How to Calculate the Real Impact of Tariffs on Your Business

Kelley, you're back again.

0:14 Kelley Birrell

I am. And every time I come on here I learn more and more.

0:18 Stephen Brown

All right. This is going to be kind of an episode where I'm going to do a lot more of the talking, and Kelley's going to be the one to ask me questions.

So one of the things that I've been thinking about as the tariffs are rolling out fast and furious is, how do I make a decision about what to do? For some customers who are importing from China, that decision is happening immediately. But I expect almost everybody that's importing products is going to have to make a decision around how they want to respond to tariffs, because of the massive amount of changes that are happening on almost a real time basis.

So the first thing we've got to think about is, how do tariffs apply to financials?

0:58 Kelley Birrell

So I actually have a question right off the bat. I've been noticing that a lot of these tariffs have been moving forward, but then there have been a bunch of delays as well. When do these things actually start to impact businesses?

1:10 Stephen Brown

That's a great question, Kelley. And I think this is part of the chaos, right? Trump is signing executive orders, and then we're seeing Customs and Border Protection, USPS who is processing a lot of orders that are coming from China via the de minimis exception, they're like, we can't handle it, it's too much.

So what we're seeing in different cases, the case in point is the de minimis rule, which was the exception under $800, that went away for a hot second. And then a bunch of the people that are processing those said, we're not equipped to process the changes in the rules. And so that has been postponed while they can get their processes in place. In other cases, like in the case of Canada and Mexico, they must've said the right things enough to get a month delay.

1:58 Stephen Brown

But what I am thinking about, if I'm importing anything from anywhere, is there's a chance that you could see an increase in tariff tomorrow with almost no notice. And so now is the time to start thinking about how to approach a tariff that may or may not happen at any time, with very little warning, and not lose your business.

So let's get into that. The first thing I think about is from a cost perspective. Let's take 10%, because it's a nice lovely number. It's also the number that's being used with the imports from China. If I have an additional 10% on my tariff, how is that going to apply to profitability?

2:53 Customs value and the math

Stephen Brown

So there's this concept of customs value.

2:55 Kelley Birrell

Okay, I'm really interested. I know that I've heard about customs value a lot recently, but I'm not sure that I completely understand what it is.

3:02 Stephen Brown

I didn't know what it was either until recently. So customs value basically is the value that Customs and Border Protection uses to apply the tariff to. It's product costs plus insurance plus international freight. It's the majority of your cost of goods sold.

If you're importing your products from say China, what would not be in that is your shipping from your port to warehouse, or if you are buying materials from other locations that aren't being tariffed. But what we see with a lot of ecommerce companies is they're buying heavily from China. So the majority of that cost of goods sold is going to be tariffed, minus those little exceptions that I talked about.

3:45 Stephen Brown

So let's just take an example, a very efficient cost of goods sold business. Let's say your cost of goods sold is 20% of your sales, and that's probably about as good as I see it, sometimes a little bit better. And let's say the other costs are negligible, so for round numbers keep it at 20%.

A 10% increase of tariffs, you would apply that to your cost of goods sold. So your cost of goods sold, instead of being 20% of your sale, it would now be 22%.

4:23 Stephen Brown

So this is kind of how I like to do the math. Obviously if we're doing real numbers, if it was $10 million and 2 million of cost of goods sold and that tariff applies to that, it's an extra 200,000. But I want to talk in terms of ratios, because it's a better way to think about your financials.

So that 2% has to hit somewhere. Let's just use this for a starting point. If you do nothing, that's going to flow down. Let's say you had a 10% net income and you don't want to pass that additional cost along to your customer. That's going to hit your profitability, it's going to go down by 2%. Now what was 10% profitability is now 8%.

And so the first thing you have to think about is how that tariff applies and how that flows down to your bottom line profitability, because it's kind of hitting in the middle of your profit and loss statement.

5:20 Stephen Brown

So that's point number one. Now obviously that impact is going to be a lot more significant depending on how much of your share of income your cost of goods sold is. So if you're a reseller, usually you're not doing anything that's your own branded trademark patented product, your cost of goods sold is usually a lot higher. I've seen it 60, 70%.

5:44 What 25% would do, and your three options

Kelley Birrell

So these businesses are going to be taking it in the teeth if they don't pass the cost along in any way. The profitability is going to go to practically nothing.

5:50 Stephen Brown

Correct. Potentially, right? So let's take a 60% cost of goods sold business, which is not uncommon for resellers or highly commoditized goods. So that 10% tariff is now going to take 6% out of your bottom line. And that's using the China 10 example.

I think what's freaked people out about Canada and Mexico is they were talking about 25% tariffs. So if you take that 25% number and go through our examples, if I had a 20% cost of goods sold business, that's an additional 5 percentage points of expense. And if I had, let's say a more extreme end, like a 60% cost of goods sold business, that's a 15% additional cost that I've got to manage within my business.

6:41 Stephen Brown

So 10% is somewhat manageable. 25% is really painful. And it seems like those are kind of the numbers that we're seeing tossed around, 10 to 25%.

The other thing we're hearing a lot of this week, the week of Valentine's, so happy Valentine's, is this concept of reciprocal tariffs. Where they're talking about looking and saying, where have we been tariffed? Okay, we're just going to apply a reciprocal tariff on that country as well.

And we're not really sure, probably by the time this episode is published we'll have a better understanding, but that could come in the form of specific categories of products, it could come at a country as a whole. So we've decided that on average you're tariffing our products 5%, we're going to apply 5% to everything that we import from your country.

7:35 Stephen Brown

So that is another concept. So the amounts could be below 10%. We haven't heard anything higher than 25%, but that 10 to 25 is a good range, with the possibility of some lower digits. But essentially, the point I want to make here, the higher your cost of goods sold, the higher the impact to your bottom line.

8:05 Stephen Brown

And so that's the starting point. So now you have a decision to make, right? Whether it's a 2% increase in costs, or on the extreme example, 25% of a 60% cost of goods sold as a percentage of income, which would be 15%, I've got to decide what I'm going to do with that additional cost.

8:20 Kelley Birrell

Wow. I mean, I'm just kind of in shock here.

Okay, so I actually want to step back just a little bit. It sounds to me, I've heard the idea of a tariff war coming around, and what's the benefit to this? What's the point? Because it sounds like the countries are making these decisions, but are they thinking about the businesses that are in these countries?

8:34 Stephen Brown

That's probably for a different podcast. Politicians like to say they care about the little guy and the consumer and the individual, and the decisions are being made in that regard.

I'll tell you what is a good time to be right now. You know what that is? An American manufacturer, right? Because foreign goods are going to be a lot more expensive, so the competition's going to decrease. So if you are manufacturing in the grand old US of A, this is probably one of the best things that has ever happened to your business. But that's a pretty rare exception from what we've seen.

9:21 Stephen Brown

We don't have a lot of manufacturing capacity here anymore, and the cost of manufacturing is higher. So that is the one area where it's going to be potentially good, if anybody has any dollars left to buy stuff, because everything will probably go up in price.

Which gets us to the next thing. So what do I do? 2% tariff, or 2% increase in costs, or 15% increase in costs. I have a couple of decisions to make. Decision number one, I pass it on to the consumer, and that's what everybody's talking about, just pass it on to the consumer. Decision number two, absorb it. Decision number three, split the difference.

So let's talk through those three scenarios.

9:59 Kelley Birrell

Yeah, because as a consumer, the thought of suddenly all these costs going up precipitously is not exciting at all. But yet I can see how the businesses still have to make a profit, they still have to keep going.

10:07 Can you absorb it, and why you might

Stephen Brown

Correct. And this is the challenge of this kind of economic activity, is it hurts a lot of parties.

So let's talk about decision one, absorbing that cost, and how I would think about that if I was a business. So the first thing you've got to think about is number one, can I even absorb the cost? I would hope that most businesses, if you're looking at an increase of 2% of cost, that you could probably absorb it if you chose to do so. I would expect very few businesses could absorb an additional 15% of cost, because I don't see a lot of consumer products businesses that are doing over 10% net profit margin.

11:01 Kelley Birrell

What is a typical net profit margin for consumer businesses?

11:04 Stephen Brown

Good question. If you're doing 10%, you're doing well. And if you're doing 20%, you're phenomenal, you're in a really good category.

Increasingly what we're seeing is the profit margins of ecommerce are really looking more and more like traditional retail. And traditional retail has always been fairly low profit margins but high volume. That's the game of retail, is you sell a lot, but there's not a lot of profit margin. It's about big dollars, volume, not necessarily big dollars from high profitability, because there are so many costs.

So I don't see a lot of 20% net profit margin businesses. And unless you're making at least 15%, you're going to have a hard, hard time absorbing a 15% additional burden on your bottom line.

12:11 Stephen Brown

So first thing is you have to decide, can I even absorb those costs? And for a lot of people the answer is going to be no. The second thing you have to ask is, do I want to absorb those costs?

12:12 Kelley Birrell

What would be the benefits of absorbing them?

12:14 Stephen Brown

That's a good question. One thought is, you're never selling in a vacuum, right? Unless you've got some super duper unique product, there are probably alternatives out there. And so one school of thinking would be, I absorb the cost, let my competitors raise their prices, and then that's going to result in more sales volume to me, which will offset those increased costs.

12:43 Kelley Birrell

Sounds a bit iffy.

12:46 Stephen Brown

Well, it is and it isn't, right? This is where we start getting into economic principles and theory. There's this concept of elasticity, which is, as prices go up the demand goes down. If you are elastic, and almost everything is elastic, especially in consumer products.

13:04 Stephen Brown

But you also have to think about this in the context of a market, and that there are multiple people that are selling alternatives to you. Pick a category, right? There's going to be a million t-shirts, there's going to be a million supplements, there's going to be a million skincare products.

And this is where we've moved into an era of ecommerce where alternatives are everywhere. And there's a good chance, especially if you look at Facebook marketing, think about, you go and you search on somebody's website and their Facebook pixel triggers, and then you go on Facebook and you see their ad, and you see everybody else's ads that are like that product. And so when somebody's buying, if they're trying to do research, they might be like, well, I could do A or I could do B.

And so that's one thing you have to think about, is do I absorb the costs and make up for it in terms of bottom line dollars through more sales volume?

14:28 Elasticity and willingness to pay

Stephen Brown

The other option is to pass either all or part of the cost on to the customer. And this is where I think you have to really think with economics in mind, because if you don't, you may have an outcome you're not expecting. And that is coming back to that concept of elasticity.

14:30 Kelley Birrell

Basically meaning that customers may just say, yeah, that was a bit more than I was willing to spend, and I'm just not willing to buy that particular product anymore.

14:35 Stephen Brown

Yeah. Well, let me give you a good example that everybody's seeing. Eggs, right?

14:43 Kelley Birrell

I was thinking exactly the same thing. There are not a lot of options with eggs. You have to buy eggs.

14:50 Stephen Brown

Yeah. So eggs, you could argue, is somewhat inelastic in that you're like, I need eggs for my ingredients. But let's kind of think through this. Maybe instead of buying a dozen a week, I'm like, sorry, we don't get to have eggs for breakfast, I need to save that for specific recipes, but I am going to decrease my consumption. Because what are they, seven? I don't know what they are for you in Kansas, but I think they're like seven bucks a dozen here in Utah.

15:23 Kelley Birrell

Thankfully we always buy from like a Sam's Club or a Costco, so we buy them by the five dozen and we get it cheaper. But we just spent 20 bucks for a box of five dozen eggs and I about died. And that was cheap in comparison to a lot of places.

15:37 Stephen Brown

Yeah. So you think about it, what consumers will do, because here's the thing you have to think about. It's not like our wallets are elastic, right? It's not like the amount of dollars are going to magically increase just because there are tariffs. And so as a consumer you're making decisions.

16:02 Stephen Brown

When I was in MBA school, I had a professor who had a really great way to teach some of the concepts of economics. And one of the things he talked through was willingness to pay.

And the concept of willingness to pay, he used a ski resort, being here in Utah. And he had the class, he said, how many of you would pay $10 for a day of skiing at Park City? There are some people that don't raise their hand, I don't care about skiing. But maybe if you go low enough, almost anybody. And he kind of ratcheted up the price, and he kept going higher and higher, and fewer people raised their hands.

And he said, this is elasticity, right? As you increase the price, the amount of people that are willing to pay decreases. And I think as a retailer you have to think about it like, we have a big world, lots of people, lots of consumers, but the reality is that the higher the price, you're going to shrink the amount of people that are willing to pay for your product.

17:02 Stephen Brown

So as you think about a price increase, for example, it's not enough to just say, well, I'm going to pass on the costs to the customer. You may have to, but how much of that can you pass on?

Talking about elasticity, there are different levels of elasticity. So a highly inelastic product, let's say eggs, for example, because we used that example. That's something where you're like, I need eggs, there are certain recipes that just require eggs. And so there is a level of willingness to continue to pay for that as the prices go up, to a point, right? And so you're going to see the amount of people that are going to buy that stay somewhat static as prices go up, to a point.

17:52 Stephen Brown

On the other end, we have more highly elastic things. That would be, think about, what's the first thing to go if things start getting tight? What things that you wouldn't worry about buying?

18:10 Kelley Birrell

Probably clothes. I can just keep wearing what I've got.

18:17 Stephen Brown

Clothes is a great example. Yeah, you're just going to stretch it out a little bit longer.

I think during, where we saw the supply chains and then the massive increases of pricing around cars, right? And people are like, well, I'll just fix my existing car, drag it along.

18:25 Kelley Birrell

Yep. Vehicles.

18:45 Stephen Brown

And I think one of the challenges of ecommerce is it's heavily populated by what I would call discretionary purchases. Things that are very useful, but they're not necessarily critical, right? There are alternatives.

So as you do the analysis on raising prices, you have to consider that the demand is going to go down, and balance that out.

19:20 Stephen Brown

And so if your product is very elastic, meaning that demand will diminish as price goes up, you might be able to preserve your contribution margin, but the demand will go down. And so your total volume of sales goes down, but you still have a bunch of fixed costs in the form of payroll, software, rent. That's still there. That expense is often known as your fixed expenses.

And so if you maintain your contribution margin, which is the percentage of dollars after your sales expenses, so that's cost of goods sold, merchant fees, fulfillment costs, and I like to argue that advertising can or should be considered in that. Those are expenses that are always going to be there as you sell. And those as a percentage of income, the sales minus all those expenses, is your contribution margin.

20:15 Stephen Brown

So let's say you maintain that ratio. Let's say your contribution margin is like 40%, which is a pretty good contribution margin in ecommerce. And so you're like, I'm going to pass the costs on and hold my contribution margin. But the actual total dollars that are being produced goes down. So I have great margins, but actually your sales went down and therefore your contribution margin dollars went down. And meanwhile I still have the same fixed costs, and I might have a worse profitability outcome, even though I'm thinking, well, I'm going to just pass it along and everything will be good.

20:48 Walking the tariff impact calculator

Kelley Birrell

Okay, so let's think in terms of some more practical things. Let's start putting percentages together so that we can start figuring out what the profitability would be at the end, with this stuff moving up and down in proportion to each other.

20:55 Stephen Brown

Well, this is probably a good point to, and if you're listening, you may want to flip to YouTube, because we're going to show a tool that we'll be releasing, which is our tariff impact calculator. So what I've done is I've taken these concepts and put them into a spreadsheet where you can plug some numbers in and see what the outcomes are. So I'm going to describe this, but if you wanted to watch, flip to YouTube, Ecommerce Finance Podcast, and you'll be able to watch along.

21:30 Stephen Brown

So in this example, I've got a business that's making $5 million in revenue, and I have a customs value, so that's the amount of cost of goods sold that the tariffs are going to apply to, of $850,000, which comes out to be about 17% of my income.

And so I've got sales expenses of a million dollars, and non-sales expenses of $2.8 million. And then I have some other income and expenses of negative 50,000. Usually that comes in the form of interest expense.

So in my example here, I have a business that has $5 million in revenue and a net income of $250,000. Or translating that into a ratio, I've got a 5% net profit margin. So tight, but I see it all the time. Getting up to 10% is not easy, and getting up to 20% takes really, really great execution, really smart, and sometimes a little bit of luck in the right category.

22:17 Kelley Birrell

That feels really tight, actually.

22:40 Stephen Brown

So this is a low cost of goods sold example, because I have really high gross margins, which is percent of dollars after my cost of goods sold.

Now in this example I don't have my contribution margin specifically modeled. Contribution margin is an incredible concept, but you don't see it in a profit and loss statement. For whatever reason the accounting powers that be decided that contribution margin was not going to show up in a profit and loss. It's pretty easy to calculate if you have your accounts broken out cleanly. So in this example I would take my gross margin minus my sales expenses, or also known as my variable expenses, and I come up with 62% contribution margin. That's really good.

23:20 Stephen Brown

So the thing I've got here in this example is I go through each scenario. So scenario one, I apply a 10% increase in my tariff rate, and that is going to apply in this scenario and be roughly 2%, or 1.7% to be precise, of my income. And I see that my net profit goes from 5% to 3.3%. Again, if you're listening, I strongly recommend you maybe watch this part. It's a big jump, right? But it's absorbable.

24:00 Stephen Brown

But then I get into raising prices, and I'm using this concept of price elasticity of demand. So price elasticity of demand is the percentage of quantity demanded divided by the percentage change in price. So if I increase my price, I should expect a decrease in demand most of the time. So that ratio, the price elasticity of demand, is a negative number.

24:30 Stephen Brown

And I did some research, and this is ChatGPT told me. In reality you need to test what your PED, price elasticity of demand, is. But they're like, if you're highly inelastic, like high loyalty items, essentials, you're going to be that ratio zero to negative one. Meaning if I increase my price by 1%, I might decrease my volume by a comparable ratio of negative 1%. Increase the price by 2%, demand goes down by negative 2%. And that more or less evens itself out. In fact, in this calculator you're a little bit better off if you have that kind of price elasticity of demand.

Does that make sense, Kelley?

25:21 Kelley Birrell

Yeah, it does. I'm following along. But that's only for the stuff that has low elasticity, things that you need.

25:30 Stephen Brown

So let's look at a couple other examples. So according to the powers of AI, they say a moderately elastic product would be a negative one to a negative two. And the examples it gave me were branded apparel, premium food, mid-tier electronics.

So let's take a negative two. That would tell me if I raised my price by 1%, my volume of demand would go down negative 2%. If I raised price by 2%, the demand goes down negative 4%. That's with a negative two price elasticity of demand.

26:20 Stephen Brown

And so you basically take that higher. The highly elastic, it was telling me negative two to negative five. And the categories it gave me there, fast fashion, trendy gadgets, non-essential digital goods. A lot of the stuff that's just like, that's nice, but it really is something that's a luxury, it doesn't have critical use in my life.

26:55 Stephen Brown

So in this example, with negative one price elasticity of demand, you're kind of somewhat equalized, depending on your underlying margins from your cost of goods sold, your gross margins. But if I start going higher, say to like a negative two price elasticity of demand, I can see in this example that I go from 250,000 of profit against my $5 million business to $185,000 of profit. Translating that to ratios, I go from 5% net profit margin to 3.8% net profit margin, which ironically is only a little bit better than if I just absorbed the price altogether.

27:23 Kelley Birrell

Interesting. And this is all with moving the price increase over to the customers to some extent.

27:34 Stephen Brown

Yeah, so in these scenarios, one is I absorb the price, two and three is I pass the price along with different levels of elasticity.

And so this calculator, which I highly recommend you go and download, and we'll have a YouTube video on our LedgerGurus YouTube channel that will explain this in greater depth on how to use this. It's a pretty straightforward tool, just plug in some numbers and change some values and see what happens.

28:02 Stephen Brown

The point I want to make is you can't just look at these decisions with a single factor. You can't just say, hey, my costs are going up X percent so I'm just going to pass them along. You have to think about it in terms of what are your underlying margins, and starting with gross margin, which is your dollars after your cost of goods sold.

And just to clarify one more time, because I see a problem with this all the time, I, and generally accepted accounting principles, define cost of goods sold as your landed product costs.

28:44 Kelley Birrell

So everything, the costs to get the product to your warehouse.

28:48 Stephen Brown

Correct. You're paying your manufacturer, you're importing, you're paying tariffs and duties and shipping fees and all that. That really is what your cost of goods sold should be. And that, sales minus that, is your gross profit, and gross profit divided by sales is your gross margin.

So it starts with looking at your gross margin, and how big of an impact to your profitability that increase of tariffs is going to be. And then it's got to go into looking at your underlying profitability. Can I absorb that increased cost? And then if you say, no, I cannot, you have to look at not only how much price I want to pass along, but you have to think about elasticity and say, is that change in demand going to offset my increase in price? It's a complicated decision matrix.

29:37 What to do if the numbers don't work

Kelley Birrell

Yeah, it does sound like it. So let's talk really quickly, what are some options? Businesses look at these numbers and say, this is not going to work. What are some options that they have?

29:52 Stephen Brown

Great question. So let's say you get in there and you're like, I can't absorb the costs.

And let me just take a tangent here. How do I figure out what my elasticity is? There are tools out there that allow you to test it, where you can AB test your prices and you'll say, hey, I sell X amount of widgets at this price and Y amount at that price in the same timeframe. You just send people to different landing pages, and then they'll do some economics math and tell you, here's your elasticity, or here's your ideal price point. So you can come up with that calculation, but you can kind of eyeball it using the definitions I have here.

30:35 Stephen Brown

But let's say you go in there and you're like, okay, I can't absorb the price, I can't pass the price along without having too big of a decrease. Maybe I split the difference. In some cases that's probably what's going to happen, I think in a lot of cases you're going to see that. But maybe I can't even split the difference, I do the math and I'm like, I'm still losing too much. Then you find yourself in some really difficult decisions.

So option number one, if the increase of tariffs destroys the profitability of your business, option number one is you've got to look at a different supply chain. Easier said than done. Because there are a lot of people like, hey, I'm in China, I'm just going to go to Vietnam. Well, I think nobody is safe at this point, except for manufacturing in the United States, and that's very expensive and we probably don't have the capabilities to do it there.

31:13 Stephen Brown

So option number one is looking at your supply chain. Can I rework it? But be careful there, because that takes time, and you may change your supply chain only to find out that that next country is also being tariffed.

Option number two is you've got to create some efficiencies in your business. So the thing that doesn't change in this calculation is your underlying fixed costs. And most of the time the biggest hits are payroll, rent, software, and marketing. Depending on where you put your advertising in particular, that's why I kind of like to put advertising as a sales-related expense, because it's not like you're going to stop advertising.

31:59 Kelley Birrell

No. Otherwise you don't sell.

32:01 Stephen Brown

Otherwise you don't sell.

So there is a little bit of a debate. I'm starting to argue that advertising expense, in my opinion, for an ecommerce business is more of a variable cost of sale, because you kind of have to do it. The challenge of it is, those other things, cost of goods sold as a percentage of revenue tends to be fairly stable, unless you have changes like tariffs. Fulfillment fees as a percentage of revenue tend to be fairly stable, merchant fees tend to be fairly stable. The argument for why you shouldn't do that with your advertising is you see it bounce around a lot, just because of seasonality and this and that and the other, and so it doesn't behave like a traditional cost of sale. But I would argue that it is, because if you don't advertise, you don't sell.

33:00 Stephen Brown

And so as you're looking at reducing some of those fixed expenses, or in this case a cost of sale that is debatable where to put it, you can try and get more efficient in your advertising. Easier said than done. But reducing fixed costs, looking at your payroll, looking at your rent, do I need that big warehouse, do I need that big office? Software, there are a ton of plugins that end up getting into Shopify stores.

These are not easy decisions. And I think businesses, especially ecommerce sellers over the last couple of years, if they haven't been scrutinizing their spend yet, boy, tariffs are going to cause that scrutiny of spend more than ever.

33:40 Stephen Brown

And so if it was me, I'm kind of going down that equation. Can I adjust my supply chain? Probably not. Maybe I can, but it's going to take me six months. Can I tighten up other costs of sales? Fulfillment? There are some things you can do to improve fulfillment, we should do an episode on that. Merchant fees, those are really hard, but you can improve them. You're not going to move the needle very much. You can maybe take a fee from 3.5% to 3% if you get really smart and strategic with who's doing your payment processing.

34:16 Kelley Birrell

It's interesting, as you're talking about this and you're bringing in all these different things, I'm thinking about the different podcasts that we've done so far, like the Amazon one and the different fees. And I'm thinking, how do sellers actually make it with all of these costs? How does profitability even happen with all of these costs continuing to go up and up and up? It's kind of crazy to me.

34:37 Stephen Brown

Yeah. I mean, it's a very tough landscape, on top of a couple of years that have been really tough. There was the golden era of ecommerce, and that golden era is long gone. And now we're in a sophisticated era where you just can't show up and get something off of Alibaba and throw it on Amazon or a Shopify store, throw a little bit of money at Facebook and you're printing profits. Those days are gone and will probably never come back.

But does that mean that you can't make money selling online? Absolutely you can make money selling online, but you're going to have to be a lot more sophisticated and disciplined than ever.

35:30 Stephen Brown

So my recommendation is, one, think through these methodologies. Take a look at our tariff impact calculator, throw your numbers in there, see what they tell you, change them around, and use that to make smarter decisions as you are responding or preparing to respond to the increased costs that come with tariffs.

35:39 Kelley Birrell

Sounds good. I'm interested to see how all of this goes down.

35:41 Stephen Brown

Buckle up, it's going to be a wild ride, that's all I can say.

All right, well thanks for joining me, Kelley, and we will talk on a future episode.

36:13 Kelley Birrell

Absolutely, sounds great. Thank you for having me.