#233 What Trump’s State of the Union Means for Ecommerce Sellers

All right, unless you've been living under a rock, you probably know that Tuesday evening Trump gave a 108-minute State of the Union address. 108 minutes. That's crazy. That's longer than most Marvel movies. That's longer than the flight from Chicago to Dallas. It's long enough that people were ordering pizza halfway through it. I think even a few people left to go get pizza, if I'm not mistaken. And buried somewhere between the Venezuelan oil talk, the hockey team celebrations, the 100-year-old veteran, the Medals of Freedom, and all this great stuff that was going on was actually information that affects your business. Not your politics, your business. Tariffs, trade policy, infrastructure costs. Most sellers heard the headlines and either panicked or ignored it completely, but operators are taking action. Welcome back to the High Voltage Business Builders Podcast. I'm Neil Twa. This is the Friday Week in Review. In this episode, we're gonna discuss headlines for this week that actually matter for e-commerce, how to implement headlines through operational lenses, and the 3 frameworks you need to build a passive and almost automated income no matter what. Washington does. All right, last week we talked about Walmart hurting $1 trillion in market cap and putting e-commerce executive with zero store experience in charge of everything. Walmart's positioning as a tech company, not just a retailer. They're integrating ChatGPT, Google Gemini. They're building out 95% of US household coverage in 3 hours. So if you missed that last week episode on Walmart, go back, listen. It's a power move. And take the strategy— it's offensive— take it with a grain of salt because it's going to be happening. It's moving extremely fast. So this week We're talking about the defensive playbook. All right. So in case you didn't watch the State of the Union, here are 2 kinds of people who did watch it. Now, those who get fired up or pissed off with the politics or argue with the TV, it's kind of like a sporting event. And second are people looking for information like me that affects their business, not just in political ways, but in other ways like tariffs and trade policy dominated coverage, right? So first, tariffs. In Tuesday's State of the Union, Trump said tariffs were paid for by foreign countries, will eventually replace income tax. I hope you guys caught that. He also said last week's Supreme Court ruling striking down 75 of his tariffs was unfortunate, and he reinstated a 15% baseline tariff using Section 122 authority. That's up from 10% last week. I think it's headed to 15%, if I'm not mistaken. And the press coverage has been all over the place. Some outlets are focusing on the Supreme Court ruling, others talking about trade deal volatility, others looking what this means for consumer prices. Some people are still talking about the US hockey game. Go hockey! Woo! And what matters for operators? So the Supreme Court struck down 75% of Trump's tariffs on February 20th. They ruled the use of the emergency powers was unconstitutional. Trump responded with a 15% baseline tariff under different authority that expires in 150 days, late July. So according to the Tax Foundation, the current weighted average tariff is around 12.1% or so on imports. Now, despite what Trump said, tariffs are paid by US importers, not foreign countries. You pay the tariff when your product clears customs. And I'll explain later what that means to all of you. And so the coverage was really having to do with impact on markets and labor. That's the second thing, right? How it affects markets and jobs. Wall Street Journal ran a piece on how manufacturers are delaying investments because they don't know what tariff means and what it will be in 6 months. CNBC covered how retailers are absorbing some tariff costs to avoid rising prices, which is compressing margins. And NPR did a segment on how tariffs are playing out differently depending upon what you import and where it's coming from. So here's the takeaway. Uncertainty is affecting business decisions across the board, not just yours. Now, third, Trump announced something called the Ratepayer Protection Pledge. He said tech companies need to build their own power plants for AI data centers so residential electricity prices don't go up. Yay! The coverage focused on whether this is realistic and what it means for big tech. So here's what it means for operators. Data centers use massive amounts of electricity and water. Amazon, Google, Microsoft, they all run data centers that power cloud services. And they can't pass on electricity costs to residential customers. They may pass them into their business. Okay. Yay. This means the potential for price increases, potential platform fee increases, potential SaaS cost increases. Not so yay. But according to the Energy Information Administration, residential energy is up 6.3% over last year, and regulators have approved about $11.6 billion in rate increases in 2025 just for the AI infrastructure. Those are the headlines. Now let's talk about what not to do. All right. What sellers typically do when they see tariffs, they hope costs don't rise. I talked about a seller last week who said tariffs don't matter to me because I only import low volume items, right? So this is wishful thinking. Game changes if duties jump 15% across the board. They certainly can if you're not paying attention and they can make retroactive or reactive pricing changes in the market and you making those changes. And as soon as they see a tariff announcement, they panic and raise prices 10%. No testing, no modeling, just reaction. Conversion tanks. They scramble to figure out what sales are going on. Sometimes people will raise prices and you can raise up to go after that and raise their prices as well, which is not necessarily a bad thing. Most sellers don't think about tariff exposure until it hits their next shipment. Then they're stuck. They can't pivot to a new supplier fast enough because they never built those relationships. And here's the thing, I get it. It's overwhelming. It feels like a lot. And they seem to be changing every week. De minimis was dead. The Supreme Court is striking down policies. Trump's announcing new ones. Could feel a little bit like chaos. And operators don't really need to Okay, you know, react to chaos. They need to interpret it. Let me show you how. Okay, let's run through a series of headlines to impact action examples. This is how you take what's happening with Washington into how it affects your business. Example number 1, Trump reinstates baseline tariff of 15%, expires in July. Impact, your landed cost just went up, possibly. And if you got a product with a $10 cost of goods from China and you're paying 25% under the old system, that's $2.50. Last week after the Supreme Court ruling, that briefly dropped to zero. Now it's back to 15%. That's $1.50. But pretending upon your category, Section 301 tariffs might still apply, so your landed cost could be anywhere between $11.50 or $12.50 higher. So you recalculate your total landed cost, not just the tariff. You go after shipping and duties and custom processing and everything and test price elasticity. Can you raise prices without killing conversions 5%, 10%? You're going to find out. You try to diversify suppliers, get quotes from Mexico, Vietnam, India, go, go, go. And even if you don't need to switch, you've just got some options. Okay. Second one, inflation talk continues. Consumer confidence is mixed. Shopping behavior shifts, and when people feel the uncertainty of the economy, they buy differently. They moved to more price sensitivity. They look to value differently, and they feel a little less impulse buying in categories and types of products. Now NPR reported that inflation is at 2.4% annually, down from 3% when Trump took office, but grocery prices are still sort of squeezing people in areas, and that affects how they shop at, you know, Amazon, Walmart, Shopify, wherever they get their food. So the realism is A/B test your pricing. Don't assume your pricing is optimal. Just test. Address, you know, and adjust your value messaging. People are price sensitive. Emphasize value, durability, cost per use. You can test some bundles. You could offer a 2-pack or 3-pack at a better unit price, possibly. That could increase average order value when people are being a little cautious. Just some thoughts there. So the other one is Trump puts pressure on tech companies, number 3, to cover their own power costs. Okay. Impact advertising and platform fees. could go up. AWS powers about half the internet. Amazon could end up passing that electricity cost on to consumers. They might pass it on to businesses. This could mean a possible FBA fee increase. It could be Shopify subscription increases, cloud server merchant fees. Some of those things might change. Just know the regulators approved $11.6 billion in rate increases just to support AI infrastructure. That cost is already going to go somewhere. So stress test your budgets. If happens to go up a little bit, can you handle and hit your margin and targets? Do you have some reserve and cash, you know, on hand? Do you Are you running a bit lean? Is the sudden fee increase going to be painful? Build in a buffer, right? Reduce burn where you can. Platform fees are going up, costs are going up. Cancel tools you're not using. Keep in the groups that you should be in and negotiate better rates on fulfillment. Stay close to people you know are building at larger amounts so you can kind of figure out how they're dealing with things at scale. And that's how you interpret the headlines. You don't react. You translate them into business decisions. You get closer to the people you trust. Now let me give you the operator playbook.

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Now let me give you the operator playbook. If you want to build resistance in your business, this is what I recommend you start doing. First, panic. Okay, no, don't panic. If you're doing it the right way, you're going to figure out that this is really a nothing burger. Okay, and all said, hard seasons make strong operators. The businesses that survive volatility don't just survive; they become unbreakable. So every tariff change, every fee increase, every policy whiplash that's either breaking you down or building you up, you get to choose which one. So framework 1, scenarios. Okay. Most sellers plan one scenario. Things stay the same. Okay. Operators, we plan for 3. Best case, 15% baseline tariff holds, no fees increases, costs stay stable. Okay. Expected 20-25% tariffs somewhere around the end of the year. Platform fees, maybe 5 to 10% difference in change. Pricing flexibility can address that. DDP shipping and other methods. Worst case, 35% tariffs, major fee increases, supply chain disruptions. Panic! Here's what you do. Run all 3 numbers. Okay. What's your margin in each scenario? What's the worst that can happen? And can you survive worst case scenario? If you can't, you'll need to start changing something now. Slowly, not reactionary, but slowly. Source differently, raise prices a little bit, cost a little bit. Don't wait for the worst to happen. Just be prepared. Okay. The second one is contribution margin focus. We most look at gross margin. That's not the right way. It's revenue minus cost of goods. Operators look at contribution margin. That's revenue minus cost of goods minus variable costs. Variable would be tariffs, shipping, platform fees, ad spend, payment processing, things that change, right? Why this matters is your gross margin might be 40%, but after tariffs, shipping fees, FBA fees, ads, Your contribution margin might be closer to 15%. So if tariff goes up, your contribution margin could end up and drop down to 5%. Now that's the difference between a healthy business and one that's barely breaking even. So track contribution margin, not just gross margin. And as we always say in Voltage, net profit is all that matters. How much you take in is all that matters. Keep that focus. So the last one, sort of an inverted logic play here, is that most sellers think, I'll deal with it if it happens. Operators think, I'm gonna assume the worst. Prepare for better, right? What's the worst that can happen? I'm going to deal with it. And here's what that looks like. Assume they hit 35%. What are you going to do? Are you going to source from Mexico, nearshore, find domestic suppliers? Do you even need to change at all? And if tariffs only hit 20%, you've overprepared a little bit. That's better than underpreparing. So now we kind of know where our boundaries are. Assuming the fees go up maybe 10%, maybe not. What do you do? Could be just 5%. You know, you may cut ad spend, negotiate a little bit better terms with your 3PL, raise prices just a little bit slightly. If fees only go up 5%, you're fine. You built in a little bit of buffer. This is sort of the operator mindset. We don't react to headlines, we interpret them. We don't hope for the best, we model scenarios. We don't wait for the pain, we build systems that work no matter what happens. All right, so let's bring this all back home. This week headlines were dominated by tariffs, trade policy, tech infrastructures, and geopolitical crap. Okay, most sellers have been reacting. They hoped costs wouldn't rise. Maybe they panicked, maybe they ignored a little bit of risk. Maybe you didn't. If you're paying attention to this podcast, hopefully you didn't. Operators interpreted what was going to potentially happen in a worst-case scenario for the next 12 months. They translated headlines into operational decisions. Tariffs mean recalculating landing costs, testing pricing, diversifying, you know, suppliers. Inflation means maybe A/B testing, adjusting messaging, possibly testing bundles to increase average order value. You should be doing that anyways, by the way. And debt cost means less stress over budgets, reserve cash, and reducing burn just a little bit, keeping with the core things you need to do to run your system. Now build in resilience with 3 frameworks. A scenario testing model, best case, expected, worst case. Contribution model focus, track what actually matters. So take the inverted logic approach, assume the worst, prepare better. So here's the bottom line. You can't control macro headlines. Trump's gonna announce tariffs, things are gonna change, Supreme Court's gonna rule, tech companies are gonna adjust pricing. Who knows what's gonna fall out after this week? Could be very interesting. But you could control your business system. So you can't control the rest of that, so take some of that with a grain of salt. You can control and model your scenarios, which you you should, and you can track your contribution margin, which you should, and you can diversify suppliers. You could build up cash reserves. You could launch new products and take advantage of the market, which is growing extremely fast. So operators build resilience and sellers chase signals. Don't get caught up in that next signal and that hopium, whatever, not, you know, fear factor kind of stuff. If this helped you and helped you to see how to interpret headlines instead of just reacting to them, then I hope it helped you today. Share it with someone else who might need to hear it. That would be awesome. Now, all right, those of you who are still with me, appreciate that. Huddle in for a second. No matter what happens with the tariffs, the platform fees, and the policy changes, if you have strong fundamentals, you can adapt to anything. If you don't, every shift feels like a crisis. Every change feels like chaos. And that's why I created Dominate and Dominate Plus within our Business Builders Group. We have an accelerator for 12 weeks to get you moving and up to 12 months to keep you powering through under our 5x5 product launch process. Using people, process, and technology through our Greenlight methodology and our Kima Data Intelligence systems. These are small groups, 10 operators at a time. We usually go 12 weeks and then 12 months based on the building process. It's a 90-day sprint to profitability. We don't just teach you Amazon. I'm going to teach you building a business, distribution systems outside Amazon with Walmart, Shopify, and yes, even platforms like TikTok, GTP, and zero-click commerce, how to structure and create data for the future. Because 2026 in single channel strategies are a suicide. Once you hit your first 25 sales a day, everything changes. Your cash flow stabilizes, your ad performance is going to improve, your fulfillment will get predictable. And that's when the business really starts working for you instead of working against you. So if you're interested in learning more how to do that over 12 weeks or even 12 months, text me interested to 417-765-0412 or email me directly at neil@voltagedm.com with interested in the subject line. That's international if you're going on as well. You can get me on WhatsApp or other social medias if you want, or just email me. That's cool too. We're going to talk through, you know, spots and opportunities. They're intentionally limited. It is a serious building block of business. If you're an existing seller, we're going to help you focus and optimize, get your profitability up like Ashley and David LeBlanc. If you're new, we're going to help you go through the entire process to build with the end in mind, which is a business that exits. And if you're on the fence, remember, hard seasons make prepared operators, and sellers who panic with tariff headlines and crap like that will be gone in 2 years. The operators who actually build systems now will be the ones with unbreakable businesses. So get started imperfectly, and something solid tends to happen along the way. This is Neil Twa, and thank you for joining me again on another episode of the High Voltage Business Builders Podcast Week in Review, and I'll see you on the next episode. Ask you this: if you're serious about building an e-commerce business starting on Amazon FBA, what if myself and my team worked with you one-on-one? To execute the steps outlined in the podcast while helping you discover what the heck to sell, how to make sure it's profitable, and how to successfully launch a brand, plus how to do it under a consulting plus performance-driven model where I put a $10,000 skin-in-the-game guarantee for those that show up and are serious about building a real business done with us. If yes, text keyword profit to +1-417-413-4209. That's 1-417-413-4209. 413-4209, and I will personally respond with a few simple questions. If you're not in the US or Canada, please visit voltage dm dot com. That's voltage dm dot com. Click Get Started and book a no-pressure discovery call with me or a member of my team to learn more about the Business Builders one-on-one coaching and mentoring for CEOs, entrepreneurs, and those looking to build an empire or retire using the power of e-commerce. Once again, thank you for listening, and be sure to tune in next week for a brand new episode of the High Voltage Business Builders podcast.