President Trump’s tariffs have merchants scrambling to gauge the impact on imports, exports, and overall cost. There’s no better authority to assess that impact than Alex Yancher. He’s the CEO and co-founder of Passport, a global provider of cross-border logistics, localization, and support for ecommerce sellers.
He and I recently spoke on the state of tariffs, the likely impact, and how merchants should react. The entire audio of that conversation is embedded below. The transcript is edited for clarity and length.
Practical Ecommerce: What’s the status of the Trump tariffs?
Alex Yancher: Let’s break it down by country, starting with China, which seems to be the focus of the Trump administration. Plus, it’s the only new tariff in effect. The president implemented a 10% tariff on all imports from China starting February 4. That’s 10% incremental, on top of the existing 39% tariff from the Biden administration.
For goods from Canada and Mexico, the president announced a 25% tariff but reversed course within a day or two. We’re waiting for more information from the administration, but it doesn’t look like those new tariffs will occur.
President Trump’s salacious post in mid-February about reciprocal tariffs, meaning like-for-like, adds more uncertainty. If one of our industries is subject to a 50% tariff from a country, he suggested reciprocating with an equivalent 50% tariff.
An adjacent development relevant to ecommerce is changes to the U.S. de minimis rules. “De minimis” refers to excluding tariffs for shipments valued below a certain amount, currently at $800. A tariff could be 1,000%, but it’s waived if the item is under $800. Any revision to that rule would be huge for ecommerce sellers.
However, the administration removed the de minimis and then reversed the decision. So it’s still intact. We’re hearing rumblings that Trump will remove it again, at least for China-made goods. A change would be a massive regulatory hurdle to monitor and enforce — likely costing more money to oversee than it generates. So stay tuned.
PEC: Practical Ecommerce has long encouraged free trade and cross-border collaboration. Nonetheless, what’s President Trump’s rationale for tariffs?
Yancher: It seems to fit into three buckets. One is national security and border integrity, including fentanyl-related issues. The second bucket is allegations of unfair, unbalanced trade. We can see that in our trade deficit numbers. We have a trade deficit with virtually every country. Trump doesn’t like that imbalance.
The third bucket is the MAGA, America-first position, putting U.S. workers and companies first — ahead of free trade principles, inflation, and so forth.
Those are the three rationales, more or less.
PEC: Your company, Passport, facilitates trade in 180-plus countries. Are the first two reasons — national security and unfair trade — legit?
Yancher: There’s something to be said about a porous border regarding people and packages. We’ve had bipartisan legislation on oversight of packages coming in, such as drugs and illicit paraphernalia. Most countries are ahead of us in collecting rigorous data and information on incoming goods.
Passport is an internationalization company, as you mentioned. We’re smack in the middle of data flow. The information we must pass to foreign governments is typically much more strict than what the U.S. requires. The U.S. and Australia are the only countries with a high de minimis.
Another aspect of national security is ensuring the supply of critical medical products, such as personal protective equipment during Covid. We don’t want to rely on another country for those items.
In terms of unfair trade, it’s hard to say. U.S. consumers benefit from having access to low-cost goods. U.S. prices are lower for the most part than any other country. That’s partly because we have low tariffs.
PEC: Let’s move on to the impact on ecommerce merchants. What’s your advice?
Yancher: You’re safe if you manufacture in the U.S. unless you import components. You’re likely cheering for the administration to compel countries to lower their tariffs and thus expand your market.
If you manufacture goods in China, there’s presumably a reason you do it since there are already tariffs involved. And now your goods have just become 10% more expensive. So what do you do? Is 10% that meaningful? Are there other suppliers? The answer is case-dependent. Certainly companies are re-evaluating their bill of materials and their supply chains.
Merchants that ship directly from China to consumers in the U.S. are in a tough spot. The de minimis is almost certainly going away, likely very quickly. I advise those sellers to keep going until the bitter end while also devising a plan B.
Otherwise, those direct-from-China sellers may have to pay the duty on the retail sales price. There are ways of structuring the setup to pay the duty on the cost of goods sold, the manufacturer’s cost. But it’s unclear and risky. We’re talking about a lot of money and a big structural expense. Sellers in that position must devise a plan now.
PEC: Tell us about Passport.
Yancher: We help ecommerce merchants go global irrespective of their size. We work with small and large brands. We help them with front-end internationalization — collecting the correct amount of duties and taxes, displaying local currencies, and regulatory and fiscal compliance.
We recently acquired Brand Access, a company that helps enterprises set up local operations in-country. We’ll handle the logistics, warehousing, and importer of record and their seller of record. We’ll equip their front-end consumer experience for a high conversion rate.
We’re at PassportGlobal.com. We’ve launched a new site, TrumpTradeTracker.com, to help the industry stay current on all the trade changes and cut through the noise.