Fast fashion, laptops and toys are likely to cost more due to US tariffs on Chinese imports
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Tariffs Consumer Products China
FILE - Packages are seen stacked on the doorstep of a residence, Wednesday, Oct. 27, 2021, in Upper Darby, Pa. (AP Photo/Matt Slocum, File)
HALELUYA HADERO
Updated 6 min read
A sweeping new U.S. tariff on products made in China is expected to increase the prices American consumers pay for a wide array of products, from the ultra-cheap apparel sold on online shopping platforms to toys and electronic devices such as computers and cellphones.
An additional 10% tariff on all Chinese goods took effect Tuesday, a day after President Donald Trump agreed to pause his threatened tariffs against Mexico and Canada for 30 days. The delay followed negotiations on Trump's demands for the North American nations to take steps to reduce illegal immigration and the flow of drugs such as fentanyl into the U.S.
After failing to get a similar White House reprieve, China struck back with retaliatory tariffs on some U.S. goods that are set to begin next week.
The sheer volume and variety of the China-made merchandise sold in the U.S. means residents would probably see the prices of many typically inexpensive items tick higher if the tit-for-tat tariffs persist.
These are some of the products most likely to be impacted:
Electronics, home supplies and car parts
The U.S. imported about $427 billion worth of goods from China in 2023, the most recent year with complete data, according to the U.S. Census Bureau. Consumer electronics, including cellphones, computers and other tech accessories, make up the biggest import categories.
China is a dominant production engine for tech gear, including for American companies like Apple that have their products assembled in the country. In 2023, China accounted for 78% of U.S. smartphone imports and 79% of laptop and tablet imports, the Consumer Technology Association trade group reported.
The tariffs also may affect how much consumers pay for typically inexpensive clothing, shoes and kitchen items like pots and pans, as well as the big-ticket items, such as appliances, furniture and auto parts.
Jay Salaytah, 43, who runs his own auto repair shop in Detroit, said he bought some pieces of equipment sooner than he might have, anticipating they would cost more if Trump implemented his campaign promise to use import tariffs as a tool to promote U.S. manufacturing.
“I knew the costs were going to go up, and these are manufactured in China,” Salaytah said of a probe test light he purchased before Tuesday's tariff went into effect.
Low-cost apparel and accessories
In addition to imposing a new tariff on Chinese imports, Trump’s executive order also suspended a little-known trade exemption that allowed goods worth less than $800 to come into the U.S. duty-free. The order left open the possibility for the loophole to still be used with shipments from other countries.
The trade rule, known as “de minimis,” has existed for nearly a century. It came under greater scrutiny in recent years due to the rapidly growing number of low-cost items coming into the U.S. from China, mainly from prominent China-founded online retailers such as Shein, Temu and Alibaba’s AliExpress.
Former President Joe Biden’s administration proposed a crackdown on the loophole in September, but the rules did not take effect before Biden left office.
Shein and Temu have gained global popularity by offering a quickly updated assortment of ultra-inexpensive clothes, accessories, gifts and gadgets shipped mostly from China, allowing the two e-commerce companies to compete on the home turf of American companies.
Seattle-based Amazon is trying to compete with them through an online storefront that mimics their business model by offering cheap products shipped directly from China.
Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to report released last week by the Congressional Research Service. In the U.S., Temu and Shein comprise about 17% of the discount market for fast fashion, toys and other consumer goods, the report said.
How much will prices go up?
It’s unclear. Under de minimis, Shein, Temu and AliExpress could bypass taxes collected by customs authorities. But under the changes effective Tuesday, company shipments from China will now be subject to existing duties plus the new 10% tariff imposed by Trump, analysts said.
“The vast majority of these orders are valued less than $800, which means all or virtually all of them are going to get caught in that,” Youssef Squali, an analyst at Truist Financial, said.
Juozas Kaziukenas, founder of e-commerce intelligence firm Marketplace Pulse, said he thinks the price increases on platforms like Shein and Temu will be “pretty small” and the products they sell will remain cheap. However, the rule change is likely to result in delivery delays since the packages now have to go through customs, Kaziukenas said.
The new tariffs will also hit third-party sellers on Amazon that import products from China, according to Squali. He expects sellers to eat some of the costs and pass the rest onto customers, which he thinks could result in percentage price increases in the mid-single digits. Other e-commerce sites that host businesses, such as Etsy, are also going to be impacted, Squali said.
Temu, which is owned by China’s PDD Holdings, has previously said its growth did not depend on the de minimis policy. Though most of its products are shipped from China, Temu has been recruiting Chinese merchants to store inventory in the U.S., a move that experts said would allow it to not be as exposed to changes around the trade rule.
In January, China also introduced measures to help cross-border e-commerce build overseas warehousing by offering them tax rebates or tax exemptions
What are US retailers saying?
The day after November's U.S. presidential election, Brieane Olson, CEO of teen clothing chain PacSun, went to Hong Kong to meet with factory executives to figure out ways to prepare for Trump’s tariff plan.
Roughly 35% to 40% of PacSun’s garments are made in China, even as the chain has accelerated moves to diversify with suppliers in countries like Cambodia and Vietnam.
But Olson said Trump's 10% tariff on Chinese goods was less extreme than the company anticipated. For now, PacSun doesn’t plan to increase prices on its products or move its manufacturing of knitwear and denim out of China.
Toys are another category of consumer products that relies heavily on imports from China. Greg Ahearn, the president and CEO of The Toy Association trade group, said he thinks toy companies that source in China are going to absorb the cost of the new tariff in the short term.
Eventually, those price hikes will be moved onto the consumer, Ahearn said.
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Associated Press writers Anne D’Innocenzio in New York, and Christopher Rugaber and Didi Tang in Washington contributed to this report.
