As the trade war between the United States and communist China continues to unfold, many Chinese Americans—who often base their small businesses on imports from China—are weighing their options. Some expect to survive the price hikes, some will consider sourcing their goods elsewhere in Asia, and still others are pondering closing down.
Since entering office, President Donald Trump imposed a slew of so-called reciprocal trade measures on China that significantly hiked U.S. import prices. He raised tariffs on Chinese imports to 145 percent in April, while China retaliated with a 125 percent levy on American goods, effectively raising a trade embargo. Within weeks, both countries agreed to a 90-day truce, though Trump still left in place a baseline 30 percent tariff.
In anticipation of the tariffs, importers have stocked up, several Chinese Americans who run small businesses told The Epoch Times. Now, they just wait to see how the trade war shakes up. They all asked for their real names not to be used, given their contacts in China.
“People are waiting, hoping there’ll be a more reasonable price later,” said Mary, who imports Chinese translations of English-language books from China.
Like many small businesses, she uses a shipping service where people pool their orders together to fill a whole shipping container. In her case, it’s the shipping company covering the import duties, she said.
“As early as mid-March, they had already started raising prices,” she said. “They knew the tariff hike was coming.”
She was glad to receive her shipment at all, hearing rumors that some cargo ships had turned around halfway through their trip and returned to China, with some even dumping their cargo into the ocean.
“I can’t confirm any of that,” she noted.
Mila, who sells clothes, toys, and accessories, usually only makes one large order from China every few years. Recently, however, she needed some merchandise on a short notice, and had the packages sent through airmail.
Small packages from China, however, have been slapped by Trump with a special 120 percent duty to crack down on Chinese companies like Temu that have been taking advantage of the de minimis duty exemption for low-value packages.
“I must pay the tax within five days, otherwise the package will be returned,” Mila said she was told by the shipping company.
“No one’s using small parcels anymore, from what I know,” Mary said.
“Even export companies aren’t going that route. Everyone rushed—really rushed hard—to get small packages into the U.S. before May 2 [when the duties kicked in].”
Tariffs of such magnitude would force Mila to substantially increase prices. Some clothes may be $5-10 more expensive. Many other articles would more than double in price, “which will be impossible to sell,” she said.
“Maybe I’ll find another job.”
Doris, who imports handmade jewelry from China as a side business, found herself in a similar situation, watching her stockpile diminish.
“Many of the accessories are actually only available in China … I don’t think you can get them in other countries,” she said.
She wondered whether some similar products could be sourced from Taiwan, though those might not be priced the same.
“If tariffs stay this high, I might just shut down this side business, just stop doing it altogether,” she said.
Even with steep levies, many people would still be willing to buy Chinese goods, especially those that were already extremely cheap, Mary suggested.
“Some products can still absorb the cost, like cheaper promotional items,” she said.
Katy trades exactly in such products—mugs, pens, T-shirts—whatever companies want to put their logo on.
She was in a rush to get all her shipments into the United States before the tariffs kicked in but one was held by customs for inspection and thus delayed beyond the deadline. She ended up splitting the tariff cost with her client.
Paradoxically, the worsening economic situation in China after the COVID-19 pandemic has helped her business, she said.
“Customers are afraid. They used to order directly from China. Now they don’t … They don’t know if factories in China will even be open tomorrow. It’s unpredictable,” she said.
“They come to me instead … They prefer someone in the U.S. they trust.”
Her relatives in China would vet suppliers, and monitor production and shipping for her. Her clients, often government agencies and schools, are willing to pay a premium for the worry-free service she provides, she said.
“I’ll definitely raise prices. But I can’t raise them too much … So for some products, I’ll lower my profit margin a bit.”
The tariffs may even open new opportunities, she said.
As buyers adjust to higher prices, sellers will have more of a margin to work with in developing new supply chains.
“I can also import from Vietnam—that’s one option,” she said.
China Has it Worse
All the entrepreneurs agreed that, from what they’ve gathered from their contacts, businesses are in much worse shape on the Chinese side.“Lots of businesses are collapsing. It’s a huge impact,” Katy said.
Her college classmates who majored in English all went into foreign trade, she said. One started a successful business exporting household goods.
“But 70 percent of his market is the U.S. That’s a huge impact [from the trade war],” she said.
“The Chinese government says, ‘Find alternative markets,’ but that’s not realistic. It’s hard. Your market is the U.S. If tariffs go up so much, it’s brutal.”
Many Chinese companies have started to let people go even before the tariffs kicked in, she said.
“Wave after wave of layoffs. So unemployment in China is scary. This July, over 10 million college grads will enter the job market. Many will be unemployed.”
Meanwhile, American and even European buyers have disappeared from trade shows, she said. To some degree, they have been replaced by buyers from Africa and the Middle East. But those don’t have the consumer markets to absorb Chinese goods, she said.
To cut costs, many Chinese companies now just skip the shows altogether.
“Just surviving the trade war is already an achievement,” she said.
