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Why it matters: Although President Trump has implemented a 90-day pause on his latest tariffs, China has been hit even harder, with duties on items it exports to the US reaching 125%. This is expected to have a significant impact on Chinese companies that sell products on Amazon, forcing them to either raise their prices for American consumers or exit the market entirely.
After Trump raised tariffs on Chinese imports to 125% up from the current 104%, Wang Xin, the head of the Shenzhen Cross-Border E-Commerce Association, which represents more than 3,000 Amazon sellers, told Reuters that the tariffs weren’t just a tax issue; they were overwhelming the entire cost structure.
She warned that most sellers would find surviving the US market very difficult. The only options were to raise prices in the country or leave to find new markets.
Five Shenzhen-based Amazon sellers who spoke to the publication agreed with Wang’s assessment. Three said they would raise prices for their exports to the US, while two said they were planning to leave the market entirely.
One seller said he had raised prices in the US by up to 30%. He also plans to let his inventory levels fall and lower spending on Amazon advertising fees, which once took up 40% of his US revenue.
“We have to reduce investment, and put more resources into regions like Europe, Canada, Mexico and the rest of the world,” he said.
Another seller said that maintaining his margins might require prices for higher-cost items to be raised by 50%.
Over half of Amazon’s sellers are based in China, with more than 100,000 registered in Shenzhen, aka the Silicon Valley of China. They generate annual revenues of $35.3 billion, according to estimates.
According to China’s State Council, the country’s imports and exports involving cross-border e-commerce were worth $358 billion last year.
Wang also warned that the tariffs could lead to a rapid increase in China’s unemployment rate.
It’s not just Amazon’s Chinese sellers being affect by Trump’s actions. Popular platforms Shein and Temu, known for selling virtually everything at low prices, will feel the impact of the de minimis exemption ending at midnight on May 1.
The de minimis exemption allows items valued at under $800 to be imported without facing added extra duties. After it ends, these shipments sent through the international postal network will be subject to a duty rate of 90% of their value or $75 (rising to $150 after June 1) per item.
Some rival American companies have welcomed the end of de minimis. Forever 21, which is winding down its US operations, attributed its decline to companies leveraging duty-free exemptions on low-cost Chinese imports to gain a pricing advantage.
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