Supply chain executives manage ‘day-to-day’ uncertainty as federal courts challenge presidential tariff authority
By David Bland
“We have met with the White House and are actively getting them our feedback for how the president’s tariff policies, both existing and prospective, will affect the channel.” – Dave Grimaldi, CEO, Direct Selling Association
The direct selling industry finds itself grappling with unprecedented trade disruptions as companies scramble to adapt supply chains and pricing strategies in response to sweeping tariff policies that have created what one executive described as “day-to-day, week-to-week” uncertainty across global operations.
President Donald Trump’s aggressive tariff agenda has imposed duties ranging from 10% to 145% on imports from major trading partners, fundamentally disrupting established supply chain networks that direct selling companies have relied on for decades. The escalation began in February with a 10% tariff on all Chinese imports, followed by a 20% increase in March, before reaching peak rates that prompted immediate industry concern.
The administration simultaneously eliminated the de minimis exemption for Chinese goods under $800 on May 2, a move that potentially impacts e-commerce and direct-to-consumer shipments. The administration’s use of the International Emergency Economic Powers Act (IEEPA) to implement these tariffs has drawn sharp legal challenges, culminating in a federal court ruling that declared the president exceeded his constitutional authority.
Channel Leaders Assess Widespread Impact
During a May 28 webinar hosted by the Direct Selling Association (DSA), supply chain executives from major direct selling companies outlined the extensive disruptions facing the channel. The timing proved particularly poignant as participants discussed adaptation strategies while news broke of the court’s rejection of the administration’s legal authority.
“Having been in China the week that the rift between the United States and China governments really escalated, it was one of those kind of career moments that you never forget,” said Brian Kraus, chief supply chain officer at Amway, the industry’s largest company with operations in 100 countries and more than 1 million business owners worldwide. “By the back half of the week, that’s all employees wanted to talk about, because it’s a major issue between our countries.”
Amway’s significant exposure to Chinese markets—its largest revenue source for over two decades—exemplifies the challenges facing globally diversified direct selling companies. The company’s complex supply chain includes three organic farms across Mexico, Brazil, and Washington state, processing facilities primarily in the United States, and distribution networks spanning all continents.
The tariff situation has forced companies to fundamentally rethink their approach to global sourcing and distribution. Amway has established task forces to assess potential supply chain adjustments while maintaining what Kraus characterized as a “sprint” mentality for decision-making in an environment where policies shift daily.
“We have elected to take a task force and sprint approach to deeply assess and determine whether we’re going to move forward with some slight adjustments in our supply chain,” Kraus explained. “My coaching to teams is progression, not perfection.”
Supply Chain Strategies Emerge Across Product Categories
Direct selling companies are implementing varied strategies to navigate the tariff landscape, with responses ranging from aggressive stockpiling to complete vendor switches, according to survey data presented during the DSA webinar. Tyler Mount, senior manager of operations excellence and strategy at Pampered Chef, highlighted findings from a Direct Selling Education Foundation pulse survey that revealed the breadth of industry responses to the crisis.
“These tariffs are a real-time disruptor changing from day to day, and you do have to pay them if you have any sort of products coming into these ports,” Mount said. The survey captured companies at various stages of response, from initial assessment to full implementation of contingency plans.
Survey responses showed companies pursuing multiple approaches simultaneously. Some have limited vendor orders while maintaining relationships, others have moved aggressively
to alternative suppliers, and still others have opted for significant inventory buildups
to weather potential policy reversals. The diversity of responses reflects both the varied exposure levels across companies and different risk tolerance levels among executives.
“One company mitigated the impact of these tariffs by tripling their imports of finished product from Mexico, securing enough supply for the next four to five months,” Mount noted. This approach exemplifies what he called the conservative strategy that “prioritizes business continuity above profitability in the short term.”
The geographic diversification strategies have accelerated existing trends toward nearshoring and regionalization that began during the COVID-19 pandemic. Companies with operations spanning North America have found particular value in leveraging the United States-Mexico-Canada Agreement (USMCA) trade relationships to maintain cost-effective sourcing while reducing tariff exposure.
Nate Buhler, chief global supply chain officer at 4Life Research, emphasized the importance of treating tariffs as what he termed “elevated supply chain events” requiring immediate action. “You’re never going to regret being proactive. You will regret procrastinating and being slow to act,” Buhler said, drawing on experience from what he characterized as five to six major supply chain disruptions over the past eight years.
Economic Ramifications Intensify Across Sectors
The tariff policies have created substantial economic disruption extending far beyond direct selling. According to the Tax Foundation, Trump’s imposed and scheduled tariffs will increase federal tax revenues by $156.4 billion in 2025, representing the largest tax hike since 1993. The scope exceeds tax increases implemented under previous administrations, with potential coverage of nearly all U.S. imports excluding certain USMCA trade and energy-related categories.
The Penn Wharton Budget Model projects more dire economic consequences, estimating the tariffs could reduce GDP by approximately 8% and wages by 7%, with middle-income households facing a $58,000 lifetime loss. These projections assume the tariffs remain in place long-term, though the model acknowledges that actual impacts could prove even larger due to factors not captured in traditional economic modeling.
Supply chain experts report widespread market turbulence as companies adjust to the new reality. “The recent 88% increase in ocean freight spot rates on the China to U.S. trade route indicates demand of some shippers willing to pay to pull forward their freight during the 90-day tariff pause,” noted Peter Sand, chief shipping analyst at Xeneta, according to Global Trade Magazine. However, Sand predicted that “spot rates are expected to peak in June before downward pressure returns” as inventory levels normalize.
The logistics industry has experienced dramatic shifts as companies rushed to import goods ahead of tariff implementations. Trade data shows the U.S. trade deficit fell by the largest amount on record in April as imports dropped over 16% following the pre-tariff import surge. According to CNBC analysis, this front-loading created significant warehousing challenges, with inventory costs rising even as storage levels remained flat due to extended holding periods.
Legal Challenges Mount Against Presidential Authority
The administration’s use of the IEEPA Act to impose tariffs faced immediate and sustained legal scrutiny from multiple directions. On May 28, the U.S. Court of International Trade unanimously ruled that Trump’s worldwide tariffs exceeded his statutory authority under IEEPA, delivering a sharp rebuke to the administration’s interpretation of presidential trade powers.
“Because of the Constitution’s express allocation of the tariff power to Congress, we do not read IEEPA to delegate an unbounded tariff authority to the President,” the three-judge panel wrote in their decision permanently enjoining the challenged tariffs. The court explicitly rejected the administration’s argument that trade deficits constitute the type of emergency IEEPA was designed to address.
The ruling applied to the 10% global tariffs imposed on virtually all countries as well as higher “reciprocal” rates targeting specific nations with large trade surpluses. Notably, the decision did not affect tariffs imposed under other statutory authorities, including Section 232 steel and aluminum duties and Section 301 China tariffs that remain in place from the first Trump administration.
However, the Trump administration immediately appealed the decision, and the Federal Circuit Court of Appeals granted a temporary stay within hours, allowing the tariffs to remain in effect pending appeal. The government indicated it was prepared to seek emergency relief from the Supreme Court if the appeals court had declined to intervene.
A second federal court in Washington, D.C., reached a similar conclusion to the Court of International Trade the following day, with Judge Rudolph Contreras ruling that IEEPA “does not authorize the President to impose the tariffs” and blocking collections from specific plaintiffs. The coordinated legal challenges suggest a broader constitutional conflict over the separation of powers in trade policy.
Legal experts suggest the cases are likely headed to the Supreme Court, given their far-reaching implications for presidential trade authority and the billions of dollars in trade affected. According to Reuters, the decisions of the Court of International Trade “can be appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., and ultimately the U.S. Supreme Court.” The Court’s eventual ruling could reshape the balance between executive and legislative power in international commerce for decades.
Third-Party Logistics Grapple with Extended Timelines
The complexity of supply chain adjustments has become apparent to logistics providers serving the direct selling channel. Coy Moore, president and CEO of Lacore Logistics, which specializes in supplement manufacturing and distribution, outlined to Social Selling News the extended timelines companies face when attempting to pivot away from tariff-affected suppliers.
“Supply chains in the supplement industry can pivot, but not overnight,” Moore explained. “Reformulating products, qualifying new suppliers (especially for NSF/GMP standards), and updating regulatory filings can take anywhere from 3 to 9 months.”
Moore has observed significant shifts in client strategies since the tariff announcements. “There’s been a noticeable shift toward U.S.-based manufacturing, not just for formulation but also for bottling and labeling,” he said. “Some direct sellers are simplifying their product portfolios to reduce reliance on specialized foreign ingredients. We’re also seeing more interest in ‘Made in USA’ claims, both as a way to avoid tariffs and as a marketing advantage.”
The logistics executive identified specific product categories facing the most sustained pressure from tariff policies. “Products that rely on complex imported blends or niche ingredients—like traditional Chinese herbs, rare adaptogens, or specialty amino acids—are most at risk,” Moore noted.
“Sports nutrition powders, immune health formulations, and functional drinks often contain imported sweeteners, flavor systems, or botanical extracts that are now tariffed. Also, packaging sourced from Asia—like HDPE bottles, flip-top caps, and foil pouches—faces increased costs that companies must absorb or pass along to consumers.
White House Engagement and Industry Coordination
DSA CEO Dave Grimaldi told Social Selling News that the association has maintained direct communication with administration officials about the tariffs’ industry impact. “We have met with the White House and are actively getting them our feedback for how the president’s tariff policies, both existing and prospective, will affect the channel,” Grimaldi said.
“As was covered extensively in our webinar, there are supply chain, and product development, and product launch concerns that are being affected by the uncertainty, and it is impacting and impeding the ability of our companies to scope, plan, and make economic predictions quarter by quarter.”
Cross-Border Implications and Investment Concerns
The cross-border implications have proven particularly challenging for North American operations. Peter Maddox, president of Direct Sellers Association of Canada, outlined the multifaceted impact on companies operating across the U.S.-Canada border.
“For both Canadian direct selling companies doing business in the U.S., and U.S. companies operating in Canada, tariffs and trade tensions have created significant complications,” Maddox said. “These include specific tariffs on products such as cosmetics and kitchenware, difficulties navigating the ever changing tariff landscape and associated customs challenges, and amendments to de minimis duty thresholds for small items. There has also been a substantial movement in Canada to avoid the purchase of U.S.-manufactured products, which is having a measurable impact on U.S. companies selling north of the border.”
Beyond immediate operational challenges, Maddox identified a more fundamental concern about investment decisions. “The greatest concern is most likely the chilling effect the entire issue has had on investment and expansion plans,” he said. “In the face of unpredictability and uncertainty, companies are choosing not to invest in manufacturing, distribution and selling infrastructure, as they do not have confidence in what the future holds. The ripple effects of this are felt across the continent.”
Despite these challenges, Maddox emphasized the Canadian market’s continued potential. “DSA Canada continues to talk with all stakeholders, to push for quick resolutions and the re-establishment of a predictable marketplace for North American direct sellers,” he said. “Beyond the challenges faced, Canada remains a vibrant and entrepreneurial direct selling market, providing great opportunity for companies with an attractive value proposition.”
The coordinated industry response reflects the global nature of direct selling operations and the need for multinational companies to navigate policy changes across multiple jurisdictions simultaneously.
Industry Adaptation Continues
Despite the uncertainty, direct selling executives expressed confidence in the channel’s resilience. During the DSA webinar, leaders emphasized their continued commitment to innovation and market expansion while carefully managing supply chain investments.
“We remain bullish about the future of this industry,” Amway’s Kraus said. “We’re not stopping our innovation efforts, our go-to-market efforts, training efforts. The only thing we’re being cautious on is significant supply investments.”
Pampered Chef’s Mount noted that direct selling companies may actually benefit from their premium pricing structures compared to traditional retail competitors operating on thinner margins. “If you have room in your margin to take these tariff hits, you’re going to serve yourself way better than these retail competitors or e-commerce competitors are,” he observed.
The industry’s global footprint and local investment strategies may also provide some protection from retaliatory measures. “We get a little bit of a pass vs. maybe the bourbon industry because we are such a locally invested industry, where we are creating jobs and value where the product is sold,” Mount explained.
Looking Forward
As the legal challenges work through federal courts and trade negotiations continue, direct selling companies are preparing for extended uncertainty. The 90-day tariff pause negotiated in May provided temporary relief, but executives stress the need for long-term contingency planning.
“Direct selling will find a way,” 4Life’s Buhler concluded during the webinar. “Just keep grinding, keep working through it. This is no different than what we’ve seen in the last eight years. We’ll come out on top.”
