Chinese companies selling products on Amazon are bracing for significant changes, with many planning to increase prices for U.S. consumers or withdraw from the American market altogether in response to President Donald Trump’s increased tariffs, according to sellers and the head of China’s largest e-commerce association.
Trump’s announcement on Wednesday to raise tariffs on Chinese imports to 125% from the already substantial 104% has escalated trade tensions between the world’s two largest economies.
“This isn’t just a tax issue, it’s that the entire cost structure gets entirely overwhelmed,” stated Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, representing over 3,000 Amazon sellers.
She told Reuters that the tariffs could make it “very hard for anyone to survive in the U.S. market,” and warned of potential customs delays and increased logistics expenses. “So for all of us in the cross-border e-commerce business today, this is truly an unprecedented blow.”
Wang’s assessment was echoed by five Amazon sellers based in Shenzhen, who spoke to Reuters on Thursday.
China is a major player in the global e-commerce landscape, home to approximately half of Amazon’s sellers, with over 100,000 Amazon businesses registered in Shenzhen alone, generating substantial annual revenue. China also serves as a key manufacturing hub for other prominent e-commerce platforms like Shein and Temu. Cross-border e-commerce in China reached a value of 2.63 trillion yuan ($358 billion) last year, according to China’s State Council.
The U.S. market’s significant consumption power presents a challenge, as other markets may not be able to fully absorb the production capacity, potentially leading to intensified price competition among Chinese exporters and squeezing profit margins.
Of the sellers interviewed, three indicated they would seek to raise prices for their U.S.-bound exports, while two are considering exiting the U.S. market entirely.
Dave Fong, who sells a range of products including schoolbags and Bluetooth speakers, reported that he has already increased U.S. prices by up to 30%. He plans to reduce inventory and decrease spending on Amazon advertising fees, which previously accounted for a significant portion of his U.S. revenue.
“For us and anyone else, you can’t rely on the U.S. market, that’s quite clear,” Fong stated. “We have to reduce investment, and put more resources into regions like Europe, Canada, Mexico, and the rest of the world.”
Brian Miller, an Amazon seller based in Shenzhen for seven years, expressed concerns about product development in the current environment. He anticipates steep price increases once current inventories are depleted, potentially within one or two months.
Miller provided an example, stating that a children’s building block set that sells for $20 on Amazon and costs his company $3 to produce would now cost $7 with the tariff. Maintaining profit margins would necessitate a price increase of at least 20%, with higher-cost toys potentially seeing increases of up to 50%.
“I don’t see a scenario, if things don’t change, that serving the U.S. from China is viable any more and manufacturing that serves the U.S. will have to be transferred to other countries like Vietnam, or Mexico,” Miller said.
Wang Xin of the Shenzhen Cross-Border E-Commerce Association warned that the tariffs pose a significant risk of accelerating unemployment in China, particularly among small enterprises and manufacturers.
Leave a Reply