In today’s global supply chain, understanding tariffs and country of origin rules isn’t just a legal requirement—it’s a competitive advantage. For suppliers working with Walmart and Sam’s Club, these details can make the difference between a profitable product launch and a margin-draining misstep.
At Apex Marketing and Sales, we help brands and private label manufacturers navigate these complexities every day. Here’s why country of origin matters—and what every CPG supplier should keep in mind.
What Are Tariffs?
Tariffs are taxes placed on imported goods, typically as a percentage of the product’s value. They can be used to:
- Protect domestic industries
- Generate government revenue
- Serve as leverage in international trade negotiations
For CPG suppliers, tariffs impact landed cost—the final cost of getting your product into the U.S. market. A 10% tariff on a key ingredient or finished good can quickly erode margins if it’s not accounted for upfront.
Why Country of Origin Determines Tariff Impact
Many suppliers mistakenly assume tariffs apply only to the country they purchased goods from. In reality, tariffs are assessed based on the country of origin, not necessarily the country of sale or distribution.
For example:
- If you buy ingredients from a German supplier, but those ingredients were originally sourced from China, U.S. Customs may consider China the country of origin—and Chinese tariff rates may apply.
- The country of origin is determined by the place of “substantial transformation,” meaning where the product was last materially changed into a new and different article.
Understanding this rule is critical when sourcing globally, especially if your supply chain involves multiple regions.
Why This Matters for Walmart and Sam’s Club Suppliers
Walmart and Sam’s Club are extremely price sensitive. Tariffs tied to country of origin can:
- Shift your costing structure mid-negotiation if not accounted for early.
- Complicate supply planning, especially for private label programs where pricing is locked in months ahead.
- Affect competitiveness, as suppliers with a more favorable country of origin may have lower costs and better margins.
Retailers expect transparency and accuracy when it comes to landed cost. A surprise tariff bill can hurt your credibility with buyers and squeeze already tight margins.
Best Practices for CPG Brands
- Audit Your Supply Chain – Know where every ingredient and component originates, not just where you buy it.
- Understand “Substantial Transformation” – Determine which step in your process creates the country of origin designation.
- Build Tariff Scenarios into Pricing Models – Factor potential tariff changes into your Walmart and Sam’s Club proposals.
- Stay Current on Trade Policies – Tariffs shift with global politics, and changes can happen quickly.
- Work With Experts – Partner with brokers like Apex who understand the ripple effect tariffs can have on retail programs.
How Apex Marketing and Sales Helps
At Apex, we go beyond selling products into Walmart and Sam’s Club. We help our suppliers anticipate challenges like tariffs, ingredient sourcing, and compliance requirements. By addressing country of origin issues early, our partners can avoid costly mistakes, protect their margins, and stay competitive in the world’s largest retail channels.
Final Thought
Tariffs and country of origin may feel like a back-office detail, but in reality, they are strategic levers that impact pricing, profitability, and retail success. As trade policies continue to evolve, CPG brands need partners who can guide them through these complexities.
At Apex Marketing and Sales, that’s what we do best—whatever, whenever, and however it takes to help our suppliers succeed.
