American "tariff refugees" flock to Chinese e-commerce platforms

Cross-border e-commerce platform DHgate has suddenly welcomed a "tsunami of traffic." It has surged to second place in the "Free Apps" download ranking in the U.S. Apple App Store, second only to ChatGPT.

DHgate is a B2B cross-border e-commerce online trading service platform founded in 2004, known overseas as DHgate. On April 11, DHgate was ranked 352nd in the free app rankings in the U.S. Apple App Store. Two days later, DHgate's iOS downloads in the U.S. market increased to 65,100, a staggering 940% surge. On April 15, DHgate further rose to second place.

Due to concerns that domestic platforms would raise prices because of tariffs, Americans have been searching for "quality goods from the source" made in China on Chinese e-commerce platforms, highlighting the anxiety of U.S. consumers behind the escalating tariff war.

In the past week, global trade has faced enormous uncertainty due to changes and flip-flops in U.S. tariff policies.

On April 2, U.S. President Trump declared a national emergency and imposed a 10% "baseline tariff" on all countries and regions. Subsequently, on April 7, he further imposed "reciprocal tariffs," and on April 8 announced an additional 50% tariff on Chinese imports based on the "reciprocal tariffs." On April 10, he issued an executive order to further increase the tariff rate on products imported from China, raising the "reciprocal tariff" on China to 125%, resulting in a combined tariff rate of 145%.

In response to the U.S. side's escalating trade protectionist measures, China took swift and resolute countermeasures: on April 4, China announced that starting from April 10, it would impose an additional 34% tariff on all imported goods originating from the U.S. on top of the existing applicable tariff rates; on April 9, China announced that the tariff rate would be raised from 34% to 84%; on April 11, China further announced that starting from April 12, the tariff rate would be raised from 84% to 125%.

On April 16, a spokesperson for the Ministry of Commerce stated regarding the maximum 245% tariff faced by Chinese exports to the U.S.: "This fully exposes the irrationality of the U.S. side's weaponization of tariffs. China has previously clarified its position on the U.S. unilateral tariff increases multiple times, and we will not pay attention to such meaningless tariff number games by the U.S. However, if the U.S. insists on continuing to substantively infringe upon China's rights and interests, China will resolutely counter and accompany to the end."

This tariff storm not only affects the nerves of global markets but also directly impacts the interests of countless enterprises and consumers. Against the backdrop of rising tariff barriers, some American consumers have begun flying to China to "purchase Chinese-made goods." Domestic platforms have launched "foreign trade to domestic sales" support plans to assist foreign trade enterprises. Foreign trade enterprises have already begun exploring emerging markets, developing new products, and seeking opportunities for transformation.

Enterprises "Have Long Been Prepared"

"When tariffs exceed 50%, people are less concerned about subsequent increases; it becomes a numbers game." Zhang Ning, who has been engaged in cross-border e-commerce for ten years, reflected on his "unprecedented" experience last week, believing that when tariffs reach a certain level, "instead of worrying about these numbers, it's better to spend more energy on the business." In early February this year, U.S. President Trump signed an executive order imposing a 10% tariff on goods imported from China; the executive order also eliminated the "de minimis" tariff exemption for small goods valued under $800. However, just a week later, the U.S. reinstated the "de minimis" tax exemption threshold for Chinese small packages.

The entire industry, from sellers and logistics providers to platforms, underwent a real "rehearsal." In just a few days, a series of adjustments were made regarding customs fees and tariff guarantees. This also served as a warning for practitioners.

Since this blunder, Zhang Ning and his team have been well-prepared. He estimates that there will be more sudden policy releases, and to avoid impacts on their U.S. business, goods sufficient to support three months of sales have already arrived at local warehouses in the U.S. This is the source of Zhang Ning's current confidence.

"Direct mail for small packages" has long been a logistics method used in the clothing and small appliance industries. Currently, according to the U.S. executive order, starting from May 2, small packages sent from China to the U.S. with a single item value not exceeding $800 will be subject to a 120% tariff. For small packages entering between May 2 and May 31, a tariff of $100 will be imposed per item; starting from June 1, the tariff for packages entering will rise to $200 per item. Such tax rates have long exceeded the bearable range for businesses.

Zhang Ning explained that after communicating with freight forwarding companies, they reached an agreement: some goods primarily shipped as small packages will be sent to the U.S. through re-export trade via other countries, while another portion will be sent directly to Amazon's U.S. warehouses by increasing the declared tariff price. He summarized that both methods will increase logistics costs, which could reach 5 to 10 percentage points of gross profit.

Correspondingly, on various cross-border e-commerce platforms, the prices of products purchased by American consumers have also risen. "Our strategy is to delay the consumption of inventory in the U.S. market, not to raise prices, because we also need time to adjust logistics and cargo," Zhang Ning admitted.

Liu Yingfeng, founder of Xingying Overseas, operates an overseas community that includes 30,000 merchants. After the announcement of the tariff policy, intense discussions erupted within the community. He summarized that many merchants' costs have already begun to rise. The increase in shipping costs is very evident; he cited an example of a 34% tariff, where the logistics cost for 1 kilogram of goods would increase by 2 yuan; if the tariff rises to 104%, then the logistics cost for 1 kilogram of goods could increase even more, possibly reaching 8 to 10 yuan.

The mutual imposition of tariffs will inevitably have a direct impact on bilateral trade between China and the U.S., but how much of this impact will actually materialize remains uncertain. Taking semiconductors and electronic products as an example, they have experienced a reversal of policy. On April 11, the U.S. Customs and Border Protection (CBP) quietly released updated tariff regulations, exempting import tariffs on categories of goods including automatic data processors, computers, communication equipment, displays and modules, and semiconductors from the impact of "reciprocal tariffs." However, shortly thereafter, Trump stated on social media that he would focus on the semiconductor and electronic product supply chains in the so-called "national security tariff investigation." This latest statement further increases the confusion surrounding Trump's tariff policy and amplifies the uncertainty of risks faced by businesses.

However, all foreign trade personnel dare not let their guard down. Chen Juan, the cross-border channel operations manager at Karmay, believes that we have reached a "critical moment," and companies that are well-prepared will not be significantly affected at this time. The "preparations" they are making involve rational strategic adjustments in pricing and inventory, maintaining profits while reducing promotions, as well as cutting labor costs and improving efficiency, with plans to digitize the workshop, ultimately achieving cost reduction and efficiency enhancement, and fighting this battle of short-term pressure and long-term benefits.

For Nie Ziqin's business, the U.S. market accounts for 50% of her operations, making her one of the merchants in Yiwu Mall most affected. Her business category is Halloween decorations, which has certain uniqueness. As soon as the tariff policy was announced, she received numerous messages from old customers to postpone production and shipping. Some customers from the U.S. pressured her with million-dollar orders, demanding a 30% price reduction and six months of credit, which made her feel furious. Soon, she boldly declared, "If American customers want it, they can have it; if not, I'll switch tracks." She was also rated as the "most impressive boss lady" and subsequently gained popularity.

"We make Halloween products, and our main sales area is the U.S. This time of year is peak season. Last month was still normal, but at the beginning of this month, customers started calling and messaging to postpone production and shipping." However, she emphasized that Yiwu's products are recognized worldwide, and as wholesalers, the profit margins are already small. Now requiring wholesalers to bear the tariff costs is impossible.

But in fact, she did not sit idly by. Recently, she began sending some reasonably priced and quality-assured products to South America and other regions and countries. As early as last year, Nie Ziqin led her team to design thousands of New Year products in just a few months, already making strides in domestic sales. However, "Americans still want to celebrate Halloween," Nie Ziqin mentioned that if these goods are not ultimately shipped to the U.S., then this year for Halloween, American consumers may face price increases or shortages of Halloween decorations.

The rise in tariff barriers has led to a significant increase in trade costs, causing many Chinese products exported to the U.S. to increase in price. Liu Yingfeng mentioned that most of the tariff-related shipping costs will ultimately be added to the selling price, which means that American consumers will bear the cost.

"Purchasing Agent" for Chinese Manufacturing

Bill, an American working on Wall Street, told China News Weekly that the cost of living for American families is already very high. He lives in Manhattan, and recently, dining out at restaurants has become more expensive, and rent is also rising, making housing, education, and healthcare increasingly costly. Online shopping has long become his daily consumption habit. He often buys clothes, electronics, and more on Amazon, but now he may also face the risk of price increases.

This can be seen from the U.S. Consumer Price Index (CPI) report. Bill pointed out that the U.S. CPI in March increased by 2.4% year-on-year, although it significantly fell from 2.8% the previous month, it still has not returned to the Federal Reserve's target of 2%. However, he also mentioned that the impact of the tariff policy on people's lives will depend on subsequent data, as it has only just taken effect However, according to a series of studies, the costs of increased tariffs will ultimately be passed on to American consumers and businesses. A report released by the United States International Trade Commission in March 2023 shows that nearly 100% of the costs of tariffs imposed on China are borne by importers. Data from the Peterson Institute for International Economics indicates that over 90% of the tariff costs will be passed on to American importers, downstream businesses, and final consumers.

The Yale University Budget Lab predicts that after the implementation of "reciprocal tariffs," in the event that other countries take countermeasures, the increase in personal consumption expenditure prices in the U.S. will expand to 2.1%, with average losses of $1,300, $2,100, and $5,400 for low, middle, and high-income households, respectively.

Some American importers and retailers have already begun to express concerns about the tariff policy. According to a survey by the National Retail Federation, over 70% of retailers stated that rising tariffs would lead them to increase consumer goods prices, and nearly 50% of retailers are worried that this will affect their hiring and investment plans.

In the view of Tan Jianhua, a partner at Beijing Dingxiang Law Firm, the global tariff policy led by the Trump administration clearly deviates from traditional free trade theory. Traditional free trade theory assumes that countries trade without trade barriers, which can enhance global production efficiency and allow consumers to choose more quality and affordable goods, while fully competing and driving global technological innovation. Although completely barrier-free free trade is an ideal state, various countries and regions inevitably have some tariff barriers. However, Trump's high tariff bombshells thrown globally resemble a form of extreme pressure, aimed at gaining a favorable position in trade negotiations.

Under the escalating tariff game, a new phenomenon is emerging—some American consumers, especially American tourists, are choosing to "purchase on behalf of" Chinese-made products from China. Reports indicate that after the U.S. imposed a 145% tariff on Chinese goods, some savvy American consumers found that the cost of airfare is far lower than the price difference caused by tariffs. Consumers can purchase more Li Ning sports shoes, Yiwu small commodities, and other products that have seen a price premium of 30% to 50% in the U.S. market due to tariffs.

Additionally, just last week, China's implemented departure tax refund policy provided more extra benefits for foreign tourists consuming in China. According to current policy, foreign travelers can enjoy a VAT refund on goods purchased in China upon departure, with a refund rate of about 13% of the shopping amount. This means that American consumers shopping in China can not only avoid the high tariffs imposed by the U.S. but also receive an additional 13% tax refund, further widening the price gap.

For example, if an American tourist purchases goods worth 10,000 RMB, they can receive a tax refund of about 1,300 RMB upon departure, equivalent to a 13% discount on the original price. This policy further enhances the cost-effectiveness of "purchasing on behalf of" in China, becoming another favorable factor for American consumers to evade tariffs.

The purchasing list of American consumers mainly focuses on Huawei phones, technology products, clothing, luggage, and other areas. These categories happen to be products in which China has long had strong competitiveness in the global supply chain. Although the tariff escalation initiated by the U.S. attempts to sever this supply chain connection, consumers' rational choices are maintaining this connection in another way Experts interviewed believe that this phenomenon also reflects the comprehensive advantages of Chinese manufacturing in terms of price, quality, and innovation capability. Even under the barrier of high tariffs, Chinese products remain attractive enough for consumers to cross oceans to purchase them in China. The deeper logic behind this is that the advantages of the industrial chain and product competitiveness are fundamental to coping with trade barriers.

Exploring the Shift from Foreign Trade to Domestic Sales

It is undeniable that many foreign trade enterprises will face certain impacts in the short term. Against the backdrop of tariff escalation, some Chinese foreign trade companies are facing multiple challenges such as reduced orders, inventory backlog, and increased market uncertainty. This is particularly true for companies that heavily rely on the U.S. market, making it imperative to adjust their market structure.

According to several foreign trade companies, since the U.S. announced the imposition of tariffs, American clients have begun to delay or cancel existing orders, waiting to observe market conditions before making decisions. This has led some companies to face issues of overcapacity and inventory accumulation. At the same time, due to a general lack of experience in domestic sales and insufficient understanding of the domestic market and consumers, it is not easy for these companies to shift to domestic sales relying solely on their own efforts.

Liu Yingfeng told China News Weekly that recently many foreign trade factories have approached him seeking to handle related goods. He cited a reverse umbrella manufacturing company as an example, which originally planned to export 100,000 units to the U.S. at a wholesale price of $5.6. However, due to the impact of tariff policies, the orders could not be exported as planned. Subsequently, after deducting a 30% advance payment from the U.S. client, the goods were sold domestically at an ultra-low price of 15 RMB each, aiming to quickly recover funds.

"The selling price of 15 RMB is far below the material cost." After Liu Yingfeng sent this batch of goods to a group chat, many practitioners suggested that they could share information to collectively sell the goods.

In response to the difficulties faced by foreign trade enterprises, the Chinese government quickly introduced a series of support measures. He Yongqian, spokesperson for the Ministry of Commerce, stated at a regular press conference on April 10 that the Ministry of Commerce will help foreign trade enterprises facing export obstacles to explore the domestic market, make good use of the old-for-new policy for consumer goods, and organize a series of activities such as the "Foreign Trade Quality Products Tour in China," to deepen the integration of domestic and foreign trade.

Governments in various regions are also taking active measures, launching special support plans for foreign trade enterprises to shift to domestic sales. For example, the Zhejiang Provincial Department of Commerce has partnered with several e-commerce platforms to create a green channel for foreign trade enterprises to connect with the domestic market, providing comprehensive support such as platform entry incentives, traffic support, and warehousing logistics.

Major e-commerce platforms have launched "Foreign Trade to Domestic Sales" support plans to assist foreign trade enterprises in entering the domestic market. Platforms such as JD.com, Suning.com, and Hema have all introduced support plans targeting foreign trade enterprises.

"Jiao Ge Peng You" is also one of the companies participating in this support initiative. In the past, "Jiao Ge Peng You" accumulated relevant experience in live-streaming e-commerce, opening up a channel for foreign trade enterprises to enter the market, allowing them to quickly reach domestic consumers through live streaming, while leveraging policies and platform resources to achieve brand reshaping. According to relevant personnel, as of April 14, they have received cooperation applications from over 40 enterprises in Zhejiang, Jiangsu, Shanghai, Guangzhou, Shandong, Anhui, and Sichuan. Most of these enterprises are foreign trade-oriented, covering various categories such as household goods, outdoor sports equipment, beauty and skincare, and maternal and infant products However, the aforementioned person in charge also told China News Weekly that due to the differences in products and operating models of foreign trade enterprises compared to the domestic market, such as product design, packaging specifications, pricing strategies, and sales strategies, further adjustment and optimization are needed in cooperation. Although in the short term, using live streaming sales can help companies quickly clear inventory, in the medium to long term, foreign trade enterprises still need to focus on brand building, product research and development, and market expansion to achieve long-term stable development.

China has a super-large market with a population of 1.4 billion, which has enormous consumption potential. In recent years, with the increase in per capita income and a clear trend of consumption upgrading, the domestic market's demand for high-quality and diversified products has been continuously growing. This provides a broad space for foreign trade enterprises to shift to domestic sales. According to data from the National Bureau of Statistics, the total retail sales of consumer goods are expected to grow by 7.2% year-on-year in 2024, reflecting a warming trend in the consumption market. Since 2025, the growth rate of retail sales of consumer goods in China has rebounded significantly, with the core CPI rising in March, indicating enhanced vitality in the domestic market.

Therefore, foreign trade enterprises can leverage their advantages in product design, quality control, and cost management, combined with the preferences of domestic consumers, to adjust product positioning and marketing strategies to tap into the potential of the domestic market.

Although the current challenges of trade friction are severe, they also provide opportunities for foreign trade enterprises to transform and upgrade. As economist Shen Jian Guang stated: "Although the trade policies of the United States pose a short-term shock to the Chinese economy, if China can take effective measures to respond actively, in the long run, it can turn pressure into motivation and achieve economic transformation and upgrading."

Seeking Diversification

Pan Hong runs a headphone manufacturing factory in Shenzhen.

Since October last year, the shipment volume of AI headphones has surged. After integrating AI, headphones can provide translation functions, making them very popular in foreign markets, especially in the United States. However, since the second half of last year, she has noticed that many of the customers placing orders are targeting South America, the Middle East, and Southeast Asia, while orders from the United States have not grown as quickly as those from these regions. This indicates that many foreign trade practitioners have realized the risks and are beginning to seek development in emerging markets.

Regarding the current trade situation, Tan Jianhua pointed out that currently, tariffs between China and the United States have exceeded 100%, making it difficult for importers from both countries to have competitive products in their domestic markets. In this context, there may be some behaviors involving the import and export of goods through gray or even illegal channels. The U.S. government will increase the inspection rate of goods from China in the short term, and there will be certain risks associated with false declarations or transshipment trade. Therefore, when trading with transshipment merchants and importers, it is necessary to pay more attention to the payment cycle and the responsibility for related risks. For foreign trade enterprises, short-term pain is unavoidable, but in the long term, they can choose to deepen their focus on the domestic market and shift to markets such as the European Union.

The person in charge of the aforementioned "Making Friends" also believes that helping foreign trade enterprises shift to domestic sales is only a stopgap measure. The sudden high tariffs have caused foreign trade enterprises to accumulate a large amount of inventory and goods, which need to be digested through domestic sales in the short term. However, in the medium to long term, "the advantageous markets for foreign trade enterprises still lie abroad." Currently, Jiaoge Pengyou has overseas e-commerce and integrated marketing services in Mexico, the UK, Spain, ASEAN, and the Middle East, helping major clients in foreign trade enterprises in the United States to shift their business to these countries. The aforementioned person in charge mentioned that in 2024, exports to the United States will account for 13.5% of China's overall foreign trade volume, and in the future, the goal is to help foreign trade enterprises transfer most of these exported goods to broader markets such as the Middle East, ASEAN, and Europe, promoting the diversification of export markets.

In fact, China has long been actively laying out and promoting trade cooperation with more countries and regions. The comprehensive implementation of RCEP has provided more convenient conditions for Chinese enterprises to enter the Asia-Pacific market; the "Belt and Road" initiative has also created a favorable environment for Chinese enterprises to explore markets in the Middle East, Africa, and Eastern Europe.

Huang Dejian, the person in charge of Zhihu Electric, originally planned to invest more manpower and resources in the United States this year to expand sales. However, with the change in circumstances, his expansion in the United States has come to a halt, and he has instead continued to deepen his efforts in the Japanese market, where he has already recruited two teams to strengthen sales capabilities. He stated that even without entering the U.S. market, there is still room for deep exploration in the Japanese market and some emerging markets.

He remains optimistic about the future development of cross-border e-commerce, stating that regardless of how tariff policies change, the scale of cross-border trade continues to grow. "Essentially, we still need to improve the competitiveness of our products." Huang Dejian cited the recent explosive sales of cooling coffee cups, noting that these innovations in scenarios and functions stem from over a decade of accumulated research and production capabilities. This year, he also expanded the factory, and the new 1,000-square-meter workshop has already gone into production.

Shi Zhengwen, director of the Tax Law Research Center at China University of Political Science and Law, also emphasized that even for the foreign trade industry, one cannot be satisfied with being the "world's factory." In the future, it is necessary to venture into high-tech fields and develop new economic formats; only in this way can sustainable development be achieved. "Only by breaking through one's own capabilities can one stand at a higher position."

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