Chinese e-commerce businesses selling on Amazon are contemplating raising prices in the US or potentially exiting the market due to increased tariffs imposed by the US government.

Some sellers are reportedly seeking new international markets, while others plan to adjust their prices in response to the tariff changes.

This follows an announcement by President Trump to raise tariffs on Chinese imports to 125%, up from the previous rate of 104%.

Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, which represents over 3,000 Amazon sellers, called the tariff hike an “unprecedented blow.” She said that the higher costs could challenge businesses’ competitiveness in the US market.

Wang also noted that the new tariffs could significantly impact small enterprises in China. This could potentially lead to increased unemployment rates in the country.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tariff escalation follows historical pattern of economic pain beyond intended targets

Current tariff increases echo previous trade conflicts that led to economic downturns for all parties involved.

The 125% tariff level mirrors the approach of the Smoot-Hawley Tariff Act of 1930, which raised duties on over 20,000 imported goods and contributed to the Great Depression by triggering retaliatory measures from trading partners1.

According to Yale Budget Lab analysis, the effective U.S. tariff rate has reached 22.5%, the highest since 1909, with consumer prices projected to increase by 2.3%, resulting in an average household loss of $3,8002.

Previous U.S.-China tariff exchanges led to a 25% decline in U.S. imports from China in early 2019, costing approximately $14 billion in net trade, while passing most costs to U.S. consumers through higher prices3.

Federal Reserve models estimate that tariffs raise production costs for firms, lower productivity, and disrupt supply chains by reallocating resources to less productive sectors4.

2️⃣ Tariff burden falls disproportionately on vulnerable groups within both economies

The economic impact of tariffs is not evenly distributed, with small businesses and lower-income households bearing the heaviest burden.

Yale Budget Lab’s analysis shows lower-income U.S. households face disproportionately higher losses, averaging $1,700 annually, as they spend a larger percentage of their income on imported goods2.

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