In today’s volatile global trade environment, tariffs have become a double-edged sword for brands. Intended to protect domestic industries, tariffs often lead to unintended consequences that pose significant challenges for brand owners—especially in the online marketplace. Brands are now facing increased threats from unauthorized resellers, illegal imports, and grey market goods, all of which can damage brand integrity, impact consumer trust, and narrow profit margins.
Tariffs and Their Impact on Unauthorized Resellers
As tariffs increase the cost of goods, savvy resellers seek to exploit price arbitrage by sourcing inventory outside authorized channels. This can include stockpiling goods before tariffs take effect or capitalizing on inventory acquired during previous, lower-tariff periods. With most brands conducting recent holiday sales, and now some offering pre-tariff sales to try to promote brand loyalty, brands should be on the watch as savvy unauthorized resellers likely have taken advantage of these sales to exploit ecommerce marketplaces. While tariffs impact brands, tariffs are likely to also impact brick-and-mortar retailers, who then may elect to liquidate inventory as a result. Low prices—whether it be a holiday promotion, liquidation, or other sale—followed by an increase in retail prices, will create a greater arbitrage for unauthorized resellers to exploit.
The discounted products often find their way into online marketplaces, sold by unauthorized sellers who undercut official pricing structures, disrupt authorized distribution channels, and erode brand value.
Illegal Importing and Alternative Sourcing
In an effort to avoid high tariff costs, some resellers and bad actors turn to illegal importing practices, such as smuggling goods through unofficial or deceptive means. In parallel, alternative sourcing has emerged as a growing problem. Unauthorized sellers frequently procure products through:
- Stolen goods from warehouses, retailers, or supply chains
- Expired products that may no longer meet safety or quality standards
- Returned, refurbished, used, or broken items misrepresented as new
Each of these alternative sourcing methods presents risks not just to brand reputation, but also to consumer safety and regulatory compliance.
The Need for Vigilance
Given these challenges, it is critical for brand owners to strengthen their online enforcement strategies. Tariffs are likely to continue incentivizing unauthorized resale and illicit sourcing for the foreseeable future. Proactive measures include:
- Monitoring online marketplaces for suspicious or unauthorized listings
- Implementing robust brand protection programs that track and enforce against unauthorized sellers
- Educating consumers about the risks of purchasing from unauthorized sources
- Enforcing contracts with authorized distributors to prevent supply chain leakage
- Working with experienced counsel to develop comprehensive enforcement strategies
Brands that act swiftly and decisively to combat these threats not only protect their reputation but also ensure long-term business stability in an increasingly complex global economy.
Conclusion
Tariffs have shifted the landscape for brand enforcement, making vigilance more important than ever. By understanding the risks and taking proactive steps to guard against unauthorized resale and illegal imports, brands can protect their hard-earned value and maintain consumer trust.
If your brand is facing challenges related to unauthorized resale, illegal imports or online brand enforcement, contact Antonio Dempsey (AFD@kjk.com), Kyle Stroup (KDS@kjk.com), Alex Jones (AEJ@kjk.com) or anyone within KJK’s eCommerce practice group.
