How do tariffs work?
Now that we know what a tariff is, let’s discuss how it’s applied and who actually pays for it.
How tariffs are imposed
When a government imposes tariffs, it sets a specific rate—either a percentage of the product’s value (ad valorem tariffs) or a fixed fee per unit (specific tariffs). These tariffs apply at the border when imported items arrive in the country.
Here’s a simple breakdown of how tariffs are enforced:
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A business in the US orders products from another country—a batch of phone cases from a supplier in China, for example.
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The shipment arrives at customs, where officials check if a tariff applies.
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If a tariff is in place, the importing company must pay it before the goods are released for sale.
Governments track import tariffs through customs declarations, and the collected money goes toward government revenue, debt repayment, trade adjustment programs, economic development funds, retaliation funds, or relief programs.
Who pays for tariffs?
The importer pays tariffs—not the exporting country.
Using the phone case example, if there’s a 20% tariff on phone cases from China, the US company that ordered them has to pay the extra 20% in fees when the shipment arrives if they are the importer of record. The foreign supplier doesn’t cover that cost—it’s an added expense for the importer unless otherwise agreed upon.
So, what happens next? Importers usually have a few options:
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Absorb the cost, which lowers their profit margin.
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Raise prices, passing the cost onto consumers.
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Find alternative domestic suppliers.
This means that while importers technically pay tariffs, they often lead to higher prices for businesses and consumers. It also impacts supply chains, as companies may look for new sources of goods to avoid higher import duties.
The pros and cons of tariffs
Tariffs are a double-edged sword—they can protect domestic products and foster local economic growth but also increase prices and trade imbalances. Let’s break down some key pros and cons so you can see both sides of how tariffs impact businesses.
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Pros
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Cons
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Support domestic economy – Tariffs help protect domestic industries by making foreign products more expensive, encouraging local businesses to compete while protecting industries.
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Lead to higher prices – Tariffs increase the cost of imported goods, and businesses that rely on global sourcing may face increased costs for materials and products.
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Increase state revenue – Tariffs generate revenue to fund infrastructure projects, public services, or tax reductions elsewhere.
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May trigger retaliatory tariffs and a trade war – when a country imposes tariffs, foreign governments might respond with their own, even leading to a trade war that affects multiple industries and reduces economic growth.
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Encourage local job creation – Tariffs can incentivize businesses to hire locally and expand domestic production and economic growth by making foreign competition more expensive.
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Impact supply chains – Businesses that rely on imported goods need to adjust sourcing strategies or explore new supplier options.
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Can help balance trade – Tariffs are sometimes used to reduce trade deficits, encouraging more local manufacturing and fewer imports.
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Not guaranteed to reduce imports – Even with tariff costs, businesses and consumers may still prefer certain imported goods due to quality, availability, or other factors.
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May encourage domestic investment – Tariffs can drive investments into local production facilities, reducing dependency on foreign countries for essential products.
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May shift trade imbalances elsewhere – High tariff rates on one country might push businesses to source from other countries rather than boost domestic producers.
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Breakdown of the 2025 US tariff increases
As of early 2025, the US entered a new trade policy phase under President Donald Trump, marked by sweeping tariff changes targeting key trading partners. The Trump administration has stated that these tariffs are designed to protect domestic industries, shrink the trade deficit, and encourage US-based manufacturing.
US tariffs on other countries
The tariff changes began on February 1, 2025, with a 10% tariff on all Chinese imports and the elimination of the de minimis exemption, which had previously allowed goods under $800 to enter duty-free. Although the exemption was temporarily reinstated on February 5 to give US customs time to adapt, the 10% tariff remained in place.
By March 4, the tariff on Chinese goods increased to 20%. On the same day, the US announced a 25% tariff on imports from Canada and Mexico, set to take effect April 2 for goods that comply with the USMCA trade agreement.
The most significant updates happened between April 2 and April 10, when President Trump introduced a series of major new tariff measures:
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A 104% reciprocal tariff on Chinese goods was announced on April 8, effective immediately. It was then raised to 125% starting April 10. These new tariffs are applied on top of the previously imposed 20% IEEPA tariff, bringing the total tariff rate on affected Chinese goods to 145%.
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The removal of the de minimis exemption for Chinese and Hong Kong imports will go into effect on May 2.
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Trump’s latest increased reciprocal tariffs, except those placed on China, were paused for 90 days as of April 10, with the 10% “baseline” reciprocal tariffs remaining in force for all countries except China.
Retaliatory tariffs on the US
On March 4, Canada imposed a 25% tariff on a range of American goods, including clothing, shoes, and household items, warning that more retaliatory tariffs could follow.
China followed with its own round of tariffs on March 10, targeting specific US exports. However, not all US-based sellers were affected. On April 8, they announced an 84% retaliatory tariff, which was increased to 125% on April 11 in direct response to U.S. tariff hikes—along with a statement that no further increases are planned at this time.
Disclaimer:
Tariff policies can change quickly due to ongoing negotiations between governments. Keep an eye on our blog and YouTube channel for updates—we’ll make sure you have the latest information as it develops!
How the new tariff rates affect Printiful merchants
If you’re a Printful merchant, good news – most of our catalog remains unaffected, and we’re not raising prices right now. We’re working hard to minimize any changes that could impact your business.
Here’s what you need to know:
Printful is not increasing prices right now and is absorbing some costs where possible. If changes become necessary, we’ll give you plenty of notice so you can plan ahead.
2. Tariffs mainly impact product costs, not shipping
Trump administration tariffs primarily affect the cost of blank products—such as t-shirts, hoodies, and other apparel—rather than shipping fees. However, since the de minimis exemption for low-cost imports has been adjusted, we’re closely monitoring potential long-term effects on shipping costs.
3. Locally fulfilled products are tariff-free
If a product is printed and sold in the same country, tariffs don’t apply. This means there are no additional tariff costs if you’re selling to US customers from US fulfillment centers. However, some blank products might come from foreign countries, so tariffs may apply depending on their sourcing.
Keep in mind that wide-ranging tariffs like the ones recently introduced by President Donald Trump can still lead to higher operating costs for fulfillment centers. Increased costs for imported materials, machinery, or even energy sources can affect overall pricing—even for products that are fulfilled domestically.
4. Some apparel products may be affected
While most Printful products remain unaffected for now, certain apparel items are more likely to be impacted due to their country of origin. We’re working closely with suppliers to reduce costs and keep pricing stable wherever possible.
5. No expected shipping delays
Printful’s logistics team is actively managing fulfillment operations, and we do not anticipate any shipping delays related to tariffs. Orders should continue to reach your customers on time.
6. No need to adjust your pricing right now
Since Printful isn’t increasing prices for now, you don’t need to change prices right now. However, if you sell internationally, remember that customs duties and taxes may apply depending on the destination country. Customers are responsible for these fees, and customs agencies often calculate duties based on the declared retail price.
Pro tip:
If you ship to Canada or the UK, you can choose the Delivered Duty Paid (DDP) option (available for select stores with live rates). This adds customs duties and taxes at checkout, so your customer pays upfront, ensuring faster customs clearance and a smoother delivery process.
