How Tariffs Affect US Etsy Sellers & What You Can Do

For Etsy sellers, the global marketplace opens doors to customers in every corner of the world. However, evolving trade policies — particularly tariffs — can complicate international transactions. If you’re an Etsy seller wondering whether tariffs will impact your shop, we’re here to help.

This guide will cover what tariffs are, how they affect US based Etsy sellers, and share strategies to tackle potential challenges.

What Are Tariffs?

A tariff is a tax imposed on goods when they are imported into or exported from a country. Governments use tariffs to generate revenue, protect domestic industries from foreign competition, or influence trade relationships.

Tariffs are typically calculated as a percentage of the item’s value, and they can vary depending on the product category and country of origin.

As an online seller in the US, and you import products or raw materials from overseas, you may be required to pay tariffs upon entry into your country.

2025 US Tariff Summary

Here is an abbreviated rundown of the key changes from a US seller perspective:

De Minimis Exception

Most Etsy sellers up to this point will not have run into tariffs often, thanks in part to the de minimis exemption.

“De minimis” effectively means “too small to matter” and was a legal loophole that enabled items below a certain retail value to bypass tariffs and customs declarations.

Up to this point, in the U.S., the de minimis threshold was $800, meaning most Etsy sellers would fall below this limit when importing raw materials and products from other countries.

US President Donald Trump signed an executive order on April 2 which means the de minimis loophole will be completely removed on May 2nd for China and Hong Kong. It’s widely expected that the loophole will then start to close for other countries also.

Foreign companies that will be significantly impacted by this change include online discount marketplaces like Shein and Temu, so it’s not all bad news for Etsy sellers: as they will now be subject to added costs on their imports, this in turn should lessen the competition domestically and potentially even help to set more appropriate prices online for online handmade goods.

What U.S.-Based Etsy Sellers Need to Watch

You might be thinking, “I’m based in the U.S., so these new tariff changes don’t affect me, right?” Not so fast! While tariffs on exports aren’t usually your concern, there are still key ways these changes can impact your Etsy shop — especially behind the scenes.

Here’s what to keep an eye on:

1. Importing Supplies or Inventory

If you buy materials, components, or finished goods from overseas — think leather from Mexico, fabric from Canada, jewelry findings from China — you could be on the hook for import duties once the de minimis exemption is removed.

Example (Updated 9 April 2025):

You order $200 worth of specialty paper from Hong Kong to create your handmade journals.

Estimated Tariff Breakdown

🔍 Note: The U.S. currently applies full China tariffs to Hong Kong imports due to revised foreign policy. This includes the most recent 125% tariff hike implemented in April 2025.

• Landed cost now = ~$460, not $200.
• This is a 130% increase in material cost.
• These tariffs cannot be recovered through duty drawback or other programs.
• You’ll want to factor this into your pricing or consider sourcing from non-tariffed countries.

Example 2: You now purchase $200 of leather sheets from Mexico to create the covers for your handmade journals.

Here is the estimated tariff breakdown based on this purchase and import:

🔍 Note: Thanks to a temporary exemption (or “carve-out”) under the USMCA agreement, qualifying Mexican-made leather products currently avoid the 25% tariff. However, this exemption may be lifted in the future, so it’s not guaranteed long-term.

• Significant savings: You avoid the $50 tariff that would apply if the carve-out were removed.
• Ensure your leather meets USMCA origin rules (e.g., processed entirely in Mexico with qualifying materials).
• Keep an eye on policy updates — if the carve-out ends, this same shipment could cost 25% more.
• Consider asking your supplier for a USMCA Certificate of Origin to ensure compliance.

2. Using Print-on-Demand or Fulfillment Services Abroad

Some Etsy sellers use third-party services that print, produce, or ship from other countries (like the UK, China, or Canada). Even if you’re based in the U.S., if the item is physically shipped from abroad, your customer’s package becomes an international import.

If your fulfillment partner doesn’t handle tariffs upfront (i.e., uses DDU shipping), your customer could face unexpected charges on delivery. That’s a quick way to get a bad review — even if it wasn’t your fault so it’s wise to understand and take preventative action where possible.

3. Sneaky Extra Costs That Add Up

Even if you’re just importing a few small things to run your shop, these changes could bring:

• Higher customs brokerage or handling fees
• Longer shipping delays due to customs clearance
• More paperwork or classification requirements

These aren’t always headline-grabbing problems, but over time they can slow you down and shrink your profits.

Who Pays the Tariffs?

In general, it’s going to be the company shipping the goods to you, however this isn’t always the case. There are two common ways to ship internationally — and the your vendor chooses determines who pays any tariffs, import duties, or taxes.

1. DDP (Delivered Duty Paid) With DDP shipping, the vendor takes care of all customs fees ahead of time. That means:
   • They will calculate and include any tariffs into your shipping costs.
   • They will work with a carrier or platform that handles the import paperwork for you.
   • You, the customer gets a smooth, surprise-free delivery — no extra charges on arrival (yay!).
2. DDU (Delivered Duty Unpaid) With DDU, you now become the importer and are thus responsible for paying any duties or taxes when the package arrives.
   • The package ships without customs fees prepaid.
   • The carrier (like USPS, Canada Post, or FedEx) will contact you for payment before delivery.
   • If you don’t pay, the package could be delayed, returned, or refused.

Ensure you are checking when ordering supplies which method of delivery your vendor has selected to ensure you don’t get any nasty surprises.

What You Can Do - Now

The good news? There are practical ways to adapt to tariff challenges. Here’s a quick list of strategies for Etsy sellers to minimize the negative impact:

1. Review your supply chain: Are you buying from overseas suppliers? This is the time to check what tariffs may apply and if possible, consider switching to domestic suppliers to reduce costs.
2. Talk to your fulfillment providers: Ask if they use DDP (Delivered Duty Paid) shipping (see above for a primer), and whether they handle customs for U.S. customers.
3. Start tracking landed costs: Use tools, software like Craftybase or spreadsheets to calculate true costs, including shipping, duty, and taxes.
4. Plan for pricing updates: Build in a buffer if you expect your input costs to rise — better to adjust proactively than react too late. Use a pricing calculator like Craftybase to ensure your prices include all costs of production and delivery so you make the margins you need to stay afloat.
5. Diversify your offerings: Introduce digital products like art prints or patterns (these are currently exempt from tariffs). They have low COGS, and thus you can maximise your margins with these lines - meaning also you always have at least one revenue stream unaffected by trade taxes.

How To Adjust Your Pricing for Tariffs

When tariffs enter the picture, it’s easy to feel overwhelmed — especially if your profit margins are already slim. But the good news is: with a few smart tweaks, you can build those costs into your pricing and stay both competitive and sustainable.

Here’s how to do it step by step:

Understand Your “Landed Cost” for all materials

Your material landed cost is how much you paid for the raw materials that go into your product, including shipping and tariffs.

It includes:

• The base price of the material
• Shipping and insurance
• Tariffs and import duties
• Customs or broker fees

Calculate your Cost Price

Tally up the total material cost for your product to make a single unit. This is the price you would charge the customer to make zero profit.

• Calculate your Desired Price Now apply markups to determine your ideal price for the product. Tip: use an online Etsy pricing calculator for simplicity.

Decide Where to Absorb or Pass On Costs

Once you’ve calculated your true costs, decide:

• Can you absorb some of the increase to stay price-competitive?
• Or do you need to adjust your retail price to maintain healthy margins?

Many sellers choose a hybrid approach:

✅ Absorb small increases on bestsellers

✅ Raise prices on lower-volume items or bundles

See also:

• How to Price your Product: The Ultimate Guide for Small Manufacturers →
• Pricing Mistakes (and how to avoid them) →

Accounting for Tariffs in Your Bookkeeping

Integrating tariff-related costs into your accounting process is crucial for accurate recordkeeping and tax efficiency. Here’s how to handle it:

If you aren’t using the COGS method:

• You’ll want to include your tariff costs in your overhead expenses.

If you are using the COGS method:

• Tariffs are part of what it costs you to get your inventory into sellable condition.
• You’ll want to add them to the landed cost of your products—this includes the product cost, shipping, insurance, customs fees, and tariffs.

As a quick example of a landed cost, let’s say I have a material that costs $10 to purchase. The shipping is $2 and the tariff is $1. My fully landed cost to get to me from the supplier is therefore $13.

This will ensure that your tariffs paid are factored directly into your inventory value and thus your COGS.

If you’re unsure about how to categorize your tariff costs, consult with a tax professional or accountant for guidance. It’s important to properly track and document these expenses for accurate financial reporting.

Also consider getting your bookkeeping on track with tools like Craftybase bookkeeping software, which integrates seamlessly with Etsy. It simplifies inventory tracking, COGS adjustments, and expense reporting—making it much easier to manage tariff-related complexities.

How Craftybase can Help Beat your Tariff Woes

Craftybase is a user-friendly bookkeeping + inventory software designed specifically for handmade and creative businesses. It offers a range of features that can help you navigate the complexities of tariffs, including:

• Accurate COGS calculations: Craftybase allows you to track your inventory costs accurately, taking into account any tariff expenses incurred. This means your COGS will reflect the true cost of each product sold, minimizing the impact on your profitability.
• Automatic landed cost calculations: With Craftybase, you can easily calculate the landed cost of your products by factoring in tariffs, shipping fees, and other related expenses. This feature not only helps with accurate COGS calculations but also gives you a clear picture of your overall product costs.
• Real-time pricing guidance: With the constantly changing nature of tariffs, it can be difficult to know how much to price your products. Craftybase’s real-time pricing guidance takes into account any additional costs from tariffs, giving you a more accurate idea of how much profit you will make on each sale.
• Automated tax reporting: Tax time can be a headache for many small business owners, but with Craftybase, you can generate detailed tax reports that include your tariff expenses. This will save you time and effort when it comes to filing your taxes.
• Better decision making: By having accurate and up-to-date information on your inventory costs, you can make more informed decisions about pricing, purchasing, and sourcing. This can ultimately lead to increased profitability for your business.
• Product categorization: Organizing your products into categories can help you quickly identify which items may be subject to tariffs and easily adjust their prices accordingly. Craftybase allows for easy product categorization, making it simple to manage tariff-related costs.
• Reporting and analytics: The software offers various reports and analytics to help you understand the impact of tariffs on your business. You can track how much you’re spending on tariffs, identify any trends or patterns, and make informed decisions to minimize their impact on your bottom line.

Start optimizing your inventory management and gain control over your tariff-related costs today. Sign up for Craftybase and enjoy a free 14-day trial—no commitment, no hassle. Take the first step toward smarter decisions and increased profitability. Start Your Free Trial Now →

Conclusion

Tariffs can have a significant impact on small businesses that rely on imported goods. As an Etsy seller, it’s important to stay informed about any changes in tariffs and how they may affect your business. By understanding the basics of tariffs, how they are going to impact your bottom line and utilizing tools like Craftybase, you can better navigate these trade policies and keep your business financially healthy.

Remember to always consult with professionals for specific advice on how to handle tariffs and maintain accurate financial records. With proper planning and management, your Etsy shop can continue to thrive despite tariff fluctuations. Happy selling!

Etsy Tariff FAQ

Is the De Minimis Rule suspended for the US?

As of April 2, 2025, the status of the U.S. de minimis rule has undergone several changes:

​Initial Suspension: On February 1, 2025, President Donald Trump signed executive orders imposing tariffs on imports from China, Mexico, and Canada.

These orders also suspended the de minimis exemption for shipments originating from these countries, effective February 4, 2025. This exemption previously allowed duty-free entry for shipments valued under $800. ​

Temporary Reinstatement: On February 7, 2025, the suspension of the de minimis exemption was paused indefinitely to provide U.S. Customs and Border Protection (CBP) with additional time to implement necessary procedures for processing and collecting duties on low-value shipments. ​

Closure of Loophole: On 4th April, Donald Trump signed an executive order on April 2 closing the loophole for China & Hong Kong, removing the exception officially on May 2. Given these developments, the de minimis exemption remains in effect until May 2nd.

However, due to the evolving nature of trade policies, it’s advisable for businesses to stay informed about potential changes that could impact import procedures and costs.

Do I have to pay tariffs if I buy supplies from overseas through marketplaces like Alibaba, AliExpress or Temu?

Yes, even if you purchase through online marketplaces, you may be responsible for paying tariffs or import duties—especially if the shipment value exceeds the de minimis threshold or if the exemption is suspended. Always check the origin country and confirm who is responsible for duties (you or the supplier).​

Can I avoid tariffs by switching suppliers?

With the new US tariffs, it isn’t possible to avoid tariffs if sourcing your supplies from overseas. The best strategy to minimise tariffs is to research and consider purchasing domestically in the US.

What Does “Temporary Carve-Out for Eligible USMCA Items” Mean?

A “temporary carve-out” means that certain products are exempt from new tariffs for a limited time, as long as they meet the rules of the USMCA trade agreement.

USMCA = United States–Mexico–Canada Agreement (the trade deal that replaced NAFTA).

Eligible items = Products that qualify under USMCA rules, such as origin requirements (e.g. where and how the product or its components were made).

Temporary = This is not a permanent exemption. The product is only spared from tariffs for now, and this exemption may be removed later.

What Are USMCA Origin Rules?

To benefit from USMCA tariff exemptions, a product must “originate” in the U.S., Mexico, or Canada according to specific criteria. Products must be entirely made in the U.S., Mexico, or Canada without any foreign inputs. If a product includes materials from outside North America, it can still qualify if the final product undergoes a significant transformation and its tariff classification changes.

Example: You import raw hides from Brazil (non-USMCA), but process them into finished leather goods in Mexico.