A2X Newsletter | Tariffs: What your UK ecommerce clients need to know

Here’s an unfortunate truth: Ecommerce sellers are on the front lines of these tariffs.

The U.S. has the world’s largest consumer market, and China finds itself in most ecommerce supply chains.

If your accounting practice supports UK ecommerce businesses that sell into the U.S., you’re probably asking the same questions they are: “What will these tariffs do to our margins, and what should we change right now?” Tough to answer in volatile markets.

Your clients do have two clear advantages:

1. They have you.
2. They have accurate, up-to-date numbers to base real decisions on.

Even so, there’s still so much uncertainty. That’s why I teamed up with Phil Oakley, founder of Outserve and long-time ecommerce accounting and inventory specialist, to unpack the tariff questions we hear most from UK sellers.

If your clients are asking something we’ve missed, let us know ( contact@a2xaccounting.com). I’ll track down an answer and share it with the community.

Let’s dive into the FAQ.

Tariffs & margins: FAQs (and answers) for UK-based sellers

Disclaimer: The information provided here is intended to be general. Every business will be impacted by tariffs differently and we strongly recommend you consult with an expert to understand your business’s specific obligations.

“How can I quickly determine which tariffs and duties apply to my product category?”

Every product globally is classified under an HS Code (Harmonized System Code). Use an online HS-Code lookup tool or your local customs site (UK: https://www.gov.uk/trade-tariff).

Tip: Find your product’s code via the UK tariff site, then identify the full U.S. code (usually 8- to 10-digits) in the Harmonized Tariff Schedule of the U.S. (HTSUS) for the exact U.S. duty rate and any special tariffs.

“How do I keep up with evolving U.S. tariff regulations and ensure compliance?”

While there are many ways that you could stay up to date, specifically for U.S. updates, you could:

• Subscribe to the U.S. Customs and Border Protection Cargo Systems Messaging Service
• Check for updates from the Harmonized Tariff Schedule of the United States

“If I source my material in China, assemble in the UK, and sell in the U.S., do I still pay U.S. tariffs on Chinese products?”

It can depend on the “substantial transformation” rule. The U.S. uses this rule to determine the country of origin:

“A product undergoes a substantial transformation if it results in a new and different article of commerce, having a new name, character, or use.”

It’s important to note that simple assembly or minor processing often does not change the country of origin. If your UK “manufacturing” is only light assembly of predominantly Chinese-made inputs, your goods may still be considered Chinese-origin when entering the U.S. and thus subject to any U.S. tariffs on Chinese goods.

As a general guide to benefit from “Made in UK” origin status, you’ll need:

• Evidence of transformation (manufacturing records, cost sheets).
• Preferably, a Certificate of Origin from a UK chamber of commerce.
• U.S. customs may also ask for a detailed bill of materials.

“What if I use a U.S.-based fulfilment center (like Amazon FBA) instead of shipping each order from the UK?”

You become the importer of record when shipping to the fulfilment center. You will usually pay duties/tariffs upfront on the entire bulk shipment, not per order.

As the importer, you’re legally responsible for all duties and tariffs at the time your goods clear U.S. customs. That means if you’re importing £40,000 worth of stock into the U.S. with a 10% tariff, you’ll need to pay an additional £4,000 upfront just to get the goods into the country. This payment is non-recoverable and must be settled immediately, often while you’re also covering manufacturing costs, freight, and local U.S. logistics to Amazon’s fulfilment centers.

This creates a cash flow pinch because you’re tying up working capital long before Amazon releases your payout (which typically happens every two weeks, but only after stock begins to sell). If sales take longer than expected, or if you’re holding multiple shipments in transit, that cash drain can compound quickly.

At Outserve, we’ve worked with clients on Xero, QuickBooks, and NetSuite alongside tools like A2X to forecast how much working capital will be tied up in tariff-related expenses, and using inventory management software like NetSuite and Unleashed to calculate precise landed costs per SKU. A client could use this insight to switch to more frequent, smaller shipments – reducing the size of each duty bill and spreading the cash outflow over time. With the right data and planning, you can maintain healthy cash flow while staying compliant and competitive.

“How do I calculate my new landed costs so I don’t underprice (or overprice) products?”

You should always include your relevant tariffs and duties in your landed costs at a product code level to accurately calculate your COGS and profit margin.

Using an inventory management system like Unleashed or NetSuite helps automate this, ensuring duties are captured correctly in your product cost. Alternatively, you can manually update your product code COGS to include duties, allowing tools like A2X to accurately calculate your total COGS based on actual sales.

“What documentation/compliance pitfalls should I watch out for to avoid fines or unexpected fees?”

Here’s a quick list:

Documentation pitfalls

1. Incomplete commercial invoice – Missing or unclear line items, invoice numbers, detailed product descriptions, or values.
2. Missing country of origin markings – Failing to include proper “Made in [Country]” designations on documentation and/or packaging.
3. Not updating product cost data for duties – Outdated or incorrect product values that feed into shipping and customs documents.

Compliance pitfalls

1. Incorrect HS code classification – Misclassifying products can lead to underpayment or overpayment of duties, penalties, or customs delays.
2. Under-declaring product value – Deliberate or accidental undervaluation can be seen as customs fraud.
3. Poor record-keeping – Incomplete or disorganised records can create liability and risk during audits or investigations.
4. Over-reliance on third parties without oversight – Failing to monitor brokers, forwarders, or other logistics partners can lead to mistakes or misconduct in compliance.

“Could alternative sourcing or ‘tariff engineering’ help me preserve profitability?”

Alternative sourcing and tariff engineering can be two of the most effective levers for protecting (and even growing) your margins when tariffs are squeezing profitability.

Here are a couple of examples:

• A business importing kitchenware from China may face a sharp tariff increase on stainless steel items. By working with their supplier to switch to an alternative finish that reclassified the product under a lower-duty HS code – without impacting quality – they could maintain their margin without raising price. (Note: Superficial changes might be scrutinised by CBP. Be sure to confirm new HS code classifications with a broker or official ruling.)
• A retailer using Unleashed inventory management could identify that a significant portion of their landed costs came from a single high-tariff supplier. By switching to a UK distributor for similar products, they could reduce both duties and shipping times, improving both profitability and cash flow.“Should I adjust prices or absorb tariff costs?”

“Should I adjust my prices or absorb the tariff costs to stay competitive?”

Whether you should adjust your prices or absorb tariff costs to stay competitive really comes down to your specific margin structure, customer expectations, and how price-sensitive your market is – but the key is using data to guide the decision.

At Outserve, we work with sellers to model different scenarios using integrated tools like A2X and Unleashed, which give clear visibility into real-time margins, landed costs, and product-level profitability.

For example, a fashion retailer may discover that by tightening up their purchasing processes and using Unleashed to reduce overstocking, they could absorb a 5% tariff increase without materially affecting their bottom line. This would allow them to maintain competitive pricing and customer loyalty, while improving overall cash flow.

On the flip side, a home goods brand may find that absorbing the increased costs would push some of their lower-margin products into the red. Instead of a blanket price hike, they can use sales data to identify SKUs with loyal repeat buyers and room for price flexibility. By applying targeted increases – communicated clearly to customers as a result of global trade pressures – they could preserve overall margins while maintaining trust.

In both cases, the decision is not guesswork. It is backed by connected financial and inventory data. With the right reporting in place, you can forecast the impact of pricing changes, test alternatives like product bundling or value-added features, and strike the right balance between competitiveness and profitability.

How are other UK sellers navigating tariff changes?

UK sellers are combining a number of tactics to stay profitable under changing tariff conditions.

Flexibility and fast data-driven decision-making are key to staying ahead.

See above for examples of how smarter sourcing and selective price increases might help sellers remain profitable.

Here are a few other ideas.

Improved reporting

Many UK sellers are navigating recent tariff changes by investing in improved reporting and margin analysis, enabling them to make faster, more informed decisions.

How? Clients working with Outserve have enhanced their visibility by integrating tools like Unleashed for inventory management and A2X for automated ecommerce accounting. These platforms sync seamlessly with Xero and other systems, allowing sellers to track landed costs, product margins, and tariff impacts in real time.

The result: By pulling accurate data across inventory, sales channels, and accounting, businesses can isolate problem SKUs, spot margin erosion, and adapt pricing strategies quickly – ensuring they stay profitable despite the shifting landscape.

Tighter cost controls

Tighter cost control has become a top priority for UK sellers in response to shifting tariffs and rising operational expenses.

How? Through smart inventory management with tools like Unleashed and NetSuite, businesses gain clearer visibility over purchasing patterns, stock levels, and supplier performance. This allows them to reduce excess inventory, avoid unnecessary storage costs, and negotiate better terms with suppliers.

The result: When combined with A2X for accurate cost-of-goods reporting, sellers can confidently track true margins and make precise, data-led decisions.

Shelving low-margin products, while focusing on high margin products

Shelving low-margin products and doubling down on high-margin ones has become a smart strategy for sellers trying to stay profitable in a volatile tariff environment. When working with our clients we often uncover that certain SKUs – especially those with high shipping costs or steep tariff rates – are actually eroding overall profitability.

How? By using tools like Unleashed to track landed costs and real-time inventory performance, and A2X to sync accurate financials, sellers can clearly see which products are dragging down margins. We can see that a client may phase out a bulky, low-margin product that is being hit with a 10% tariff and instead focus on a smaller, high-margin SKU line with strong repeat purchase behaviour.

The result: Better use of capital, simplified logistics, and improved cash flow – all without sacrificing revenue.

Expanding into other regions

There’s never been a better time for sellers to explore expansion into other regions. With rising tariffs and supply chain volatility, diversifying your market reach can reduce reliance on high-cost trade routes and unlock new revenue streams. Sellers working with Outserve are successfully entering markets like Canada, the EU, and the Middle East – often finding more favourable duty rates and buyer demand.

How? Tools like A2X, integrated with Xero, QuickBooks, or NetSuite, make it easy to manage multi-currency and multi-region financials with automated, accurate accounting.

The result: Paired with Unleashed for real-time inventory tracking across countries, this tech stack gives sellers full visibility and control, making global growth not just possible, but profitable.

More questions from your clients?

Reach out and let us know – our A2X community of ecommerce accounting experts is happy to help.