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Yiwu, a small city in eastern China, has become a major player in the global trade of small commodities, with many of its exporters supplying the United States and other countries with tons of goods, from fridge magnets to glass vases and portable toolboxes, which are sold in stores and on online platforms around the world, including on Amazon.
Du Jing, who runs Yiwu Xianchuang Handicraft Manufacturing with her husband, is one such exporter who has been in the business for years, selling her products to consumers in the United States, among other countries, despite the challenges posed by the trade tensions between Beijing and Washington, which have led some exporters to reduce their reliance on the US market and look for alternative destinations for their goods.
For several years, the United States has been a significant destination for Chinese goods, but exporters like those in Yiwu have been seeking to diversify their customer base and reduce their dependence on the US market, with some moving production to Southeast Asia and other parts of the world to evade US tariffs on Chinese goods, a trend that is expected to accelerate under President-elect Donald Trump, who has threatened to sharply raise tariffs on all Chinese imports and close loopholes that exporters currently use to sell their products more cheaply in the US.
Chinese exporters are exploring new markets
Du, who spoke from her booth in the Yiwu wholesale market, which is covered in colorful magnets and keychains, expressed concerns about the impact of the trade tensions on her business, saying that sales to the US have declined, possibly due to the economic situation in the country, which has led American customers to become more price-sensitive and put pressure on her company to keep prices low, with many customers frowning at any product that wholesales for more than 25 cents.
In contrast, the Middle East has become a more promising market for her company, with higher prices and increasingly larger orders, providing some relief from the decline in sales to the US, which has been her main market for years.
Similarly, Chen Yong, who runs Yiwu Bixuan Import Export Co., Ltd., which exports glass vases and other home decor, reported a decline in business with the US and Europe over the past few years, but an increase in sales to other regions, such as Southeast Asia, Africa, South America, and Russia, which has helped his company to offset the loss of sales to the US.
The decline in sales to the US is reflected in China’s customs data, which shows that the share of Chinese exports going to the US dropped from 19% in 2018 to 15% last year, despite a record high in overall Chinese exports.
President-elect Trump has announced plans to impose higher tariffs on Chinese goods, with potential increases of 60% or more, which could have a significant impact on Chinese exporters, many of whom are already facing pressure from the existing tariffs, which have been averaging around 20% since the start of the trade war.
Higher tariffs could lead to a decline in Chinese exports to the US
Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, warned that higher tariffs could lead to a severe decline in Chinese exports to the US, potentially affecting many companies, including larger ones, which might find it difficult to absorb the increased costs, let alone smaller and medium-sized companies, which could struggle to survive.
The impact of higher tariffs on Chinese exports to the US could be significant, affecting industries such as light manufacturing, textiles, steel, and computers, according to a report by Caicong Securities, and leading to a decline in Chinese exports to the US, which could have significant economic implications for both countries.
Du and Chen are among the many exporters in Yiwu who are exploring new markets and looking for ways to offset the decline in sales to the US, and to adapt to the changing global trade landscape, as they navigate the challenges and opportunities presented by the evolving relationship between China and the US.
