The United States has long been a key market for Chinese goods, but as tensions rise between Beijing and Washington over trade issues, many exporters are rethinking their business strategies.
Shoppers purchasing souvenirs like fridge magnets in New York’s bustling Times Square may not realize that these items are manufactured in a small city in China. Du Jing and her husband, operators of Yiwu Xianchuang Handicraft Manufacturing in Yiwu, represent a network of exporters from this Chinese city that supplies a vast array of small commodities to the U.S. and beyond.
Yiwu boasts the world’s largest wholesale market, where products ranging from plush toys to glass vases and toolboxes are sold globally—or translated straight into online sales, including platforms like Amazon catering to U.S. consumers.
While the U.S. has historically served as a significant destination for these Chinese products, shifts are occurring. Exporters in Yiwu and elsewhere have begun exploring alternatives as the trade conflict intensifies. Some are transferring their production to Southeast Asia and other regions to avoid the steep tariffs imposed on Chinese goods.
Shifting Focus: Chinese Exporters Eye New Markets
In her booth at the Yiwu wholesale market, where colorful magnets and keychains adorn the walls, Du wonders about the factors influencing her declining sales. “The U.S. market has shrunk significantly,” she reflects. “It feels connected to their financial climate.”
Since 2019, she adds, American customers have exerted intense pressure on prices, often rejecting items that wholesale for more than 25 cents. Conversely, opportunities in the Middle East have emerged, where demand is growing, featuring larger orders and higher prices.
Another vendor, Chen Yong, experiences a similar trend. His trading company specializes in exporting home decor like glass vases, and while business with the U.S. and Europe has dwindled, orders from regions such as Southeast Asia, Africa, South America, and Russia have surged.
The Impact of Potential Tariff Increases
Data from Chinese customs reveals a drop in the share of China’s exports directed to the U.S., from 19% in 2018 to just 15% last year. This decline occurs even as China is projected to reach record-high overall exports this year.
Former President Trump indicated potential tariff increases of 60% or more, and he proposed a 10% additional tariff on Chinese goods alongside a 25% tariff on imports from Canada and Mexico during his early days in office. Such significant tariff hikes would compel exporters like Chen to either raise prices or accept reduced profit margins, inevitably driving the need to seek alternative markets if American consumers resist price increases.
“We must wait to see his tariff decisions to gauge the extent of the impact on us,” Chen said, expressing uncertainty about future prospects.
Tu Xinquan, director of the China Institute for WTO Studies at Beijing’s University of International Business and Economics, cautioned that “no one can cope with” the prospect of 60% tariffs. He predicts that many companies could cease trade with the U.S. entirely, noting that smaller firms would be especially vulnerable compared to larger enterprises.
Photo credit & article inspired by: Euronews
