Austin’s Algorithm: How to Adapt Your Business to E-commerce Tariffs 2025

The e-commerce tariff and duty tax can make or break online companies. For years, CpG brands and e-commerce stores have relied on banks to streamline their supply chain, but the new tariffs and de minimis rule have increased the costs and disrupted the whole model. It requires the companies to come up with a plan that helps them get ahead of the curve. For this, they need to determine and understand the “Austin algorithm” or the blueprint of how the industry works with tariffs to empower themselves to weather the tariff storm and maintain their local, customer-centric feel.

How the 2025 e-commerce tariff has changed everything?

Tariff is an important tax. The current government has imposed more taxes this year, which means:

• A 25% duty on a $100 item, which drives its cost to $125 before it even reaches your warehouse.

• Elimination of the de minimis rule for imports from China/Hong Kong, which means there are no longer $800 duty-free packages.

• Increased costs across categories, such as toys (7.5%), furniture (25%), electronics (up to 25%), and jewelry (7.5%).

These tariffs are calculated as per the Penn Wharton Budget Model in April 2025 to reduce wages by 5%, making GDP decline by 6% in the long run. Analyzing the tariffs, it turned out that it will bring a loss of $22,000 in lifetime income per household, which means that your customers will spend less in comparison to the past, but your product price will increase. These tariffs are more like a test for all brands. 

In this article, we will explore how to remodel your business according to the imposed e-commerce tariff. Here are a few steps to understand the strategy.