Chinese merchants operating on Amazon are preparing to raise prices or withdraw from the U.S. market in response to President Donald Trump's latest tariff hike, which raised duties on Chinese imports to 125%, escalating trade tensions between the world's two largest economies.
"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. "It'll be very hard for anyone to survive in the U.S. market." Wang added, "So for all of us in the cross-border e-commerce business today, this is truly an unprecedented blow."
The shift in strategy was echoed by five Shenzhen-based Amazon sellers interviewed by Reuters. Three indicated they would raise prices, while two said they were preparing to exit the U.S. market altogether. China is home to about half of Amazon's global sellers, with over 100,000 businesses based in Shenzhen alone, generating approximately $35.3 billion in annual revenue, according to SmartScout.
Among those reacting swiftly is Dave Fong, who sells products ranging from backpacks to Bluetooth speakers. "We have to reduce investment, and put more resources into regions like Europe, Canada, Mexico and the rest of the world," Fong said, after raising U.S. prices by up to 30% and slashing his advertising spend on Amazon. Advertising once accounted for 40% of his revenue.
Brian Miller, a Shenzhen-based seller for seven years, said, "I don't see a scenario, if things don't change, that serving the U.S. from China is viable any more." He estimated that a children's toy that once cost $3 to manufacture would now cost $7 with tariffs, requiring at least a 20% price hike-while high-end products might see 50% increases.
Amazon CEO Andy Jassy acknowledged that the e-commerce giant is closely monitoring the evolving impact. "I think they'll try and pass the cost on," Jassy told CNBC's Andrew Ross Sorkin on Thursday, referencing Amazon's third-party sellers. "You don't have 50% extra margin that you can play with."
Amazon has already canceled some direct import orders from Chinese vendors in response to the tariff hike. Home goods and kitchen accessory sellers reportedly had orders scrapped via Vendor Central, Amazon's internal system, even after goods were ready for pickup at shipping ports.
The e-commerce platform has observed some evidence of shoppers purchasing ahead of anticipated price increases. "People have not stopped buying and in certain categories, we do see people buying ahead," Jassy said. "But it's hard to know if it's just an anomaly... or how long it's going to last."
Trump's tariff escalation came after he signed a reciprocal trade order targeting about 75 countries. Days later, he paused the most aggressive country-specific duties for 90 days-excluding China-and imposed a flat 10% universal rate on most imports.
The tariffs are already affecting supply chains beyond retail. Jassy noted that Amazon Web Services began diversifying its sourcing strategies five years ago. "It's not just one country," he said, referencing AWS's supply base for infrastructure used to power artificial intelligence and cloud computing demand.
China's State Council reported that cross-border e-commerce transactions totaled 2.63 trillion yuan ($358 billion) in 2023. The latest tariffs, Wang warned, could accelerate unemployment in China's export sectors and trigger severe disruptions to global online retail dynamics.
