Why Americans Are Turning to Chinese E-Commerce to Beat Tariff Hikes
Donald Trump’s latest “reciprocal” tariff has created a lot of buzz all around the world. It seems like it gave a huge benefit to some Chinese e-commerce platforms. According to some latest reports, Americans are increasingly using Chinese e-commerce platforms like DHgate, Taobao, and Shein to avoid potential tariff hikes.
According to data revealed by SensorTower data, DHgate has now become the second most famous app in Apple’s US App Store free app rankings. The reason behind this rapid growth is that Chinese suppliers are promoting affordable and high-quality products on platforms. There are huge differences in prices as well.
Why Americans Are Turning to Chinese E-Commerce to Beat Tariff Hikes
For example, a fake Louis Vuitton wallet costs US$3.24, compared to the original’s US$1,490 price tag. Similarly, fake Lululemon-style yoga pants cost only US$13, while the retail price is US$98. Many videos are also circulating on these apps claiming that these counterfeit products are of good in quality.
The main reason behind this trend is tariff-induced price increase. In 2018–2019, U.S. consumers paid almost the full cost. The prices of manufactured goods went up by 1% compared to if there were no tariffs.
An average U.S. household had to pay $419 more each year because of these tariffs. When tariffs increased from 10% to 25%, the yearly cost went up to $831. Research from the New York Federal Reserve found that producers increased the price by 1.5% to 2.3% within three months due to a 10% increase in tariffs.
Because of these increases in tariffs, consumers are now seeking direct channels to Chinese suppliers to compensate for the increased prices.
Meanwhile, the rising trend of buying counterfeit luxury goods from China is a threat to the original brands as well. When consumers are getting the same goods at a low price, why would they buy the expensive ones?
Not only Americans are following this trend, but the global counterfeit market is expanding rapidly. Research shows that 25% of UK consumers knowingly purchased counterfeit goods in the past year. According to some reports, the global counterfeit market is getting revenue between $1.7 trillion and $4.5 trillion annually.
See Also: Trump Excludes Smartphones and Computers from Latest Tariff List – A Strategic Economic Shift?
The popularity of DHgate shows the advancement of China’s e-commerce system. It is different from Western platforms. Chinese e-commerce platforms make up 47% of all global sales. The reason behind this achievement is the government’s contribution. They receive subsidies, tax breaks, and favourable rules. This gives them an advantage when they enter U.S. markets.
However, the growing trend of using Chinese e-commerce apps is an alarming sign for the US government. When they are applying different restrictions and increased tariff rates, China is finding another way to dominate the world. No doubt, the coming months are so important. We have to wait and see how things will turn out.
