.

Historical Precedents: What Comes Next

While initial disruptions from tariff changes can significantly impact market entry strategies, history suggests these effects often stabilize over time as brands adjust and diversify their operations.

• EU’s 2021 VAT reform: Initial 20% drop in Chinese imports, but recovery within 18 months as brands adjusted logistics.
• Mexico’s 2020 de minimis cut: Cross-border parcels fell 35% Q1–Q2, then stabilized as sellers moved inventory locally.

The pattern? Short-term chaos, then adaptation.

Action Plan for Brand

1. Diversify markets: Use affiliate data to identify tariff-advantaged regions.
2. Lock in affiliate deals: Look into market diversification through affiliate networks. Partner with U.S. cashback sites to retain price-sensitive shoppers.
3. Test hybrid pricing: Phase in increases while affiliates soften the blow.

The new U.S. tax and tariff policies present significant challenges for Chinese brands—but strategic adjustments can turn obstacles into opportunities. Since 2013, Admitad has successfully facilitated cross-border sales for Chinese retailers, surpassing an impressive $7 billion milestone. Admitad’s performance-based marketing solutions help brands enter the U.S. market efficiently while minimizing risks from tariffs. Contact us and let’s discuss it!