China Rates Drop to 30% for 90 Days - Here’s What it Means for You

U.S. tariffs on goods from China - which peaked at a sky-high 145% - dropped to a “manageable” 30% this weekend. 

The new agreement, in place for 90 days, gives DTC brands some much-needed breathing room after essentially shutting down business with China, the strongest player in the global supply chain.

Many brands canceled or suspended inventory orders rather than bleeding cash. Others scrambled to protect their gross margins, with most deciding to simply hit pause on operations rather than run at a loss. 

It was survival mode, and many were waiting for the tariff rate to drop. With news of the new rate, brands are going to be quick to take advantage of the opportunity. 

What you can expect 

A mad dash to restock

With tariffs slashed, everyone's itching to hit the "order" button. That could clog up ports and logistics like a Black Friday rush. Plan ahead, lock in your shipping slots, and keep your logistics partners on speed dial.

Play smart with inventory 

The 90-day clock is like a ticking time bomb. Will it be diffused or will it explode? It’s tempting to place larger-than-needed orders, but it’s also risky. You could get stuck with goods you can’t bring over the border. It may be worth considering leaning into just-in-time inventory to stay nimble. And again, nobody knows, the cuts may remain permanent.

Factor in currency shifts

With the trade war at a temporary detente, currency trading will be in high gear after the announcement. Keep an eye on currency swings and adjust your pricing to make sure you are taking this into account. 

Inflation's still lurking 

While the new tariff rate is going to bring tons of economic activity, there’s no reason to expect inflation to suddenly drop. Stay flexible on pricing and keep a close eye on your P&L to make sure revenue is turning into profit. 

Markets are buzzing - but instability continues

The tariff cuts are a win, but trade policy chaos is never a good thing, and doesn’t necessarily point towards stability. Ongoing trade talks need to deliver a solid resolution to keep this party going. Stay locked into the headlines to avoid getting caught off guard.

Your Next Steps

Restock and breathe again 

The new tariff is a lifeline - but don't get too comfortable. That 30% still packs a punch, especially if you're running a smaller brand with tight margins. Think of it like going from a hurricane to a strong thunderstorm—better, but you'll still get wet.

Keep your eyes open

Don’t miss this opportunity but remember, the 90-day clock is ticking, and nobody knows what happens when it hits zero. 

Start to diversify your supply chain

The up-again, down-again cycle of tariffs on China is a stark reminder that you never want to rely so much on a single partner for all supply chain needs. See the current crisis as motivation for starting the long process of diversifying production partners. 

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