Americans say ‘trade war is lost’ after Chinese reveal unique way to get goods
Chinese business owners are getting creative in their response to Donald Trump’s trade war – and it could result in unintended consequences for the US economy.
TikTok users in the US have reported getting videos in their feed from manufacturers in China, who say they make items for companies in the West.
Instead of buying those shoes or handbags once they’re shipped out, though, the entrepreneurs suggest ordering them straight from the factory.
That way, the customers would still need to pay tariffs and shipping – but not the markup added by the stores that act as a middleman.
‘Why don’t you just contact us and buy from us?’ says one go-getter, who claims to make handbags ultimately sold by brands like Gucci and Louis Vuitton. ‘You won’t believe the prices we give you.’
It’s an unorthodox tactic, albeit not one that’s completely unprecedented – the rise of e-commerce opened up these mini trade channels decades ago.
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However, between China and the US it could mark the start of a major shift prompted by Trump’s rapid reshaping of the global economic landscape. And it’s likely to only cause real pain for one side.
Dr Muhammad Ali Nasir, Associate Professor in Economics at Leeds University, told Metro: ‘Definitely, the US retailer would be at the losing end.
‘A lot of people do have their livelihood attached to these small businesses, so they would be negatively affected by that, definitely.’
He pointed out that Instagram, Facebook and TikTok have made it easier than ever for manufacturers around the world to flog their wares direct to customers – and to quickly change their business model if necessary.
For those in China, it provides an opportunity to undercut the US firms that could previously be relied upon to buy up those products.
But another change made by the US President – one that went mostly unnoticed beyond real trade and politics geeks – is making their work a little more difficult.
At the start of this month, Trump announced he was scrapping the ‘de minimis’ rule for items sent from China. This rule previously exempted imported goods valued at under $800 from any tariffs.
Now, even individual people who are shipping in something they want direct from a Chinese factory will have to deal with tariffs.
Professor Davide Castellani, the head of the International Business and Strategy Department at the University of Reading’s Henley Business School, said this could end up benefitting US businesses.
He told Metro: ‘The US importers could swallow some of the cost of the tariff, and they could reduce their margin in order not to lose their business.’
Another selling point for the importers is the element of risk involved in sending single items halfway across the world for the buyer.
Prof Castellani said: ‘They might save something by cutting the middle manager, but there’s a risk that the goods are not delivered and that the time of shipping and clearing custom can be quite long.
‘Then the seller is basically saying, “Look, I’ve shipped my goods, and now it’s your responsibility. It’s out of my hands.”‘
He added: ‘As a buyer, you might weigh the savings that you might get by buying directly with the risk and the time that it might take to reach your final delivery address.’
Dr Nasir also advised taking claims that buyers are getting luxury-quality goods for extremely low prices with a pinch of salt.
For example, Louis Vuitton bags – like the ones a Chinese TikToker said he made in his factory – are actually only produced in Italy, Spain, France and the US.
Prof Castellani and Dr Nasir were in agreement that the US, rather than China, will be the country that feels the hardest impact from the tariffs.
The importance of the US for Chinese exports has been declining over time, while Trump’s radical policies (along with the uncertainty around them) are unlikely to achieve his aim of returning manufacturing to his country, Prof Castellani said.
‘Both countries would be harmed, and the global economy as a whole will be harmed,’ Dr Nasir added. ‘This is a fact, but it is also a fact that the US will be harmed more.’
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