Chinese sellers on Amazon to hike prices or exit US as tariffs soar

Chinese sellers on Amazon are preparing to increase the prices of their goods or exit the US market altogether following the tariff hikes made by President Donald Trump. The increase in trade penalties forces the hands of retailers and wholesalers in China’s e-commerce industry to recover what they pay for imports by adding charges on consumers.

President Trump announced Wednesday that his administration has raised tariffs on Chinese imports to 125%, up from the initial level of 104%. The move is expected to directly affect tens of thousands of Chinese Amazon merchants who rely heavily on American consumer demand.

“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. The group represents over 3,000 Amazon sellers in China. 

Speaking to Reuters, Wang said high trade levies could paralyze sellers who now face higher shipping costs, customs complications, and the challenge of staying profitable.

“For all of us in the cross-border e-commerce business today, this is truly an unprecedented blow,” she added.

Price increase or exit plan as the only options

Of every five Shenzhen-based Amazon merchants interviewed by Reuters, three said they plan to raise prices in the US to offset the new costs. The remaining two intend to withdraw from the market entirely and redirect sales to other regions, such as Europe, Canada, and Mexico.

Dave Fong, an Amazon seller whose inventory includes Bluetooth speakers and schoolbags, said he had no choice but to hike prices up to 30% for American buyers. He also plans to reduce spending on Amazon advertising, which previously consumed 40% of his US revenue.

“For us and anyone else, you can’t rely on the US market, that’s quite clear,” Fong complained. Much like most retailers sourcing products from China, he said he will have to scale back investments in America and reallocate resources to other global markets, where there’s a better chance to make sales, talk less of counting profits.

Brian Miller, another merchant on Amazon who has operated in Shenzhen for seven years, said he no longer sees the US as a viable market for China-based manufacturers. Miller mentioned the increased burden tariffs place on production costs, saying a children’s building block set that once cost $3 to manufacture now totals $7 after factoring in the 125% tariff.

To maintain profit margins, Miller said the retail price of such toys would need to jump by at least 20%. For higher-cost items, price increases of up to 50% may be required. 

“I don’t see a scenario, if things don’t change, that serving the US from China is viable any more. Manufacturers may need to be relocated to countries such as Vietnam or Mexico,” he remarked.

China is Amazon’s best seller and cross-border trade base

MarketPlace Pulse places more than half of all Amazon sellers in China, with the city of Shenzhen alone hosting over 100,000 Amazon businesses. These sellers generated a combined $35.3 billion in annual revenue, according to e-commerce analytics firm SmartScout.

Beyond Amazon, China serves as the manufacturing hub for other platforms like Shein and Temu. Cross-border e-commerce trade from China was valued at 2.63 trillion yuan ($358 billion) in 2023, according to China’s State Council.

Yet, sellers warn that no other market offers the consumption power of the US, so changing the market target to new regions is using a band-aid to cover a huge cut, at best. 

Without access to American buyers, Chinese exporters will have to fight to sell their products at home and in smaller global markets, which could create price wars and, inevitably, bring down profitability to almost nought point nought.

US consumers will also feel the effects

US households are looking at the “short-term pain” President Trump mentioned: and that includes rising prices on commonly imported goods. According to the US Department of Commerce’s Office of Industry and Security, machinery, sound recording equipment, and televisions were among the most imported commodities from China in 2022. These sectors accounted for 46.4% of all Chinese imports to the US that year.

The latest flagship iPhone, the 16 Pro Max, was previously projected to cost as much as $2,000 under lower tariff levels of 54% if Apple chose not to absorb the added costs. With tariffs now more than doubling, those prices could climb even higher.

Sellers also have to deal with the expiration of the de minimis exemption, which has allowed goods under $800 in value to enter the US duty-free. According to several sources that investigated the matter earlier this year, more than half of these shipments come from China, and over 30% are linked to Shein and Temu.

After midnight May 1, packages under $800 from China will be taxed at 90% of their declared value or $75 per item, or whichever is higher. Beginning June 1, the per-item minimum will double to $150, according to a White House announcement issued last Tuesday.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More