A warning from the hit startup show signals a harder road ahead for new consumer brands. As entrepreneurs pitch and scale their products, many face higher costs linked to U.S. tariffs on imported goods. The pressure is reshaping deals, margins, and go-to-market plans for winners trying to prove they can grow fast.
This may be the toughest season yet for “Shark Tank,” as winners struggle to navigate the Trump tariffs.
The issue affects companies that manufacture in China or source parts from Asia. It comes as many small brands depend on overseas factories for price, speed, and quality control. Investors and founders now must weigh tariff exposure alongside usual risks like demand, returns, and marketing spend.
How tariffs became a startup hurdle
U.S. tariffs on a wide set of Chinese imports began in 2018 under Section 301 trade actions. Rates on many product categories rose to levels that can change unit economics for young brands. They include everyday goods, components, packaging, and electronics.
Many of these tariffs remain in place. The current administration has kept core measures intact while updating some rates, including recent increases on items such as electric vehicles, batteries, and certain materials. For consumer startups, the effect is simple: higher landed costs and narrower margins.
Trade analysts note the duties cover thousands of product lines and hundreds of billions of dollars in goods each year, according to U.S. government tallies. For small firms, even a 10% or 25% duty can erase profit on a bestseller.
Pricing, margins, and investor calculus
Founders who secure deals on television often face a rapid scale-up. They need inventory, packaging, and compliance at once. Tariffs add an extra line item that can turn a viable price point into a loss.
Investors also factor duties into valuations and terms. A company exposed to tariff swings may need a lower valuation or more working capital. That can change the size of the deal and the milestones attached to it.
Some brands pass costs to customers. Others cut features or shrink packaging to hold price. Both choices carry risk. Higher prices can slow sales. Lower specs can weaken reviews and repeat purchase rates.
Supply chains shift, but not overnight
Many founders now explore moving production to countries outside China. Vietnam, Mexico, India, and parts of Eastern Europe draw interest. Yet factory moves are complex. Tooling, quality control, and logistics take time and money. For young brands with thin cash buffers, a misstep can delay launches or lead to stockouts.
Freight costs and port delays add to the challenge. While shipping rates have eased from pandemic highs, volatility remains. A landed-cost surprise can wipe out a quarter’s profit for a small consumer company.
Strategies founders are testing
- Split sourcing: Keep legacy production while piloting a second supplier in a tariff-neutral country.
- Tariff-aware pricing: Build duty ranges into suggested retail prices to avoid constant resets.
- Component redesign: Swap affected parts for tariff-light materials when quality allows.
- Cash planning: Raise a larger buffer to cover duties, freight, and longer production runs.
- Nearshoring: Move final assembly closer to end customers to cut lead times and improve control.
What this means for the show—and the market
The show thrives on products that can scale fast after a national spotlight. Tariffs slow that momentum. Bigger investors can help by offering supply chain expertise, better freight contracts, and bridge financing. But small sellers, even with a deal, still face hard trade-offs.
Retail partners also react. Some require guaranteed on-time delivery and fixed pricing. Startups must absorb volatility or risk losing shelf space. E-commerce sellers face a similar squeeze from returns and ad costs, which tariffs make harder to absorb.
For now, the path forward is clear but demanding. Founders need to price with discipline, qualify backup suppliers, and model scenarios that include duty changes. Investors will likely favor companies with flexible production and stronger gross margins.
The takeaway is stark. The show can still create breakout brands, but the math has changed. Watch for more deals that include supply chain support, more cautious valuations, and product lines designed with tariff exposure in mind.
