How Tariffs and Trade Wars Affect Brand Ownership

The 2026 tariff cycle is the most volatile in 80 years. The US average effective tariff rate hit 11%, the highest since 1943. Multiple layered tariff regimes were imposed, suspended, struck down by the Supreme Court, and reimposed under different legal authorities. Brands that relied on cheap imports from China were devastated. Brands with integrated supply chains and bargaining power emerged stronger.

Tariffs do not just affect prices. They reshape brand ownership by determining which business models are viable, which brands can compete, and which companies become attractive acquisition targets.

The 2026 Tariff Shock: Highest Rates in 80 Years

The tariff landscape in 2026 is a layered system of multiple legal authorities:

• Section 301 tariffs on Chinese goods, first imposed in 2018, reached effective rates of 145% at their peak.
• Section 232 tariffs on steel (25%) and aluminum (10%), imposed on national security grounds.
• IEEPA tariffs, imposed by President Trump in February 2025 on Canada, Mexico, and China (drug trafficking tariffs) and on most US trading partners (reciprocal tariffs). These were struck down by the Supreme Court on February 20, 2026 in Learning Resources, Inc. v. Trump, which held 6-3 that IEEPA does not authorise the President to impose tariffs.
• Section 122 tariff at 10%, signed by Trump on February 21, 2026 as a temporary replacement for the struck-down IEEPA tariffs, lasting 150 days. The administration indicated it wanted to increase the rate to 15%.
• De minimis exemption suspension, effective August 2025, ending duty-free entry for shipments valued at $800 or less. The legal basis for the suspension was challenged after the Supreme Court ruling, but the Trump administration issued a new executive order maintaining the suspension.

All IEEPA-based tariffs terminated at 12:00 AM Eastern time on February 24, 2026. The Supreme Court's ruling that IEEPA does not authorise tariffs was authored by Chief Justice Roberts and joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson.

Who Won: Scale as a Tariff Shield

Large retailers with bargaining power and integrated supply chains have weathered the tariff storm:

Walmart: Operating margin stayed flat at 4.2% despite tariffs. Walmart's bargaining power over 100,000+ products allows it to negotiate lower prices from suppliers who absorb tariff costs. Advertising and membership fees now generate 27% of Walmart's operating profits, up from 9% in 2021, providing a tariff-resistant revenue stream.

Costco: The company is "leaning in on Kirkland Signature," its private label brand, which gives Costco the most control over its supply chain. Costco's limited SKU model (approximately 4,000 products versus Walmart's 30,000) means each sourcing decision commands greater buying clout. Kirkland products are often manufactured by the same suppliers as name brands but at lower cost.

Apple: Apple's integrated supply chain insulated its balance sheet. While Apple manufactures most products in China, its premium pricing and brand loyalty give it pricing power that smaller brands lack. Apple can absorb tariff costs or pass them to consumers without significant demand destruction.

Amazon: Amazon recouped $600 million in tariff refunds in Q2 2026 and returned some of those savings to customers. Amazon's marketplace model means tariff costs are largely borne by third-party sellers, not Amazon itself.

Who Lost: DTC Brands and Small Importers

Small and mid-sized brands have been hit hardest:

• 67% of US DTC brands (with $5 million to $100 million in revenue) reported an 18%+ increase in landed costs since January 2026, according to a National Retail Federation and Flexport survey.
• Apparel and electronics accessories brands faced 24%+ cost increases.
• Hard goods (furniture, appliances, fitness equipment) have the highest per-unit duty exposure and the least pricing flexibility.
• 61% of online retailers (with $1 million to $50 million in revenue) say tariff uncertainty is now their single largest operational risk, according to the NRF's July 2026 survey.

These cost increases are existential for many small brands. Unlike Walmart or Costco, they cannot negotiate lower prices from suppliers. Unlike Apple, they cannot pass costs to consumers without losing sales. The result is margin compression that forces many to seek acquisition or shut down.

The China-Vietnam Pivot That Stopped Working

The standard playbook from 2018 to 2025 was to move manufacturing from China to Vietnam, Cambodia, Bangladesh, or Indonesia. This "China Plus One" strategy allowed brands to avoid Section 301 tariffs on Chinese goods while maintaining low manufacturing costs.

In April 2026, a Trump tariff order introduced reciprocal duties on Southeast Asian nations. Vietnam faces up to 46% on certain categories. Cambodia and Laos face similar exposure. Bangladesh is under scrutiny over labour compliance.

The China Plus One strategy no longer provides tariff shelter. Brands that moved production to Vietnam in 2019 to avoid China tariffs now face Vietnamese tariffs. The only remaining tariff-free option for US market access is nearshoring to Mexico under the USMCA.

Shein: The Cautionary Tale

Shein is the brand most exposed to tariff policy change. Founded in Nanjing and headquartered in Singapore, Shein built its business model on the de minimis exemption, which allowed it to ship low-cost clothing from China to US consumers without paying duties.

The de minimis exemption suspension in August 2025 ended this model. Chinese-origin products sold by Shein and shipped to the US are now subject to tax rates from 10% to 87.5%.

• $99 million loss, compared to a $395 million profit in Q1 2025
• US revenue fell 14.3% to $2.04 billion
• US share of total revenue dropped from 28%+ to 22.5%
• A $328 million one-time accounting charge tied to share valuation ahead of its Hong Kong IPO

Shein said it is "pursuing a wide range of options, including increasing our prices in the U.S. market to offset a portion of the increased costs." The company is preparing for a Hong Kong IPO, but the tariff impact undermines its valuation.

China's commerce ministry called the de minimis suspension a "low hanging fruit" trade concession, suggesting it was an easy target for US trade policy.

Nearshoring: The New Strategy

The USMCA provides tariff advantages for Mexico-manufactured goods. Freight transit to US fulfillment hubs is dramatically shorter than from Asia. 43% of supply chain leaders are planning to shift production to the US over the next three years, according to McKinsey.

Mexico nearshoring is finally occurring at the mid-market level in 2026. But nearshoring requires capital, minimum orders, and longer lead times. It favours large companies that can invest in new manufacturing relationships over small brands that lack the resources.

How Tariffs Reshape Brand Ownership

Tariffs affect brand ownership through four mechanisms:

1. Private label growth: Costco's Kirkland Signature and Walmart's Equate are brands that own their supply chain and set their own prices. As name-brand prices rise due to tariffs, private labels become more attractive to consumers and more profitable for retailers.

2. DTC brand consolidation: Small brands unable to absorb tariff costs become acquisition targets. Private equity firms and larger competitors acquire weakened brands at discounted valuations. For more on this pattern, see our complete guide to private equity and brands.

3. Supply chain as competitive moat: Vertically integrated brands like Apple and Costco are insulated from tariff costs. Third-party brand resellers are fully exposed. The competitive advantage of owning your supply chain has never been clearer.

4. Chinese brands retreating: Shein and Temu have been hit by the de minimis closure. Polestar has been barred from the US market under the Connected Vehicle Rule. Chinese brands face a choice: restructure (the TikTok model), retreat, or be barred.

What This Means for Consumers

• 96% of tariff costs are borne by US importers and consumers, according to the Yale Budget Lab.
• 75% of consumers expect tariffs to push grocery bills higher.
• Private-label alternatives are gaining ground as name brands raise prices.
• Price-sensitive consumers are shifting from premium to budget brands.
• Every 5% price increase triggers 8 to 12% volume declines in value-sensitive categories.

The brands available to you and the prices you pay are directly shaped by tariff policy. When tariffs raise costs, brands either absorb them (reducing margins and weakening the business), pass them on (raising consumer prices), or restructure their supply chains (which takes time and capital).

For more on how trade policy affects brands, see our analysis of brands caught between US-China trade tensions and how government policy shapes brand ownership.

FAQ

How do tariffs affect brand prices?

Tariffs increase the cost of imported goods. According to the Yale Budget Lab, 96% of tariff costs are borne by US importers and consumers. Brands must either absorb the higher costs (reducing margins) or pass them on to consumers (raising prices). Small brands with limited pricing power are hit hardest, while large retailers like Walmart and Costco can negotiate lower prices from suppliers.

What is the de minimis exemption?

The de minimis exemption allowed duty-free entry for shipments valued at $800 or less. It was suspended in August 2025, ending the duty-free threshold for small shipments. The suspension devastated direct-to-consumer brands that relied on cheap shipping from China, particularly Shein and Temu. The legal basis for the suspension was challenged after the Supreme Court struck down IEEPA-based tariffs in February 2026, but the Trump administration maintained the suspension through a new executive order.

Which brands are most affected by tariffs?

Brands that rely on imported goods from China and lack pricing power are most affected. Shein reported a $99 million Q1 2026 loss after the de minimis suspension. Small DTC brands reported 18%+ increases in landed costs. Brands with integrated supply chains (Apple, Costco) or bargaining power (Walmart) are less affected. Chinese automotive brands like Polestar have been barred from the US market entirely under the Connected Vehicle Rule.

Do tariffs cause brand acquisitions?

Yes, indirectly. Tariffs weaken small brands that cannot absorb cost increases, making them attractive acquisition targets for larger companies and private equity firms. The tariff cycle accelerates consolidation by creating a survival-of-the-largest dynamic. Brands with scale and supply chain control acquire weakened competitors at discounted valuations.

Conclusion

The 2026 tariff cycle is reshaping brand ownership in real time. Large retailers with bargaining power and private labels are winning. Small DTC brands and Chinese importers are losing. The Supreme Court's ruling that IEEPA does not authorise tariffs was a dramatic moment, but tariffs remain in some form through other legal authorities. The de minimis suspension continues. The China Plus One strategy no longer works. Nearshoring to Mexico is the new strategy, but it favours large companies over small brands.

The brands you buy and the prices you pay are shaped by these policy decisions. Understanding tariffs is essential for understanding why some brands thrive while others struggle.

Want to learn more? Read about brands caught between US-China trade tensions, explore how government policy shapes brand ownership, or browse our complete guide to conglomerate brand portfolios.

Sources

1. US Supreme Court. "Learning Resources, Inc. v. Trump." February 20, 2026. supremecourt.gov 2. Congress.gov. "Supreme Court Rules Against Tariffs Imposed Under IEEPA." February 2026. congress.gov 3. Reuters. "New US tariff starts at 10%, Trump administration working to hike it to 15%." February 24, 2026. reuters.com 4. White & Case. "United States terminates IEEPA-based tariffs following Supreme Court decision." February 2026. whitecase.com 5. American Bazaar. "Shein reports $99 million Q1 loss after de minimis rule ends." July 27, 2026. americanbazaaronline.com 6. Yale Budget Lab. Tariff cost analysis. budgetlab.yale.edu

All brand ownership data verified through WhoBrands.com's proprietary research methodology. Last updated: May 21, 2026.