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What Is Dropshipping & How Do You Get Started?
Understanding dropshipping and steps to launch your own online business
May 2, 2024
16 min read
President Donald Trump’s tariffs could potentially impact dropshipping businesses in a significant way. But do tariffs mean higher costs and lower profits? Not if you take action now.
After taking office for his second non-consecutive term, U.S. President Donald Trump immediately got to work fulfilling many of his campaign promises. By signing a flurry of executive orders, Trump addressed a number of the hot-button topics at the center of his campaign. Among the orders was a directive for the President’s aides to deliver a study on international trade. This ties back to one of the central issues of his campaign: the promise of new tariffs.
Many American small businesses are concerned about new import duties, as they are responsible for paying duties and fees on goods they import from other countries. In particular, the dropshipping community is concerned about Trump’s plan for an additional 10% tariff on imports from China. However, US dropshipping is still an excellent business model for a number of reasons.
The fact is new tariffs actually make dropshipping even more attractive in some ways, especially for beginners. That’s because tariffs create a so called ripple effect for traditional retailers. Wholesalers and importers who purchase large quantities of goods must pay the new tariffs right away, driving up their operating costs and ultimately forcing them to pass on price increases to consumers. Dropshippers, however, do not pay for large-scale inventory in advance; they buy products only when a customer places an order. This leaner model buffers them from huge up-front tariff costs. While per-item shipping may be more expensive, the overall overhead remains far lower than for bulk importers who are now paying both significant shipping bills and tariffs.
First, some background on the issue of tariffs. Trump has long favored tariffs as part of his international trade policy. During his first term from 2017 to 2021, Trump imposed multiple new tariffs, often as a bargaining tool. His overall goal was to promote specific American-made products over imported ones.
For example, in January 2018, he imposed 30% to 50% tariffs on solar panels and washing machines. Two months later, he rolled out a 25% tariff on steel and a 10% tariff on imports from most countries. In June 2018, these tariffs extended to longtime American trading partners Canada, Mexico, and the European Union.
A series of retaliatory tariffs and trade negotiations followed. Ultimately, most of what was left of Trump’s new tariffs applied to China. This eventually led to a situation known as the U.S.-China Trade War. However, since most of the tariffs applied to expensive products, there was little to no impact on dropshippers. Most dropshipped products are relatively inexpensive consumer goods and are not typically subject to tariffs.
Although the U.S.-China Trade War caused considerable controversy in the media, most of the original Trump tariffs on specific Chinese imports remain in place today. Former President Joe Biden not only maintained many of the tariffs from Trump’s first term but also imposed some of his own.
Again, the focus of tariffs during Biden’s term was on higher-end goods, often in the tech space, such as electric vehicles (EVs) and EV batteries. The dropshipping industry remained more or less unaffected. However, during the 2024 Presidential campaign season, Trump scaled up his “America First” rhetoric, which included talk of new tariffs against a wide range of America’s trade partners.
Although Trump made new tariffs a central part of his campaign at rallies, in interviews, and on social media, there were few details. The only thing that was clear was that the Trump Administration 2.0 would not only follow much of the same international trade policy as Trump 1.0 while taking things to a higher level. In multiple interviews and public statements, Trump talked of tariffs as high as 100%.
Then, after winning the election in November 2024, Trump announced specific plans for his second term: 25% tariffs on imports from Canada and Mexico, and an additional 10% on top of any existing tariffs for imports from China. In a January 23 press conference, the President floated the idea of tariffs on imports from the EU, much like those in his first term.
While dropshippers have mostly avoided any fallout from the Trump 1.0 and Biden tariffs, the announced plans for Chinese imports seem worrisome for the dropshipping community. The Trump 2.0 tariffs would mean steel, solar panel, and washing machine imports from China will be subject to an additional 10% levy beyond what’s already in place. The dropshipped goods that were not subject to tariffs before would now theoretically have a 10% import duty as well.
In the weeks leading up to Inauguration Day, the Washington Post and other media outlets reported that Trump was considering walking back his tariff plans. Although the President denied those reports, it was clear he was considering his policies before implementing them.
That’s likely because the U.S.-China Trade War caused some economic problems for both countries. China’s retaliatory tariffs have negatively impacted some American companies, and both countries have lost some business to other nations where tariffs are not an issue. Yet, trade between the nations has continued at a brisk pace. The most recent data show that the goods and services trade between the U.S. and China totals more than $758 billion.
However, the Trump 2.0 tariffs could have a massive impact on the global economy. Clearly, the President still believes in his economic agenda but doesn’t want to rush into things. This brings us back to the White House memorandum about trade policy released on Inauguration Day, which explains why Trump didn’t implement his new tariffs on Day 1.
The memorandum directs the President’s aides to deliver a report that recommends “appropriate trade” measures by April 1. While this meant dropshippers faced no new tariffs as Trump took office, many started preparing nonetheless.
Regardless of the details, the Trump 2.0 tariffs will have a marked impact on the dropshipping industry. By broadly targeting large trade partners like China, the new Trump tariffs could influence a dropshipper’s operational costs and profit margins. That’s because dropshipping suppliers are expected to pass the 10% increased costs onto their clients in the form of higher wholesale prices and increased shipping costs.
By design, tariff policies are meant to boost domestic manufacturers. If the costs to import a given product get too high, businesses will turn to domestic suppliers. Whether this happens or not depends on the product in question and its level of domestic availability. However, for many products, a business that only sources domestically might have a competitive advantage over those that import from overseas, like dropshippers.
New tariffs on products that never had import duties before tend to lead to more paperwork. Rather than sending lower-value goods, customs checks will take longer and require more paperwork. All of these factors can lead to delivery delays.
There’s a risk that a dropshipper’s existing customers may give their business to a supplier that can sell products for less money and deliver them faster. Ultimately, the impact of the Trump 2.0 tariffs remains to be seen, but it helps for dropshippers to be aware of the potential issues.
It’s important to remember that none of these impacts are guaranteed to affect your income. Even with new tariffs to contend with, dropshippers can still succeed. On a general level, Trump’s new tariffs don’t threaten U.S. dropshipping businesses.
Cost increases are a fact of life that businesses and their suppliers must contend with all the time. A 10% tariff might not mean all that much on less expensive products, resulting in a relatively low dollar amount. Changes in the economy and the global supply chain often result in much larger operational cost increases for businesses of all types.
Dropshippers have all the advantages of an online business, with no office buildings or warehouses to maintain. Meanwhile, brick-and-mortar companies often see their expenses rise due to maintaining a physical presence and increasing labor costs. This can add up to a cost increase of far more than 10% in any given year.
Yet, many of these businesses find ways to make it work. By following some of the same strategies and adapting them to the dropshipping business model, new tariffs don’t have to be a problem. Here are some things dropshippers can do:
Most dropshippers today use software tools to help source and deliver products. However, not all of them are made the same. Some offer minimal features, while others are more comprehensive. A dropshipping tool with product research, trend analysis, and price guidance features can be invaluable when the global trade market changes. This type of tool not only makes dropshipping a seamless experience but can also provide insights that guide you through disruptions, such as new tariffs.
Tradelle is one such tool with a rich set of research features — seasonality analysis, competition density, trend analysis, a profit calculator, target group analysis, and more. These tools, combined with complete dropshipping functionality, provide everything you need to find profitable products and reliable order fulfillment for your business—all in one place.
The most successful businesses always keep tabs on their prices. While you may have dropshipped a particular product at the same price for years, your competitors could be selling it for less. It’s only a matter of time before your customers notice. The introduction of tariffs will affect pricing across the board, but it also provides an opportunity to evaluate your pricing. Other dropshippers may be raising their prices, but you may be able to lower yours. More sales with a smaller profit margin could mean you earn more revenue.
Staying on top of market prices doesn’t have to be a cumbersome, manual task. Some dropshipping tools offer pricing analytics, providing you with an instant look at average sale prices and more. Utilize these tools to help you adjust your pricing for competitiveness.
One of the main reasons to adjust your prices is to keep customers from going elsewhere. If buyers have a good experience and feel like they got a fair price, they’re much more likely to stick with a particular dropshipper. However, customer churn is one of the biggest risks to a dropshipping business. Sales and other promotional events can stop buyers from leaving your store. Rewards programs are another excellent way to earn customer loyalty and reduce churn.
Although the Trump 2.0 tariffs are earning significant headlines right now, they are but one fluctuation in the world of international trade. Politics, world events, and disruptions in the supply chain can impact any business. Experienced dropshippers know to follow market trends and adjust their business accordingly. For a number of reasons, customer interests shift regularly, making some products hot one day and cold the next.
Following these trends is critical to successful dropshipping, especially when changes impact the global market. Identifying rising trends and adapting your product lineup keeps customers coming to your store. Even with changes in the worldwide marketplace and international politics, driving more sales with in-demand products is key to succeeding in dropshipping.
Like any business, dropshipping is subject to ups and downs. The new Trump tariffs are just one such event. The good news is that even in the face of the planned 10% tariff on imports from China, U.S. dropshipping is still based on a strong business model. Dropshippers have the ability to sell to any country in the world, and they have no logistics or warehouses to manage.
Tradelle is a comprehensive dropshipping tool that also serves as the one expert supplier your business needs. Among Tradelle’s extensive features are product research, trend analysis, price guidance, and seamless integration with popular E-Commerce platforms like Shopify. All of these features give you the competitive edge you need to keep your dropshipping business successful in a changing global marketplace.
You’ve done your research on the Trump 2.0 tariffs. You’ve learned how to weather the storm of a changing global marketplace. Now, you only need a dropshipping platform that helps you use your knowledge to find profitable products. Tradelle makes it easy to view a wide range of products across multiple niches so you can identify products with high sales potential. One click is all it takes to import products to your store. With Tradelle’s automatic order processing, you have more time to work on business strategy.
To get started, sign up for a free 7-day trial of Tradelle today.
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