{"id":1545069,"date":"2024-11-17T08:09:13","date_gmt":"2024-11-17T13:09:13","guid":{"rendered":"https:\/\/www.practicalecommerce.com\/?p=1545069"},"modified":"2024-11-17T12:45:36","modified_gmt":"2024-11-17T17:45:36","slug":"looming-trade-war-is-upending-supply-chains","status":"publish","type":"post","link":"https:\/\/www.practicalecommerce.com\/looming-trade-war-is-upending-supply-chains","title":{"rendered":"Looming Trade War Is Upending Supply Chains"},"content":{"rendered":"

The combination of Biden administration tariffs, Trump’s proposed increases, and changes in China trade relations will impact U.S. private label and direct-to-consumer brands, driving some to reconsider sourcing strategies in 2025.<\/p>\n

Private label and DTC products are merchants’ highest-margin items. While relatively few retailers or DTC brands manufacture in-house, the products tend to remove several “middlemen,” often more than doubling profits.<\/p>\n

A pet food retailer, for example, might clear 25 points (0.25%) on a popular premium dog food brand and 55 points on its own private-label version despite both products being manufactured at the same facility using similar recipes. A dog owner will pay about the same price for the private label brand or, perhaps, even a little less.<\/p>\n

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U.S.-imposed tariffs and changes in China trade relations could remake supply chains.<\/p><\/div>\n

Private Label Sourcing<\/h3>\n

Private-label brands on U.S. retailers’ physical and virtual shelves come from factories worldwide, including China and Mexico.<\/p>\n

Brand managers identify gaps in the market and then find a manufacturing partner to build, sew, or make products to fill the void. Amazon does this with more than 100 private brands<\/a> representing thousands of products.<\/p>\n

Selecting a manufacturer<\/a> for these products involves factors such as quality, price, reliability, regulatory compliance, and \u2014 recently \u2014 trade tariffs or policies.<\/p>\n

Trade Situation<\/h3>\n

Tariffs were top of mind for a group of private-label brand managers discussing their 2025 plans around a large conference table during a meeting in November 2024.<\/p>\n

I had been invited to learn more about their businesses, which include 30 private brands with hundreds of products sold through a network of 800 stores and 30 ecommerce sites. My task was to help with potential promotion and go-to-market plans, but each manager noted the shift away from China.<\/p>\n

While the broad topic was “tariffs,” the managers zeroed in on three specifics that could impact their private brand relationships in China.<\/p>\n