Videos showing Chinese people claiming to be manufacturers of luxury brand goods and offering them for sale at low prices have flooded TikTok and other social media in the United States and Europe this week. But few of the videos, which highlight the gap between the cost of making these products and their retail price, can be seen on platforms in China itself.
Some of the brands targeted, including Hermes and Lululemon, have offered persuasive evidence that their products are produced wholly or almost entirely outside China. But a number of American commentators have seen the videos as part of co-ordinated Chinese effort to undermine Donald Trump’s position in the trade war between the world’s two biggest economies.
After Trump, under pressure from the bond markets, paused “reciprocal” tariffs on most countries, he left a 145 per cent tariff in place on all goods from China. A couple of days later, he made a further retreat by reducing the tariff on 20 types of Chinese products to 20 per cent.
The smartphones, laptops and other electronic goods that have been exempted, for now, from the 145 per cent tariff account for almost a quarter of the goods China exports to the United States. Much of the rest is made up of products like toys, T-shirts and plastic goods where the price and the margins are much lower.
A few months ago, I met manufacturers in the southern Chinese city of Yiwu, which produces most of the Christmas decorations in the world. Checking in with them this week, most were relaxed about the impact of the tariffs on their business and optimistic about China’s chances of surviving a trade war with the US.
Most of this year’s Christmas decorations have already been produced and Yu Xiangjin has shipped his orders to all destinations apart from the US.
“For the US orders, the final payments have all been made but they haven’t been shipped yet. The customers asked us to wait for a while, so we’ll just wait,” he said.
“If the tariff war continues like this, there won’t be as many orders from American customers next year. But I still have other customers, such as those from Latin America and Africa. I’ve been in the business of foreign trade my whole life so if I don’t do business with them, that’s okay too.”
Wang Chunxiao said that the tariffs had not affected her business directly because most of her customers are in Japan, South Korea and South America. But she is concerned about the potential knock-on effect of tariffs the US might impose on those countries.
“If Trump’s tariff policies lead to a decline in the economic situations of these countries, it may have a long-term impact on our business. When they have less money in their pockets, they will stop buying from us,” she said.
Some American importers have attempted to pressure suppliers to absorb the cost of tariffs by cutting prices. Chinese authorities last month warned the retail giant Walmart against squeezing producers who were already operating on narrow margins.
Sun Yingfang, who has been making Christmas trees for 20 years, said she will give short shrift to anyone looking for a price cut.
“We won’t reduce the prices. Even if it’s due to tariffs, we still won’t lower the prices. Because once we make an exception, we’ll have to keep making the same exception, and our bottom line will be continuously eroded. We are in business to make a living,” she said.
“If a customer asks me to reduce the price because of tariffs, and this customer is a long-term one with whom we have always had a very pleasant co-operation, then at most I might share the tariff cost with him on a 50-50 basis. But if this price goes below my cost price, then I can only say sorry. My bottom line is that I can’t operate at a loss.”
Although most of the manufacturers fear that Trump’s policies will hurt the global economy and hamper the trade on which they depend, they are sceptical about his chances of success. A number of them spoke of the apparent chaos at the heart of the US administration and all agreed that American manufacturers could not supply their products at a competitive price.
Yu said he is not overly concerned about the latest escalation in the tariff war because he believes that, sooner or later, Washington and Beijing will make a deal.
“The United States can’t do without China, and China can’t do without the United States either,” he said.
“It’s just like a married couple. After all the squabbling, they will eventually have to find a middle ground that both sides can accept to resolve the issues.”
