Model how much of a tariff-driven cost increase to pass through to customers versus absorb. See the impact on your gross margins and annual profitability instantly.
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At 50% passthrough, you're splitting the $12.50 per-unit tariff cost between you and your customers. Your gross margin moves from 50.0% to 41.2%, a 8.8 percentage point decrease. To maintain your original margin %, you'd need 200% passthrough. A balanced approach: pass through enough to protect margins while monitoring volume impact.
This calculator models the financial impact of passing tariff costs through to your customers. Enter your per-unit product cost, the applicable tariff rate, your current selling price, and monthly volume. Then use the slider to explore different passthrough scenarios — from full absorption (0%) to full passthrough (100%).
The breakeven passthrough percentage tells you the minimum you must pass through to maintain your current gross margin rate. Note: because gross margin is expressed as a percentage of selling price, maintaining the same margin rate often requires passing through more than 100% of the tariff cost. At exactly 100% passthrough, your dollar margin per unit stays the same, but the percentage shrinks because it's divided by a higher selling price.
For importers evaluating IEEPA tariff refund claims, see our tariff refund calculator or full claim pricing tool.
Tariff cost passthrough is the portion of a tariff-related cost increase that an importer passes on to their customers through higher prices, rather than absorbing into their own margin. A 100% passthrough means the customer pays the full tariff increase; 0% means the importer absorbs it entirely.
The optimal passthrough percentage depends on your product's price elasticity, competitive landscape, and margin structure. Products with inelastic demand (essentials, unique goods) can typically pass through more. Commoditized products in competitive markets may need to absorb more to retain customers.
The breakeven passthrough percentage is the minimum portion of tariff cost you must pass through to customers in order to maintain your original gross margin percentage. Below this threshold, your margins shrink; above it, they improve relative to pre-tariff levels.
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