Supply Chain
DTC Tariff Exposure Index 2026: Which Verticals Get Hit Hardest
The DTC Tariff Exposure Index multiplies import reliance by China share of imports by China effective duty, then scales the result to 100. Toys score 100 and footwear 47, while electronics (22) and beauty (5) sit far lower. The higher the score, the more your margin rides on a single high-tariff origin.
Key Takeaways
- Toys top the index at 100, driven by a 65.9% China import share and a roughly 41% effective duty.
- Footwear scores 47: lower China share (26.1%) but a punishing 47.5% effective China duty.
- Furniture lands at 33, electronics 22, apparel 18, and beauty just 5.
- Exposure is not about how much you import, it is about how much you import from one high-tariff origin.
- Two brands in the same vertical can have very different real exposure depending on their China mix.
Most tariff coverage treats every ecommerce brand as if it faces the same hit. It does not. A toy brand and a beauty brand can both source overseas and end up with wildly different damage, because exposure is not about how much you import. It is about how much you import from a single high-tariff origin, at what duty.
So I built one transparent index to rank it. The DTC Tariff Exposure Index combines three numbers per vertical: how reliant the category is on imports, what share of those imports comes from China (the origin carrying the heaviest 2026 duty stack), and the effective China duty itself. One score, seven verticals, no hand-waving. The first question I ask founders on these calls is simply, "what do you think your tariff exposure is right now?" Most have a gut feel and no number. Here is the number, and what to do if your category sits at the top.
Turning tariff exposure into a margin plan is the job of a fractional CFO for ecommerce.
The formula, in plain English
The index is deliberately simple so you can rebuild it for your own brand:
Exposure = Import reliance x China share of imports x China effective duty
Then I scale the raw result so the most exposed vertical equals 100. Each input does a specific job:
- Import reliance asks how much of US consumption in the category is imported at all. If you make it domestically, tariffs do not touch you.
- China share of imports is the concentration risk. China carries the stacked Section 301 plus reciprocal duties, so the more of a category that comes from China, the more a tariff move hurts.
- China effective duty is the 2026 all-in rate on Chinese goods in that category, including the product-specific base duty.
Multiply them and you get a number that rewards diversification and punishes single-origin dependence. A vertical can carry a brutal duty rate but still score low if very little comes from China, and that is exactly the point. When I talk to founders running a brand this size, the thing they keep saying is that the volatility is worse than the level. One founder importing from Switzerland and Asia put it plainly: the biggest impact of tariffs was not the rate, it was the on-again-off-again policy that made planning impossible. The index cannot kill the volatility, but it tells you where the volatility hits hardest.
The 2026 ranking
The spread is the story. Toys score 100. Beauty scores 5. That is a roughly 20x gap in tariff vulnerability between two categories that both sell on Shopify and both ship from Asia.
| Vertical | China share (2025) | China effective duty (2026) | Exposure index |
|---|---|---|---|
| Toys | 65.9% | ~41% | 100 |
| Footwear | 26.1% | ~47.5% | 47 |
| Furniture and home | 20.6% | ~58.5% | 33 |
| Electronics | 15.6% | ~45% | 22 |
| Knit apparel | 14.1% | ~34% | 18 |
| Woven apparel | 14.0% | ~34% | 18 |
| Beauty | 7.9% | ~33% | 5 |
China import shares are from 2025 US Census imports-for-consumption data, as compiled in our DTC import origins by category hub. The total 2025 import values behind these shares are large: footwear imports ran 26.6 billion dollars, knit apparel 45.1 billion, and electronics 496.8 billion. The duty side uses the midpoint of current 2026 tariff-tracker ranges, which we walk through in the methodology below.
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Why toys top the list
Toys are the worst of both worlds: near-total import reliance and the highest China concentration of any vertical. When roughly two thirds of your category comes from one country, and that country carries a 41% effective duty, there is nowhere to hide. A toy brand cannot quietly absorb that the way a beauty brand absorbing duty on 8% of its imports can.
This is the vertical where I see margin compression turn into a survival question fastest. When we have worked through this with hard-goods founders, the first move is never the sourcing map, it is the P&L. The question is always "what is your contribution margin right now, after cost of goods and shipping and ads," because tariffs hit the COGS line and the conversation has to start there, not at gross margin. One brand we worked with modeled the new tariff cost as roughly 500,000 dollars of added COGS in a single year, then had to weigh passing it on against the churn that comes with a price hike.
And reshoring is mostly fantasy at this end of the market. The pattern we see again and again: founders spend years trying to move tooling onshore and give up, because the molds and the supplier base simply do not exist in the US at toy-category volume. If you sell toys, your sourcing diversification plan is not a nice-to-have, it is the plan. The frontloading and container-rate dynamics we covered in our container rates spike and tariff frontload piece hit high-exposure verticals like this one first.
Why footwear scores lower than its duty suggests
Footwear carries the single highest China duty on the board at about 47.5%. Yet it scores 47, not 100. The reason is concentration.
Only 26.1% of US footwear imports come from China, because Vietnam (36.3% of footwear imports) and Indonesia carry the load. The chart makes the trade-off visible: footwear has the tallest duty bar but a short share bar, while toys pair a tall share bar with a tall duty bar, which is why toys sit at the top. Vietnam's 20% reciprocal tariff is real and rising, which is why footwear still ranks second. But a brand that has already shifted off China sees a very different number than the index average.
One caution we give founders here: routing China-made product through Vietnam, Canada, or Mexico does not dodge the duty. If the product still says made in China on the customs paperwork, you pay the China rate. Transshipment does not work on paper, and the penalties when it gets caught are worse than the tariff you were trying to avoid.
Why electronics and beauty sit near the bottom
Electronics is the most-imported category here in raw dollars, yet it scores only 22. China share is 15.6%, Mexico supplies 18.3% (largely duty-free under USMCA), and Taiwan, Vietnam, and South Korea fill in the rest. Diversification plus a friendly nearshore origin equals low exposure even at massive volume. The absolute China dollars are still enormous, about 77.7 billion of the 496.8 billion total, but on a percentage-of-category basis the concentration risk is low.
Beauty scores lowest of all at 5. South Korea (24.8%), France, Italy, and Canada dominate the supply chain, and China is just 7.9%. Tariffs on European and Korean beauty exist, but the China-concentration risk that drives this index simply is not there. It is one reason beauty keeps coming up in our conversations as a structurally good business to be in: the margins are strong and the tariff math is forgiving.
| Vertical | 2025 US imports | #1 origin | China share |
|---|---|---|---|
| Toys | $13.9B | China 65.9% | 65.9% |
| Footwear | $26.6B | Vietnam 36.3% | 26.1% |
| Furniture and home | $61.1B | Vietnam 22.5% | 20.6% |
| Electronics | $496.8B | Mexico 18.3% | 15.6% |
| Knit apparel | $45.1B | Vietnam 21.4% | 14.1% |
| Woven apparel | $34.4B | Vietnam 20.7% | 14.0% |
| Beauty | $7.3B | South Korea 24.8% | 7.9% |
What this means for two brands in the same vertical
The index ranks categories, but your real number is brand-specific. Two apparel brands both sit at a category score of 18, but if one sources 40% from China and the other 5%, their actual exposure is nothing alike. Use the category score as a starting prior, then compute your own using your real China mix. That is the gap between a generic headline and a number you can run your business on.
There is also a live pricing decision behind every score. Whether you pass the tariff through to customers or eat it, you will see an impact on consumer behavior, so the smart operators are modeling both a COGS-impact view and a demand-elasticity view before they touch a price. Our China import dependence for DTC breakdown is the place to benchmark where you actually sit before you make that call.
Exposure is concentration, not volume. The brands that get hurt in 2026 are not the ones that import the most, they are the ones that import the most from a single high-tariff origin and never rebuilt their landed-cost model to see it coming.
What to do about it
- Compute your own score. Take your real import reliance, your actual China share by category, and the 2026 effective duty, and multiply. Do not borrow the category average if your mix is different.
- Attack the highest-scoring SKUs first. If you straddle toys and apparel, the toy lines are bleeding faster. Prioritize diversification there, not evenly across the catalog.
- Qualify everything you can under USMCA. Mexico-compliant goods are largely duty-free in 2026. If you can nearshore even part of a high-exposure line, the index drops fast.
- Requalify your HS codes. Effective duty is product-specific. A defensible reclassification can move you into a lower base rate, which lowers the whole exposure score.
- Rebuild your landed-cost model before the next PO. Every purchase order should reflect the current duty, not last year's. To run the per-SKU math, use our landed-cost tariff calculator instead of a spreadsheet you forget to update.
Sources and methodology
The index multiplies three inputs per vertical: import reliance, China share of imports, and China effective duty for 2026. The raw product is scaled so the highest-scoring vertical equals 100.
China share of imports is sourced from 2025 US Census Bureau imports-for-consumption data (customs value) by HS code, China against total all countries. We verified toys this run (HS 9503): China 9.15 billion dollars divided by a 13.89 billion total equals a 65.9% China share. The remaining category shares reuse the same Census period and method as our audited import-origins hub: HS 61 knit apparel, HS 62 woven apparel, HS 64 footwear, HS 94 furniture, HS 3304 beauty, and HS 85 electronics.
China effective duty for 2026 uses the midpoint of current tariff-tracker ranges. The stacked framework is MFN base duty plus Section 301 plus the IEEPA and reciprocal layers where they apply, which produces category midpoints of roughly 41% for toys, 47.5% for footwear, 58.5% for furniture, 45% for electronics, 34% for apparel, and 33% for beauty. These are compiled from 2026 tariff trackers and the trade-weighted China estimates published by groups like the Yale Budget Lab and Penn Wharton.
A note on the live policy, because it is the operator pain itself: the 2026 China duty stack is genuinely contested, with reciprocal and IEEPA layers suspended or expired at different points in the year. We chose the midpoint-of-range assumption set and footnote it here rather than presenting a single hard rate. Crucially, the ranking holds up under either duty assumption, because China share drives the spread more than the absolute rate does. Toys rank first and beauty last under either the higher or the lower duty regime.
Import reliance is a labeled judgment estimate, not a sourced figure. No official source publishes imported-share-of-consumption by category for 2025-26, so we used directional estimates (toys 95%, footwear 98%, apparel 97%, electronics 80%, furniture 70%, beauty 45%). These should be replaced with your own data where you have it. China share and duty are the sourced inputs; the reliance weighting is judgment.
Triangulation for the duty ranges and operator context drew on Perplexity and Parallel.ai web research plus our own founder-call corpus. USTR tariff actions are tracked at the source linked in the dataset schema.
Frequently Asked Questions
what is a tariff exposure index?
It is a single score that combines how much of a product category is imported, how much of those imports come from a high-tariff origin like China, and the effective duty on that origin. It turns three moving parts into one comparable number per vertical.
which dtc vertical has the highest tariff exposure in 2026?
Toys. They score 100 on our index because roughly 65.9% of US toy imports come from China and the 2026 effective China duty on toys runs around 41%, on top of near-total import reliance.
why does footwear score lower than toys if footwear duties are higher?
Footwear faces a higher China effective duty (about 47.5%) but a much lower China import share (26.1%), because Vietnam and Indonesia supply most US footwear. Lower China concentration pulls the exposure score down to 47.
does importing a lot automatically mean high tariff exposure?
No. Exposure is about concentration in a high-tariff origin, not import volume. Electronics is heavily imported but scores only 22 because China share is 15.6% and a lot comes from Mexico, which is largely duty-free under USMCA.
how can a dtc brand lower its tariff exposure?
Cut the China share of the categories that score high, qualify Mexican goods under USMCA, requalify HS codes, and rebuild your landed-cost model so every PO reflects the real 2026 duty before you commit.
are the 2026 china tariffs actually still in effect or did they get rolled back?
Policy is volatile and parts of the 2026 stack are contested, with some reciprocal and IEEPA layers suspended or expired at points in the year. That is exactly why the ranking leans on China share more than the absolute rate, so it holds up even as the duty number moves.