The trade war between China and the United States has been around officially since this July, but it had precedents of course. This is what 2018 is about in the commercial sphere. However, the topic is still open: does it have an effect on e-commerce?

President Donald Trump is planning to take steps—and already took some—to put pressure on the trade between China and the US. The two states are the leaders of commerce now, and they both want to be No. 1 in the world. Now, they are about to restrict each others’ imports in the name of patriotism, and wanting the best for their own citizens—and of course for their own trade. However, in this fight, they both make statements about protectionism and the issues of a global free trade, and if one makes a step, the other strikes back. We don’t say one is the bad guy and the other is the angel, we take no stand for or against any of them.

“The U.S. duties are intended to punish China for abusing American intellectual-property rights. Trump also has signaled he wants to reduce America’s $376-billion trade deficit in goods with China” – the Bloomberg wrote.

This story is developing, so what you read in this article might be outdated in a matter of weeks.

Content:

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What is this trade war?

Hereinafter, we are going to share what this current trade war is, briefly. We won’t detail everything, just the most important and relevant information relating to our article, and just so you can get a basic knowledge about what this phenomenon is between China and the USA in 2018.

This trade war refers to the ongoing introduction of tariffs on goods between the United States and China. What notable steps happened so far?

  • 6th July 2018: the United States imposed 25% tariffs on $34 billion worth of Chinese goods (as part of Donald Trump’s new tariffs policy)
  • China imposed with similar sized tariffs on U.S. products. They want additional tariffs on American goods worth $60 billion annually.
  • 10th July: The USTR Office published a list of $200 billion in Chinese products to be subject to a newly proposed 10% tariff, following an order from Donald Trump
  • China responded that these steps from the other state are irrational and unacceptable
  • The Trump Administration’s response: the tariffs are necessary because they protect national security and the intellectual property of U.S. businesses
  • 8th August: The USTR published a finalized list of 279 Chinese products. It worths $16 billion and will be subjected to the 25% tariff from 23rd August

The U.S. Trade Representative Office is relying partly on Section 301 of the Trade Act of 1974 as for the alleged unfair trade practices and issues with intellectual property rights. It gives Trump the authority to unilaterally impose fines or other penalties on China as it really seemed to be unfairly harming US business interests. In April 2018, the USA set tariffs on steel and aluminum imports from China, as well as Canada, and countries in the European Union, by the way. However, in the meantime, Trump calls Europe and Canada, the USA’s allies, against China.

By the way, in this year earlier, Donald Trump placed additional tariffs for instance on the following products from China: solar panels, aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons.

China’s response was at that time to charge, for example, the following products: aluminum, airplanes, cars, pork, and soybeans, as well as fruit, nuts, and steel piping.

“…new tariffs […] will harm consumers and companies in both countries. The U.S. tariffs will raise prices at home and punish U.S. companies that import intermediate goods such as semiconductors and plastics. In the same way, the retaliatory tariffs China has promised will hurt Chinese buyers as well as slam U.S. farmers and workers” – the Bloomberg said.

If you want to know what those products are that the U.S. imposed tariffs on, read more below.

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What effect does the trade war have on e-commerce?

Now we are going to report on how the current trade war might impact online store owners and every figure that is in the world of e-commerce. Moreover, the most important statement we want to elaborate is the effect on those who want to import goods from China. We want to talk about this topic because maybe some people out there are worrying about how their current or future business will change as a result of the trade war.

What online store owners need to know more briefly:

  • The USA will restrict the import of several Chinese products with tariffs.
  • It’s going to be more expensive to import these goods into the USA.
  • It won’t worth doing their original business idea for those who want to sell these products in their online store that are made in China.
  • Fewer people will want to get the certain products from China so it won’t worth for those Chinese companies who would want to target the USA.
  • It can have an effect on drop shipping as well.

Please note that it doesn’t affect every Chinese product and every sector on the market!

Is this really has an effect on online stores and drop shipping?

Trade war might hinder cross-border e-commerce, but actually, it’s not that serious and desperate as it first seems. It’s because of the product categories that are already affected by restricts.

So, the situation is not that bad for online store owners. Some sectors and product types can remain untouched as for e-commerce. There’s nothing to worry about for those who are selling everyday products. YET. The tariffs apply to those suppliers, by the way, who are providing industrial parts, chemicals, vehicles and other related products, what you can see below, for instance.

So that you can relax, these products are NOT subject to the 25% import duty rate:
  • Watches
  • Consumer electronics
  • Apparel, textiles
  • Clothing
  • Kitchenware
  • Toys, children’s products
  • Accessories
  • Jewelry
The affected products, sectors:
  • Pumps/Turbines
  • Electrical equipment
  • Manufacturing equipment
  • Office equipment
  • Electronics
  • Motors
  • Machinery
  • Earth moving equipment
  • Radio-TV equipment
  • Instruments
  • Motor vehicles
  • Medical equipment
  • Microscopes
  • Machine tools
  • Printing equipment
  • Airplanes and parts
  • Engines
  • Railways equipment
  • Optical equipment

If you want to read more CLICK HERE and scroll down to the diagrams that show product details for all categories mentioned.

The trade war and its results are going to affect the whole trade of the world, because loads of big brands use Chinese assembly parts while creating products and they actually compile these in, for example, the U.S. That’s why we can count on the increase of the prices of some brands’ products, all over the world. It has an effect on all countries that are in relation to the certain brands.

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For those who are thinking about exporting products from the USA to China, they have to deal with the duties on the following objects – source: International Trade Centre / CNBC:
  • Soybeans
  • Aircraft
  • Cars
  • Computer chips
  • Jet engines
  • Gold
  • Medical instruments
  • Chip-making equipment
  • Scrap paper
  • Chemical instruments
  • Aluminum scrap
  • Fresh/frozen pork
  • Ethanol
  • Fruit
  • Nuts
  • Steel pipes
  • Wine
  • Plants (incl. ginseng)

Sources:
Bloomberg
ChinaImportal
CNBC
Wikipedia

Content manager and e-commerce adviser at Syncee. Her passion is strong for e-commerce novelties, online stores, and Shopify. She is committed to helping others succeed by her writings.