This holiday season brings unique challenges, where tariffs, de minimis challenges, and supply chain strategies will redefine how we shop and ship.
Despite substantial efforts from suppliers to pull forward cargo shipments to avoid countless tariffs, recent reports suggest there will officially be a peak holiday season again this year. But it’s not business as usual. In fact, it’s far from it.
Tariffs and economic shifts are creating a new landscape for shoppers and shippers, with one analysis from the Pricing Lab showing a roughly 5% increase on retail prices compared with pre-tariff trends. Here’s what shippers need to know to navigate the next few months and capitalize on the changes.
The tariff ripple effect
Tariffs aren’t new to suppliers. But today, these are actively reshaping global trade dynamics, adding pressure to every link in the supply chain.
One way suppliers have adapted this year is by moving to supply chain managed services, which provide access to infrastructure without requiring a big upfront investment. With the peak season quickly approaching, understanding how your partners are impacted by tariffs, where visibility is needed, and how tariffs are even influencing shopping habits will be key for suppliers and retailers alike.
As U.S. tariffs cause shifts in supply chains, the global manufacturing scene is also rapidly changing. Recent purchasing indexes found a lag in demand amongst goods producers in South Korea and Taiwan, which Vietnam and Thailand picked up new orders. If this shift continues over the next 12 months, there’s another piece of the puzzle for suppliers to figure out.
De minimis exemption changes: Small packages, big impact
If proposed changes to the de minimus exemption move forward, ending the current $800 duty-free import threshold, it would significantly affect companies that ship small packages. Meaning? Increased duties, potential shipment abandonment, and customs delays.
Large e-commerce platforms who rely heavily on cross-border small-package shipments could be significantly affected. Without exemption, shippers will be forced to either absorb duties or abandon some shipments due to the economics. Add in additional customs delays, compliance costs, and unfamiliar paperwork, and this spells trouble for the holiday season.
During the peak season, these regulatory changes can create huge bottlenecks. A possible solution would be to experiment with bundling together small shipments to limit the duties shippers must pay.
Breaking borders: The new shipping reality
Inventory shortages and rising costs on cross-border goods have already become a major issue. They’ll only be exacerbated by the spike in demand that comes with the holiday season. In cases where the businesses pass the cost along to consumers, we can expect to see a huge impact on total holiday spending and number of items purchased.
Many companies are already prioritizing supply chain agility and decision-making ability over pure cost efficiency, causing a major shift in global trade patterns. Businesses that have yet to begin thinking this way increase the risk of volatile events impacting their operations.
Reverse logistics: The final frontier
Every holiday season is followed by a flurry of returns. For the most part, suppliers and retailers have been able to manage the reverse logistics portion of the holiday season with all its challenges. But now that small packages cannot be returned in a financially viable manner – due to the end of the de minimis exemption – there's a big problem.
Most companies will face one of three options: allow the consumer to keep the product and receive a refund, ask the consumer to pay for the shipping fees, or decline returns and refunds altogether. This is certainly not ideal for customer satisfaction, which is why reverse logistics is one of the most critical, and often overlooked, supply chain functions.
Turning volatility into strategic advantage
This holiday season is shaping up to be the most challenging for suppliers in quite some time. But if done right, there’s no reason they can’t use this “trial by fire” as a guide for how to address supply chain operations for the years to come. When it comes to approaching this herculean task, it’s best to follow a three-stage framework that takes near-term, medium-term, and long-term goals into account:
1. React. The near-term shocks suppliers will experience this year must be managed immediately to minimize disruption. Building contingency models for customs delays and de minimis changes, communicating with partners to anticipate disruptions, and shifting stock closer to demand are all important steps to address risks as completely as possible.
2. Rewire. In the mid-term, businesses should attempt shifting from siloed processes to orchestrated workflows that use advanced technologies like agentic AI to unlock innovation within the business. From a redesign of the reverse logistics process that contains new return strategies to embedding regulatory intelligence within the logistics workflow, the rewire phase is all about improving operational agility.
3. Reinvent. The long-term goal is to overhaul supply chain operations for the future, ultimately gaining a competitive advantage and becoming more decision ready. Over time, the business should be experimenting with how predictive models can improve shipping decisions and where it makes sense to onshore or regionalize operations based on production footprints. Such strategies can support ESG objectives as well, such as reducing carbon emissions through optimized routes or sustainable transport methods.
Suppliers who view this year’s holiday season as a short-term challenge may manage immediate disruptions. But their long-term outlook can suffer without strategic adjustments. Adopting a proactive approach to uncertainty and using it as a catalyst for end-to-end operational optimization is a more effective strategy for long-term success.
The holiday peak season presents unprecedented challenges due to tariffs, the elimination of the de minimis exemption, and complex reverse logistics. However, by embracing a proactive three-stage framework — react, rewire, and reinvent — suppliers can not only navigate the immediate disruptions but also transform these challenges into a catalyst for long-term supply chain innovation and competitive advantage.
