The impact of duties on Amazon, Temu and e-commerce sites: « 70% of the products come from China, the prices will increase by 45% »

Each month Alessio Bruni sent two-three containers to the United States from 20,000 products for children and infants. The goods imported at an average cost of 7.7 dollars are intended for resale on the main American e-commerce platforms: Amazon, Target, Walmart and Shopify. Until April 2, Bruni paid $ 22,000 of duties on each load, a seventh of the value of the goods shipped; Today, after the commercial escalation between Washington and Beijing, the customs account multiplied by 11 and touches the 245 thousand dollars, overcoming the value of the goods imported in the USA. « There is no company in the world that can absorb such a shock », warns Bruni, who in 2020 founded in London with his brother Riccardo Heroes, a company that acquires the most successful retailers on Amazon and develops its activities. « Most of our products comes from China, so Trump’s duties have a huge impact on us. »

E-commerce aggregators

Heroes is not the only company that risks seeing its supply chain cut by the anti-chinese commercial curtain spread by the American administration. During the pandemia, in fact, dozens of other specialized startups were born in the aggregation of e-commerce retailers who in four years have collected investments for over 16 billion dollars. The import-export between China and the United States at the time of e-commerce was, moreover, a solid and profitable activity, based on the same hunger for low-cost products as American consumers and, more generally, Westerners who led to success platforms such as Temu and Shein. « Some estimates indicate that 70% of the goods sold on Amazon are produced in China »observes Bruni. Then, however, Trump arrived at the White House and everything has changed: his rates on China risk distorting a business model and, probably, also the consumer habits of Americans.

The increase in prices

« The containers subject to the new duties of 145% are currently found in the Pacific and are traveling to the US, » explains Bruni. « They should arrive on the Amazon portal within two to three weeks and that point we will be forced to increase prices ». Heroes, otherwise, would go to loss: the increase in customs taxes will in fact result in about 12-14 million dollars of additional costs for the company, about a tenth of the turnover, which will be largely poured on consumers. « We estimate that the prices of the goods affected by the duties on China will rise between 30 and 45% », Calculate. « We are very sorry to have to do it because we sell above all products for children to families who already struggle to make ends meet: raising prices for young families does not seem right to us ».

The weight of e-commerce in the USA

E-commerce represents between 15 and 20% of consumption in the United States And his impetuous growth has accompanied himself to the increase in imports from China, in a relationship where it is difficult to discern the cause and effect. « China is no longer the factory of the world, but it is the world that has become the China market », summarizes the Marketplace Pulse research company. Today over 50% of the most successful retailers on Amazon and 30% of those active on Walmart are based in China. If to this is added the exponential ascent of Temu and Shein on the American market, it is clear why the maxi-Dazi on imports from China and the cancellation of the customs exemption for shipments under 800 dollars risk having a huge impact on inflation in the USA, consumption (especially of the low end) and, consequently, on the turnover not only of startups such as Heroes but also of Ediaas American e-commerce such as Amazon and Walmart.

The alternatives

Alternatives, at the moment, are not seen. « The US administration is asking retailers to move production on American soil, but in reality it is not possible, » Buni observes. « The United States does not have the manufacturing skills of China. » Therefore, Heroes and other e-commerce aggregators are evaluating to move supplies to other markets. . « We are sorry for our Chinese producers, many of whom will fail because of Trump’s policies without having done anything wrong, » says Bruni. « We are evaluating Vietnam, Cambodia, Turkey and India », anticipates. « We have had some success but in the whole it will take time to examine the suppliers and make sure that they respect the safety and quality standards required for children’s products, » he continues. Not to mention that the threat of Trump’s « mutual » duties still hangs on many of these countries. « Everywhere, you look at it, » Brui concludes, « this situation will inevitably end up generating inflation ».