Tariffs Drive Chinese Sellers Off Amazon or Into Price Hikes

Chinese businesses selling on Amazon are preparing to raise prices or exit the U.S. market after President Donald Trump raised tariffs on Chinese goods to 125%, with a total tax burden of 145% due to an earlier fentanyl-related tariff.

“This isn’t just a tax issue, it’s that the entire cost structure gets entirely overwhelmed,” said Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, which represents over 3,000 Amazon sellers, as noted in an exclusive report by Reuters.

“It’ll be very hard for anyone to survive in the U.S. market […] So for all of us in the cross-border e-commerce business today, this is truly an unprecedented blow.” she added.

Wang stated that the new tariffs could result in customs delays and higher shipping expenses. She said that price hikes have already started for some sellers, while other merchants are now seeking alternative markets. Her comments were echoed by five Shenzhen-based Amazon sellers interviewed by Reuters, as reported by Reuters.

Online retail in China operates as one of the leading markets in the world. According to Reuters, Amazon reports that Chinese sellers make up nearly half of its total seller base with Shenzhen hosting more than 100,000 vendors.

The cross-border e-commerce sector in Shenzhen produced $35.3 billion worth of sales during the previous year. Shein and Temu receive their manufacturing support from China, said Reuters.

But the steep U.S. tariffs are now threatening that model. “For us and anyone else, you can’t rely on the U.S. market, that’s quite clear,” said Dave Fong, who sells products like school bags and Bluetooth speakers, as reported by Reuters.

He said he already increased prices by up to 30% in the U.S. and is cutting back on ads and inventory. “We have to reduce investment, and put more resources into regions like Europe, Canada, Mexico and the rest of the world,” he added, as reported by Reuters.

Seller Brian Miller, who’s been on Amazon for seven years, said once his current stock runs out, prices will have to jump. According to Reuters, the building block set which originally cost $3 to produce now sells for $7 because of tariffs although its original price was $20. The business needs to increase product prices between 20% and 50% to maintain profitability.

“I don’t see a scenario, if things don’t change, that serving the U.S. from China is viable any more and manufacturing that serves the U.S. will have to be transferred to other countries like Vietnam, or Mexico,” Miller said, as reported by Reuters.

Amazon CEO Andy Jassy acknowledged the tariffs would impact prices.”I’m guessing that sellers will pass that cost on… depending on which country you’re in, you don’t have 50 percent extra margin that you can play with so I think they’ll try and pass the cost on,” he said as reported by Reuters.