China’s online retailers give Trump’s tariffs a one-star review

SHENZHEN, China – The rapidly worsening trade war between the world’s two largest economies is threatening the place where Americans and Chinese most regularly interact: online shopping.

Chinese sellers in recent years have made it their business to fulfill – cheaply – every American consumer’s every desire: from fake nails and crop tops to fish-tank speakers and night-vision rifle scopes, delivered to American doorsteps via fashion giant Shein, direct-buy retailer Temu or Amazon.

But that could all come to an abrupt halt with President Donald Trump’s decision to impose a minimum 145% tariff on Chinese goods and to end the tax exemption that had allowed small packages to enter the United States duty-free.

Many Chinese e-commerce exporters are despairing.

“My biggest worry is that our companies won’t survive the next few months and will go bankrupt,” said Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association.

As many as 90% of the association’s members do business in the U.S., and tariffs have forced many factories to suspend operations, cut wages or give weekends off. “Everyone is waiting to see if China and the U.S. will return to the negotiating table,” Wang said.

Trump last week said packages worth less than $800 shipped from China would attract a 120% tax from May 2, effectively shuttering the loophole that allowed sellers on Shein, Temu and Amazon to sidestep duties. He said the exemption was being exploited to smuggle synthetic opioids that were fueling the U.S. fentanyl crisis.

Shipments from China accounted for around two-thirds of all tax-free small packages entering the U.S., according to Reuters data. Many were from Shein and Temu, but they also came through Amazon. Half of Amazon’s top sellers are based in China. (Amazon founder Jeff Bezos owns The Washington Post.)

In the early days of the trade war, when tariffs were still in the low double digits, thousands of vendors gathered at an e-commerce expo in this southern Chinese city to learn how to sell to global – and especially American – consumers.

Organized by Chwang, one of China’s bigger e-commerce service providers, the expo last month brought together online retail entrepreneurs to trade tips on artificial intelligence-driven data analytics, skirting government internet fire walls to advertise on Instagram and ways to make products TikTok-famous.

At the time, attendees were mostly upbeat. They pointed to their resilience and adaptability – and the low prices of increasingly competitive goods. They underscored that Chinese sellers had a deep understanding of American sales platforms and buyers that few other countries could replicate.

Deng Longyun, Chwang’s chief operating officer, said Chinese retailers were committed to their largest export market.

“The U.S. has such formidable consumption power. Chinese sellers will not give up easily,” he said in an interview when U.S. tariffs were only 20% and the small-package loophole remained open.

Few predicted the triple-digit tariff storm. Now, some in Shenzhen are rethinking their bets on the U.S. market.

“The current policies of the U.S. platforms are really unstable,” said Trevor Tang, an instructor at an e-commerce school that teaches sellers how to use Amazon. “Many sellers no longer focus on the U.S. because of unclear politics, even though China’s consumer goods still have incomparable advantages in a global market.”

Shenzhen’s 150,000 online retail exporters

Online marketplaces such as Amazon and eBay first took root in the United States, but their explosive growth in recent years has in large part been thanks to China: The world’s largest manufacturer has become really good at figuring out what Americans want and how to get it to them quickly and cheaply.

At the Chwang expo, 3,800 businesses were seeking partnerships to expand overseas. Numerous products appeared designed to appeal to American buyers, such as toy Cybertrucks and “ice princess” bubble-making wands inspired by the Disney movie “Frozen.”

Even with the end of the small-package exemption, Chinese online retailers are likely to still find ways to reach American buyers – even if they have to do so at higher costs.

“These platforms have proven that they’re very adaptable,” said Eli Clemens, a policy analyst at the Information Technology & Innovation Foundation, a Washington think tank. Government policy has encouraged Chinese online retailers to reach foreign consumers directly, rather than relying on American rivals such as Amazon, Clemens said.

Because Beijing wants Chinese companies to compete internationally, policymakers have tried to support the industry by setting up industrial parks where companies can receive subsidies for patent applications, trademark registration and logistics networks.

That support, combined with a surge of entrepreneurship in manufacturing hubs like Shenzhen, turned online retail into an area where the Chinese and American economies have become more intertwined in recent years, despite simmering trade and technology tensions.

Shenzhen alone is home to more than 150,000 online retail exporters and 41 million square feet of warehouses dedicated to overseas shipments.

The concentration of e-commerce firms makes the city the ideal base for businesses like that of Liao Changyi, who ships 30,000 to 50,000 sets of plastic press-on nails to buyers across the world each week.

“All the major cross-border e-commerce platforms have offices in Shenzhen. If you have any problems, they can solve them immediately,” Liao said from a spacious sales room where hundreds of different hand-painted fake nail designs were on display.

“We are really a group that just gets swept along with the market. If the competition gets intense, if tariffs rise, taxes and costs increase, all we can do is adapt,” he said.

E-tailers focus on American market

China has been the factory of the world for three decades, but the rise of online retail supercharged that role.

Today, Chinese firms don’t just make the products. They build online marketplaces, operate global logistics networks and employ American influencers to promote their goods on TikTok.

Platforms such as Shein and Temu brought models pioneered in China to the United States. Using the tax exemption, they could offer a massive variety of cheap and constantly updated products tailored to match the latest trends on American social media.

Their success led Amazon to launch a new section – Amazon Haul – in November to make it easier for buyers to purchase cheap goods directly from mostly Chinese sellers.

The vast U.S. market – and a proliferation of ways to sell there – also helped create a subset of manufacturers making products especially for the American market.

One stall at the expo specialized in two things: stainless steel face massagers and whiskey paraphernalia. “We still hope to sell to the United States even with tariffs, because there isn’t much of a domestic market for these things,” said Mason Zhou, gesturing to a shelf of reusable metal ice cubes shaped like rifle bullets and hand grenades.

But there were also early signs of retailers adapting to Trump’s tariffs. They were buoyed by surging sales in Southeast Asia and Russia and the emergence of Chinese AI companies such as DeepSeek, which could improve efforts to target consumers in real time and discover gaps in the market.

People at the expo were especially excited about the promise of TikTok Shop. Launched in 2023, the platform allows users to sell products directly in the video app, and it has been embraced by Chinese retailers.

Trump on April 4 gave TikTok another 75-day reprieve before its China-based parent company, ByteDance, must sell the app or face a ban in the United States.

One of the speakers at the expo, 24-year-old seller Vicky Zheng, recently founded a consultancy to teach others how to climb U.S. rankings on TikTok Shop.

Her firm has had multiple top sellers on the platform. These include jump ropes that count calories and quirky lamps that were promoted on TikTok by a network of 30,000 influencers in the U.S. and China.

Even with tariffs, Zheng still saw opportunities in investing in a mostly unexplored “blue ocean” market like TikTok Shop – as long as Trump continues to extend the deadline for a nationwide ban.

“The volume on Amazon was so-so right at the time, and TikTok Shop just happened to be a brand-new platform,” Zheng said.

After the latest tariff hikes, however, Zheng has started to advise her clients to consider branching out. “The current situation means it is essential to focus on emerging markets outside the U.S. as a preventive measure against future trouble.”