How Do Tariffs Affect Etsy Sellers — and What Can You Do About It?
Tariff rates keep changing, but the impact on Etsy sellers stays the same: higher material costs, tighter margins, and more complexity. Here's how to manage it.
Last updated: March 2026
Trade policy has been moving fast. Specific tariff rates that were accurate in April 2025 looked different by August 2025, and they’ve shifted again since then. Writing a post with specific percentages feels like painting a wall while someone keeps changing the colour.
So this guide takes a different approach. Instead of rate tables that go stale overnight, we’re focusing on the principles — what tariffs actually affect for Etsy sellers, how to find current rates yourself, and what you can do about it regardless of where the numbers land.
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What Are Tariffs, and What Has Changed?
A tariff is a tax on imported goods. When you bring something into the US from another country, that item may be subject to a duty — a percentage of its value — before it can clear customs.
For most Etsy sellers, tariffs were a non-issue for a long time. The de minimis exemption meant that individual shipments under $800 could enter the US without paying import duties. Sellers importing small quantities of raw materials from overseas suppliers largely flew under the radar.
That’s no longer reliably the case. The de minimis exemption has been significantly restricted — first for goods from specific countries, then more broadly. The practical effect: more of your supply purchases from overseas now face import duties.
The exact rules, rates, and country-specific treatments keep changing. Rather than quote figures that may be wrong by the time you read this, we’ll point you to where you can check the current state (more on that below).
What doesn’t change:
- Tariffs affect goods you physically import into the US
- Higher import costs mean higher material costs mean tighter margins — unless you adjust
- The landed cost principle applies regardless of the specific rate
How Tariffs Affect US-Based Etsy Sellers
You might assume tariffs only matter if you’re selling internationally. But for US-based sellers, there are three angles worth thinking through.
Importing Supplies from Overseas
This is the big one for most makers. If you source materials from suppliers in China, Canada, Mexico, Europe, or elsewhere, any tariffs on those materials come out of your margin — or get passed to your customers.
The math is simple but easy to underestimate. If you pay $100 for materials and a 25% tariff applies, your real material cost is $125 before shipping even enters the picture. Your cost of goods sold goes up. Your margin goes down. Unless you adjust your prices, you absorb the difference.
Makers who’ve been sourcing from the same overseas supplier for years, at prices they built their pricing around, are the ones most blindsided by this. If that’s you, it’s worth running the numbers fresh.
Using Print-on-Demand or Fulfillment Services Abroad
Some Etsy sellers use services that produce and ship from outside the US — so even if you’re based domestically, the physical goods enter the country as an import. That means tariff exposure even when you never touch the product.
The key question to ask your fulfillment partner: do they ship DDP (Delivered Duty Paid) or DDU (Delivered Duty Unpaid)? More on what this means in the next section.
Selling Internationally via Etsy
If you’re a US-based seller shipping to buyers in other countries, those destination countries may have their own import rules. This guide focuses primarily on the US side, but it’s worth being aware that trade policy is shifting in multiple directions simultaneously.
DDP vs DDU — Who Pays the Tariff?
When goods cross a border, someone has to pay the import duties. Which party pays depends on the shipping terms your supplier (or fulfillment partner) uses.
DDP — Delivered Duty Paid. The seller or shipper handles all customs fees upfront. You receive the goods with no surprise charges. Your cost is higher, but it’s predictable.
DDU — Delivered Duty Unpaid. The shipment arrives, and the recipient (you, or your customer) gets a bill from the carrier before the package is released. If it’s your customer getting surprised with a duty charge at the door, expect unhappy reviews.
When ordering supplies: ask your supplier which terms they use. If they ship DDU, build the estimated duty into your material cost calculations. If they ship DDP, verify what duty amount they’re including — and whether they’re passing it on to you in the product price.
When using print-on-demand or overseas fulfillment: push hard for DDP. DDU means your US customers are the ones absorbing the tariff bill, often without warning.
How to Check Current Tariff Rates
Don’t rely on a blog post — including this one — for current tariff rates. Rates have changed multiple times and will likely change again. Here’s where to get accurate, current information:
USITC Tariff Database The US International Trade Commission maintains a searchable tariff database at dataweb.usitc.gov. You can look up current duty rates by HS code (the product classification number) and country of origin.
CBP.gov US Customs and Border Protection publishes guidance on import procedures, duty collection, and the current state of exemptions at cbp.gov.
USTR.gov The Office of the United States Trade Representative covers trade policy, ongoing negotiations, and current tariff actions at ustr.gov. This is the place to watch for policy changes before they take effect.
HS Codes Every physical product in global trade has a Harmonized System (HS) classification number. Your carrier, freight broker, or even the supplier often knows the relevant HS code for your materials. Getting the right code is essential — duty rates vary significantly by product category and origin country. When in doubt, a licensed customs broker can classify your goods correctly. It’s worth the cost for materials you import regularly.
How to Adjust Your Pricing for Tariffs
When your material costs go up, you have three options: absorb the increase, pass it on, or some combination. Most makers end up somewhere in the middle — protecting margins on their best sellers while eating some cost on lower-volume items.
Here’s how to work through it systematically.
Step 1 — Calculate Your Landed Cost
Your landed cost is what the material actually costs you, fully delivered. It includes:
- The base price of the material
- Shipping and handling
- Import duties and tariffs
- Customs or broker fees
- Any currency conversion costs
For example: if a material costs $100, you pay $8 in shipping, and the duty comes out to $18, your landed cost is $126 — not $100. That’s your true starting number.
Our free landed cost calculator can help you work through this for any material.
Step 2 — Recalculate Your Cost Price Per Unit
Once you know the landed cost of each material, work out what it costs to make a single unit of your product. This is your cost price — the floor below which you can’t sell without losing money.
If the tariff added $26 to a $100 material purchase you use across 50 products, that’s an extra $0.52 per unit in material cost. Small per-unit, but it compounds across your whole catalogue.
Step 3 — Decide Where to Absorb or Pass On
With updated cost prices in hand, look at each product’s margin:
- If the margin can absorb the increase and stay healthy, you may choose not to change the price — at least for now.
- If the margin is already slim, a price adjustment is probably necessary.
- For bestsellers, consider a smaller price increase to minimise churn. For lower-volume items, a fuller adjustment usually makes more sense.
Run your numbers through an Etsy pricing calculator to see how different price points affect your net margin after fees.
For more on pricing strategy, see:
- How to Price Your Product — a guide for small manufacturers →
- Common pricing mistakes handmade sellers make →
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How to Track Tariff Costs in Craftybase
Tracking tariff costs properly matters for two reasons: it gives you accurate COGS, and it makes tax time less painful.
Add tariff costs to your material purchase records. When you log a material purchase in Craftybase, include the import duties you paid as part of the total cost. This is your landed cost. Craftybase then uses this figure in all your COGS and recipe calculations — so every product that uses that material automatically reflects the true cost.
Update material costs when tariff rates change. If your supplier’s effective rate goes up (or down), update the material cost in Craftybase. The pricing guidance feature will recalculate your margins across all products that use it, so you can immediately see which items are underwater.
Use COGS reporting for tax purposes. If you’re using the COGS method for your taxes — which most product-based makers should — your tariff costs are already captured as part of inventory cost. When you generate your COGS report in Craftybase, tariffs paid are factored in. No separate spreadsheet needed.
Track tariffs as overhead if you’re not using COGS. If you’re on a simpler expense-tracking approach, record tariff costs as an overhead expense. They’re still a legitimate business cost — they just sit in a different line on your Schedule C.
If you’re unsure which approach is right for your business, talk to a bookkeeper or accountant who works with product-based businesses. It’s a worthwhile conversation to have once, rather than scrambling at tax time every year.
Frequently Asked Questions
Do tariffs apply to handmade goods I make myself?
Not directly — but tariffs still affect you. If you import any of the raw materials you use to make your products, those materials may be subject to import duties when they enter the US. The tariff applies to the materials, not to your finished handmade goods. But higher material costs mean higher production costs, which squeezes your margin unless you adjust your pricing accordingly.
How do I pass tariff costs on to customers without losing sales?
A gradual, targeted approach usually works better than a blanket price increase. Start by identifying which products use the affected materials most heavily — those are the ones where your margin erosion is greatest. Raise prices on those items first. On your bestsellers, you may be able to absorb more of the increase to protect conversion. Adding a small premium to shipping or introducing a bundling option can also help recover costs without a visible per-item price jump.
Are digital products on Etsy affected by tariffs?
No. Tariffs apply only to physical goods that cross a border. Digital downloads — PDF patterns, SVG files, printables, digital art, Lightroom presets — are not subject to import duties. This makes digital products a genuinely useful hedge against tariff exposure. They have low cost of goods, no shipping, and are completely unaffected by trade policy changes. If you're able to add digital offerings to your shop, the margin stability is a real advantage right now.
How do US tariffs affect sellers in Canada and Mexico?
Canada and Mexico have a unique position due to the USMCA trade agreement. Goods that qualify under USMCA rules may receive preferential tariff treatment — but qualification is strict, and the rules around what counts as "made in" a USMCA country are specific. Whether your goods qualify depends on their HS code and where the materials originated. Check with a customs broker or refer to the USTR.gov for current USMCA guidance. The rules have shifted over the past year and the current treatment may differ from what you've read elsewhere.
How do I update my pricing in Craftybase when material costs change due to tariffs?
Update the cost price on the affected material in Craftybase to reflect your new landed cost (including the tariff). Craftybase will recalculate the manufacturing cost for every product that uses that material. You can then review your pricing on each product using the pricing guidance feature to see which items now have margins too thin to sustain. From there, you can decide which products need a price adjustment and by how much.
Where to Go From Here
Tariffs are a real cost now — not a future concern or something that only affects big importers. If you’re buying materials from overseas, the math on your products has changed. But it’s manageable if you work through it methodically.
The priorities are simple: know your landed costs, update your pricing to reflect them, and stay on top of the current rates through official sources rather than secondhand summaries. No blog post (again, including this one) is a substitute for checking dataweb.usitc.gov or cbp.gov when you’re making a real purchasing decision.
If you’re not already tracking your material costs and COGS properly, this is a good moment to start. The makers who know their numbers — exactly what each product costs to make — are the ones who can respond quickly when costs shift. The ones guessing are the ones who end up surprised.
Craftybase tracks your materials, calculates landed costs, keeps your COGS current, and shows you in real time which products are priced sustainably and which aren’t. That visibility matters more when the inputs are moving.
Need to get your Etsy bookkeeping in control?
Try Craftybase - the award winning inventory AND bookkeeping solution for Etsy sellers. Track expenses and revenue, raw materials and product stock levels (in real time!), order management, COGS, pricing guidance and much more.
It's your new production central.
