For crowdfunding creators, tariffs aren’t just about economics or politics – they’re about survival.
Resource limitations outside of manufacturing hubs like China (both expertise and materials) means certain products simply cannot be manufactured outside of those regions. That’s simply the reality for entrepreneurs in the US (and around the world), so current tariffs are a huge hurdle to launching, and sustaining, a business.
Particularly for those embarking on crowdfunding. Increasing prices by 25%, 50% (or 145%!) is not a viable option. But, if the consumer won’t buy at the price needed for a business to make profit, the path ahead is bleak.
Four critical challenges make tariffs especially tough for crowdfunding:
- You’re setting prices and timelines before supply chains are developed. Unlike established businesses, you need to get it right from day one with enough buffer for tariff fluctuations.
- Backers are highly sensitive to pricing and delays. When tariffs force changes, you risk losing backer trust. A six-month delivery promise can easily stretch to a year.
- First-time creators typically work with tight 10-20% margins, if that. When a tariff hits, it can mean the difference between success and failure.
- Your first order run will likely be relatively small. A production run of 500, 1000, or even 5,000 units is significantly smaller than what suppliers and manufacturers get from more established businesses. This means you’re unlikely to be a priority when macro problems arise.
With that in mind, we’ve created a quick roadmap for navigating trade uncertainties while keeping your backers happy:
Smart Sourcing Strategies
Don’t put all your manufacturing eggs in one basket. Build relationships with multiple suppliers across different regions now, even if you don’t need them immediately.
Consider:
- Developing partnerships in countries with favorable trade agreements
- Building connections with domestic manufacturers
- Creating a “backup plan” network of suppliers
- Investigating emerging manufacturing hubs
Preparing for Evolving Consumer Expectations
Tomorrow’s backers will be more sophisticated about international trade.
Get ahead by:
- Building tariff contingencies into your pricing strategy
- Creating transparent communication templates about potential cost impacts
- Developing premium product tiers that can absorb cost fluctuations
- Focusing on value proposition over pure price point
Automation from Day One
Don’t wait for labor costs to force your hand.
Start planning for automation early:
- Research semi-automated production methods during prototyping
- Design products with automated assembly in mind
- Build relationships with manufacturers who are investing in AI
- Consider how automation might actually improve product quality
The Small Business Advantage
While big businesses can muscle through trade challenges, you can be nimbler.
Here’s how:
- Focus on innovative designs that justify premium pricing
- Build strong community relationships that support higher price points
- Create hybrid digital/physical products to diversify revenue
- Develop modular products that can adapt to supply chain shifts
Remember: The most successful campaigns of tomorrow won’t be the ones that avoid tariffs entirely, but the ones that plan for them strategically from the start.
