Startups

How Aussie SMEs are navigating trade tariffs and shifting US strategies

It’s been six weeks since the announcement of Trump’s incendiary “Liberation Day” tariffs – but the rollercoaster ride hasn’t slowed down since. In just the latest unexpected twist, the US and China have agreed to end their trade war and scrap tariffs – but not all of them, and only for ninety days.

Many Australian small-business owners have been hit hard by Trump’s trade upheaval, especially those in e-commerce and those whose supply chains cross affected regions.

It’s not just the tariffs themselves, either; the unpredictable nature of the situation makes any business strategising much more difficult. To find out how businesses are faring six weeks in, ISB spoke to impacted entrepreneurs to find out where they are now and how they’ve pivoted their strategies.

Turning away from the US

Many Australian businesses have turned away from the US since liberation day. Inge Heath, founder of Tape Zoomie, was one of them. Heath manufactures her products in China and ships them directly to customers in the US, so when the tariffs hit, her business felt the blow instantly.

“The increased tariffs have significantly affected our landed cost and overall margin,” Heath told ISB.

The business quickly switched focus to the EU, UK, and South African markets – countries Heath had been eyeing prior to the tariffs for their strong product demand and relatively easy entry.

“I’ve learnt to diversify to ensure that when there are changes in one market that can negatively affect your business, you can steer towards the others,” she said.

Heath is far from the only business owner who has stepped away from the US in light of the recent changes. Kobi Tollitt’s cosmetics brand, La Base, has given up on the country completely for the time being.

The business had just opened up its e-commerce store to US customers a few days before the tariffs were announced. With its packaging and tools being from China, talks of the US’ 145 per cent tariff on China forced Kobi and her co-founder to abandon the launch plans and move their focus elsewhere.

“We’ve decided for now to focus our time, energy, and resources closer to home,” Tollitt told ISB. “Instead of spreading ourselves thin, we’re doubling down on Australia and New Zealand.”

Staying on the Americans’ good side

While Inge Heath has pivoted her business’ focus toward new markets, she’s still maintaining her US relationships. 

“I’m working closely with wholesale partners to make sure they remain a priority [and] maintaining strong relationships with them,” she said.

Heath has stock already in the US, but her priority now is to make sure it’s balanced across all her key sales channels. This is both to maintain relationships and the business’ Amazon performance – not having stock available on Amazon listings can damage your visibility, she added.

Businesses aren’t just worried about their supply chain relationships in the US – American customers are also on their minds. 

Jason Hoeung, founder of The Lifestyle Co, told ISB that he prioritised open communication with his stateside customers.

“We didn’t hide behind vague updates,” he said. “Instead, we empowered our US customers with the facts.”

Like Heath, Hoeung has shifted focus towards other overseas markets since liberation day. But he didn’t leave his US customers in the lurch, instead taking to social media to communicate with them about how the tariffs were affecting his business. 

The goal was to build trust through transparency and make sure no one got a surprise at the checkout – and it turned out to be a successful strategy.

“People appreciated the honesty and rallied behind the brand even more,” said Hoeung.

Doubling down

Not everyone is pivoting away from the US right now. Michael Jankie, co-founder of NATPAT, doubled down on his US activities – and has found ways to offset the costs.

“We’ve seen a significant drop in freight costs to the US, and our logistics partners have been excellent in helping us optimise,” Jankie told ISB.

Jankie added that his brand has benefitted from competitors being scared off.

“Suddenly, there’s more shelf space and less competition,” he said.

Wanda Szychowska, founder of cosmetic bag business, Estetika, is another Aussie small-business owner with a big American dream. Half of Szychowska’s customers are in the US, and she had just signed a big deal with US retail giant Nordstrom when the tariffs hit.

Despite the uncertainty, Szychowska wasn’t swayed.

“I’m staying nimble and proactive to continue growing sustainably in the US,” she told ISB. “I’m really excited to explore this market more.”

As the company eyes rising costs, Szychowska is looking at other areas to cut back. For instance, she’s currently renegotiating with her Chinese suppliers to maintain her margin.

A bird’s eye view

Lawrence Christoffelsz is CEO of the Australian Trade and Logistics Corporation, and works directly with hundreds of SMEs. He told ISB that he’s seeing a lot of businesses shopping around suppliers right now.

“The immediate shift we’re seeing post-tariffs is proactive reforecasting and supplier reshuffling,” he said.

Christoffelsz said small businesses are handling some of their fulfilment duties themselves to cut costs, rather than relying on third parties. Others are front-loading stock from affected regions, booking earlier and in larger volumes, to avoid cost spikes later in the quarter.

“The margins are razor-thin, and there’s a growing sense that you have to play both defence and offence,” Christoffelsz said. “It’s about managing costs while actively looking for new opportunities, especially as competitors hesitate.”

• This story was originally published on Inside Small Business.