What Amazon & E-Commerce Sellers Need to Know About New U.S. Tariffs and Sales Tax Compliance in 2026

This article was originally written in May 2025 and was updated in March 2026

Key Takeaways

• RJM Tax Exemption explains what tariffs are and who pays them
• Potential strategies for tackling tariffs are outlined
• The Pros and cons of stopping selling in the U.S. (temporarily)
• A look at how tariffs impact sales tax compliance and how RJM can help

The new tariffs in the U.S. have sent shockwaves through the e-commerce community, with a vast majority of sellers sourcing products from Europe, China, or other impacted countries. There are many misconceptions about how they work. In this blog, we’re going to discuss how e-commerce businesses are affected, and how this could have a knock-on effect on your sales tax compliance.

What is a Tariff, and Who Pays?

A tariff is a tax imposed by a government on imported goods and services. The primary objectives of tariffs are to generate revenue for governments, shield domestic industries from foreign competition by increasing the cost of imported products, and influence trade patterns between countries.

The business importing the products pays the tariff, not the foreign exporter.

Example:

A U.S. Amazon seller purchases sunglasses from a Chinese supplier. They purchase 1,000 units a month at $5 each, for a total sale price of $5,000 plus shipping. With the new tariff of 145% on Chinese exports, the sale would go through like this:

• Business buys products for $5,000 + shipping
• Upon entry to the U.S., the 145% tariff is added = $7,250
• Total cost = $12,250

The supplier receives their $5,000 payment, and the U.S. government gets the $7,250 tariff.

For nearly every business, a cost increase of this size will be impossible to absorb.

Tariff on Shipping and Freight

The tariff pain continues: you don’t just pay the tariff on the product cost. You pay the tariff on the total customs value, which includes:

• Cost of goods
• Freight
• Insurance

Example:

If your products cost $5,000, freight is $1,000, and insurance is $100, the total customs value is $6,100.

With a 145% tariff on Chinese goods, you’d owe $8,845 in tariffs—that’s an additional $1,595 just on the freight and insurance.

This is why accurate valuation and Incoterms matter so much in your import strategy.

Strategies to Tackle a Tariff

This is the million-dollar question: what’s the best strategy? With everything so uncertain, it’s hard to find a one-size-fits-all answer—but here are several strategies businesses are currently trying:

🔄 Shift Away from Chinese Suppliers

China has been hit hardest by the tariffs. It may be worth exploring manufacturers in Vietnam, India, or Mexico.

Pros:

• Reduces exposure to future tariff shocks
• Potential access to lower labor or raw material costs
• Enhances supply chain resilience

Cons:

• Finding reliable suppliers takes time and effort
• Possible quality or communication issues
• Short-term switching costs
• New countries may also face future tariff changes

Tip: Try sourcing smaller test batches from alternative suppliers to minimize disruption.

📟 Reclassify Your Product

Some product categories are not subject to the same tariff rate. Since tariffs are applied based on the Harmonized Tariff Schedule (HTS) code, verify that your product is classified correctly.

If your product has multiple potential classifications, it may be worthwhile to consult with a customs broker or trade attorney to explore the possibility of legal reclassification.

🧹 Import Products in Parts

Depending on what you’re selling, you can import your products in parts for reassembly in the U.S., which can sometimes change the tariff classification and reduce duty.

This may be especially effective for mechanical or modular products.

📈 Adjust Your Pricing Strategy

In most cases, some of the added cost will need to be passed on to customers.

• Raise prices carefully
• Bundle products
• Add value to justify increases

Consider split-testing pricing on your product listings to find the optimal balance between profitability and customer retention.

🤝 Renegotiate Supplier Costs

It’s always worth a conversation with your current supplier before switching. You may be able to reduce costs, negotiate bulk discounts, or explore alternative shipping routes that lower your landed cost.

Some suppliers may be willing to absorb a portion of the cost or switch to a non-China manufacturing partner in their network.

🚩 Stop Selling in the U.S. (Temporarily)

✅ Pros

1. Avoid Immediate Financial Losses

Prevents negative margins and avoids dumping inventory into a market with a high loss rate.

2. Time to Rebuild & Restructure

Use the pause to:

• Source from non-tariff countries
• Reclassify products
• Adjust pricing
• Restructure logistics or legal entities

3. Focus on Other Markets

Canada, the UK, the EU, Australia, or domestic (non-U.S.) markets may offer lower duties or better product fit.

4. Avoid Compliance Risk

U.S. compliance, including tariffs, sales tax, and marketplace rules, is complex. Pausing removes that burden—temporarily.

❌ Cons

1. Loss of Market Share

The U.S. is the largest e-commerce market globally—pausing may hand customers to competitors.

2. Impact on Amazon Seller Health

Inactivity can hurt Buy Box eligibility, seller score, and FBA ranking.

3. Sunk Costs in U.S. Setup

You may lose investment in:

• Trademarks
• Logistics infrastructure
• U.S.-targeted marketing

4. No Guaranteed Improvement

Tariffs may stay in place or increase. There’s no clear “safe return” date.

📊 How Tariffs Affect Sales Tax Compliance

A tariff and sales tax are separate taxes, but they’re indirectly linked in several essential ways.

📉 1. They Increase Product Cost, Triggering Economic Nexus

Economic nexus is a connection between your business and a state based on sales or transaction volume. Once you cross a state’s threshold, you must collect and remit sales tax unless your buyer provides a valid resale certificate.

If your prices increase due to tariffs, you may cross nexus thresholds sooner.

Tip: If you’re a B2B seller, more of your customers may start charging you sales tax unless you provide resale certificates.

🧱 2. Sales Tax May Be Charged on Tariff-Inflated Values

In many states, sales tax applies to the total price of the item, including tariffs, shipping, and insurance. If you pass the tariff costs into your product pricing, you’re likely charging and collecting more sales tax as a result.

Ensure that your tax software or sales tax team understands how to calculate taxable bases, including tariffs, accurately.

📆 Customs and Sales Tax Audits

The government is increasing oversight to ensure that each tariff is applied correctly, which also helps states with sales tax audits.

States May Use Import Records to Catch Noncompliant Sellers:

• Importer of record
• Product descriptions
• Tariff amounts
• Port of entry
• Delivery locations

States can use this information to identify sellers with physical or economic nexus and audit businesses not registered for sales tax collection.

Customs data is becoming an audit trail that tax authorities are increasingly tapping into.

✅ RJM Can Help

RJM offers free sales tax nexus reviews to ensure you’re registered in the correct states for collection. With tariffs already taking a chunk of your profits, don’t let a sales tax audit be the final nail in the coffin.

We specialize in helping e-commerce sellers navigate the often confusing landscape of tax exemption, nexus compliance, and documentation. Whether you’re sourcing globally or selling across the U.S., our team can help you stay ahead.

📝 Summary

Times are incredibly uncertain for U.S. e-commerce businesses. It’s vital to have a strategy to tackle fluctuating tariff risks. However, despite the challenges, the U.S. remains the largest online market in the world—and sellers who adapt well could emerge as market leaders.

If you’re concerned about sales tax or want to take advantage of our free nexus review, reach out to our team.