YIWU, China (AP) — If you’ve recently picked up a fridge magnet from Times Square or wandered through another bustling New York tourist spot, chances are it originated from Yiwu, a small Chinese city renowned for its massive contribution to the global flow of small goods. This city is where Du Jing and her husband run the Yiwu Xianchuang Handicraft Manufacturing company, within the world’s largest wholesale market. The reach of their products extends far and wide, from plush toys to glass vases, winding their way into U.S. homes via platforms like Amazon.
For many years, China has flooded the U.S. market with exports, but recent tensions between Beijing and Washington have prompted businesses in Yiwu to reconsider their strategies. Some are choosing to relocate manufacturing to Southeast Asia or elsewhere to sidestep hefty U.S. tariffs.
This shift is picking up momentum, especially with threats from President-elect Donald Trump to significantly raise tariffs on Chinese goods. If his administration proceeds, it could result in higher prices across America while squeezing profit margins for Chinese exporters.
From her cluttered booth brimming with colorful merchandise, Du is uncertain about the exact cause driving down sales — whether it’s tariff fears or a faltering U.S. market. All she knows is, “The U.S. market has shrunk a lot,” attributing it possibly to America’s economic circumstances.
In recent years, she noticed American buyers pushing back against any significant price hikes, while markets in the Middle East have been thriving by comparison, welcoming higher prices and more substantial orders.
Elsewhere in the sprawling market, Chen Yong of Yiwu Bixuan Import Export Co., Ltd., shares a similar experience. His company, dealing in glass vases and home decor, has seen business dwindle from the U.S. and Europe. Yet, it has flourished in regions like Southeast Asia, Africa, South America, and Russia.
China’s export share to the U.S. fell from 19% in 2018 to 15% last year, despite an overall forecasted record high in exports. Trump’s threats of a 60% tariff hike could force businesses like Chen’s to either boost prices or accept slimmer margins. Without American buyers accommodating higher costs, his only option might be to find alternative markets.
Tu Xinquan, an expert in trade studies, warns that a tariff as high as 60% would devastate Chinese exports to the U.S. “Many companies will completely halt their trade with the U.S.,” he predicted, noting that such a hike would be insurmountable, especially for smaller businesses.
Industries like light manufacturing and textiles would feel the heaviest blows, with predictions also extending to sectors like steel and computers. Trump’s initial term saw tariffs on over $360 billion in Chinese products, which temporarily slowed export growth before rebounding once the U.S. economy boomed.
The Biden administration has upheld many of Trump’s tariffs, adding new ones on strategic sectors like steel and green tech. However, Trump’s envisioned blanket tariffs could impact everyday goods, burdening small manufacturers.
Among the top exports from China to the U.S. last year were furniture, toys, and games, trailing behind electronics and machinery. Trump aims to tighten loopholes that allow Chinese products to evade tariffs, such as the duty exemption for shipments under $800 — a facility many vendors on platforms like Amazon and Shein heavily rely on.
Eswar Prasad from Cornell University highlights that closing this loophole could be crippling for Chinese exporters whose models depend on low-value exports and equally damaging for value-conscious American consumers.
Adapting to these challenges, some Chinese companies have shifted operations overseas. With average tariffs sitting around 20% since the trade war began, firms have moved production to countries like Vietnam and Mexico.
The Shenzhen HIHO Luggage and Bag Industry Development, for example, established a factory in Indonesia in 2021. The company’s marketing director, Steven Wang, noted that their operations span both Indonesia and several Chinese provinces, allowing them to navigate new tariff landscapes.
As strategies continue to evolve, Wang remains watchful. “If Trump imposes any additional tariffs on Chinese goods from ASEAN countries or Mexico, we may need to move the factories somewhere else,” he remarked, underscoring the dynamic nature of international business in the face of economic and political flux.
Mistreanu reported from Taipei, Taiwan. Contributions came from video producer Wayne Zhang in Yiwu and researcher Yu Bing in Beijing.
