By Mark Seavy

2025 was yet another year in which companies’ logistics capabilities and strategies were tested as newly imposed tariffs weighed on the business. We’re looking back at how the licensing industry responded this year and what challenges remain ahead for 2026.

Responding to Tariffs

Since the dawn of the pandemic more than five years ago, logistics have become an annual challenge. A number of issues, including container ship pricing or soaring inventory levels, have forced brand owners, licensees, and retailers to adjust their strategies.

This past year was no exception, as newly imposed U.S. tariffs on imported goods forced companies to recalibrate their pricing strategies, delay shipments amid the rise and fall of levies, and continue the search for production outside of China. At year’s end, 47% tariffs on products imported from China, Vietnam, and several other countries remained in place, but there were signs that some relief might be on the horizon.

President Trump and the Federal Trade Commission’s decision to initially place 145% tariffs on China imports in April 2025 halted many shipments. Retailers that typically opted for direct imports shifted to making suppliers responsible the shipments. Suppliers, meanwhile, imposed wholesale price increases across products (which some retailers passed on to consumers). The ebb and flow of tariffs continued throughout the year and varied by country.

Increasing Costs

The added cost of the tariffs forced suppliers and retailers alike to make tough decisions. Some retailers like Target and Walmart absorbed some or all the added costs, with the latter having increased prices by 1.3% in Q3. These higher prices led many forecasters to focus on increased dollar sales, though many also anticipated declines in unit volumes.

At year-end, there were signs for relief from the tariffs either through President Trump’s administration or the courts. Costco, Bumble Bee Foods, Revlon, EssilorLuxottica, Yokohama Tire, and others have sued the federal government seeking refunds if the U.S. Supreme Court finds the tariffs were illegal and in violation of the International Emergency Economic Powers Act (IEEPA). Through August, importers had paid $88 billion in IEEPA tariffs, according to the Tax Foundation.

Yet through it all, many companies used price increases to “neutralize” the full impact of tariffs and sought other cost-cutting measures including layoffs.

“For the last eight months, conversations have shifted to less what the impact [of tariffs] might be to what it could mean for the first half of 2026,” Randy Konik, a Research Analyst at Jefferies for lifestyle and growth platforms, said during the firm’s “Who May Win as Tariffs Fall in 2026” webinar on December 15. “That is still a question that a lot of management teams are wrestling with for the first half of 2026.”

Tariff Relief

The major beneficiaries of any tariff relief will be apparel, textiles, processed rice, and other food products, according to Jefferies. And there is a “medium probability” that consumer electronics, leather, wood products, and plant-based fibers will see some tariff reduction, according to Jefferies.

Among the companies, e.l.f. Beauty would gain a “significant catalyst” for business with any tariff relief, Jefferies said. About 75% of e.l.f.’s cost of goods is sourced from China. Faced with 45% tariffs, the company imposed a $1 price increase across its products on August 1. Every 10% reduction in tariffs would produce a $17 million “benefit” to e.l.f.’s costs, the company has said.

In releasing earnings earlier this month, Nike said it was incurring $1.5 billion in tariff-related costs or more than 5% of its cost of goods sold (COGS), Jefferies said. Any reduction in tariffs would also have a “modest but meaningful tailwind” for Target, which sources more than 50% of its merchandise outside the U.S. Target has absorbed tariffs in some product categories, including apparel and home goods.

“While Target’s scale and vendor negotiations have mitigated some of the impact of tariffs, any rollback [in tariffs] would enhance flexibility on pricing and promotional cadence,” Konik said. “That would reinforce Target’s value proposition and potentially drive incremental share gains in key categories.”

Looking Forward to 2026

And despite the sharp focus on tariff costs, many retailers continued this year with store expansion plans, while suppliers benefitted as container ship pricing stabilized. The more subdued pricing followed several years of extraordinary volatility underscored by some container rates soaring to $20,000.

That stability resulted in the prices for 40-foot containers averaging $1,895 as of November, with recent fluctuations indicating a rebound of global freight rates. Those container rates hit $1,959 in early November, marking a fourth consecutive week of increases that had followed a prolonged downturn in pricing, according to Drewry’s World Container Index.

The rate increase was driven by aggressive price moves by carriers to counter weak demand and overcapacity. They also came after a year in which businesses adapted to more normalized freight demand, restructured logistics networks, and more balanced use of container fleets. A more stable market is expected to give way to one in 2026 in which buyers will have the upper hand in procuring container ships for consumer products. An overcapacity of containers is expected to lead to more availability at competitive prices.