How the China trade deal will affect Amazon sellers

Business News | 2 Jul |

There are a number of ways to earn money running an online business through Amazon. Sites like Hustle Life can recommend courses that will help you start a successful online Amazon shop. However, you might be wondering if the U.S.-China trade war is impacting online sellers. The answer is yes. Companies and small businesses that are selling products through Amazon will have to pay taxes if they are importing their goods from China.

What is the U.S.-China trade war?

The U.S.-China trade war that started in 2018 is having an impact on the global economy. The United States continues to increase U.S tariffs on Chinese imports. A tariff is a tax on imports. U.S. tariffs of up to 25% could permanently be applied to a number of Chinese imports. As a result, the prices of everyday objects will continue to rise as retailers try to make a profit. Other large retailers beyond Amazon, such as Target and Walmart, will also experience price hikes. United States President Donald Trump and Chinese President Xi Jinping plan to meet at the end of June 2019 to reach a resolution. President Donald Trump is also planning tariffs for other countries, such as Mexico.

How does this impact Amazon sellers?

Amazon sellers that source or manufacture their inventory from China will be directly impacted by the tariffs because they will have to figure out how to pay for the increased taxes. While large companies might be able to figure out a different way to source their inventory, smaller businesses and third-party sellers are going to get hit the hardest. Many everyday consumer goods will be impacted by the tariffs.

Currently, most small businesses and third-party sellers buy inexpensive goods from China and then resell them at a higher price. In order to continue importing goods from China to resell, sellers will either have to take on the taxes themselves (and lose profit) OR raise the prices of their products (which will cause consumers to have to pay more).  Many sellers are currently opting to raise prices. Since the trade war continues between the United States and China, there is an uncertainty of what the final tariffs will look like. Sellers are preparing for the tariffs to be permanent.

Will Amazon itself be impacted?

Amazon as a company will be impacted since some of their products come from China. While the company hasn’t said much about the trade wars, they are aware that companies of all sizes are having to adjust to the increased costs. They are willing to work with vendors to help make the adjustments as smooth as possible, however, this help will only apply to products that Amazon purchases and sells itself. Third party sellers will still have to take on the tariffs on their own. A decline in sells could also limit the amount of work available through Amazon distribution centers.

What can third-party Amazon sellers do?

There are a few options available to Amazon sellers that are currently importing goods from China. Each one comes with pros and cons.

• Raise Prices

By selling products at a higher price, sellers are able to earn back a portion of what they had to pay to import the product. However, consumers now have to pay more for products that were previously available to them at a lower cost. Some consumers are struggling to afford the new prices, which means sellers may see a decline in sales.

• Import from another country

Some sellers are starting to buy goods from other countries, which means they do not have to pay for the tariffs. However, it’s not always easy to simply begin importing from another country. Not all countries have the same factories or raw goods that China has. Even if sellers find a factory in another country that is willing to produce their goods, there’s still a chance the raw material might need to be imported from China.

• Stockpile Merchandise

Some sellers are simply buying and importing as much as they can before the tariffs are permanent. This allows them to keep the prices the same. However, this could backfire on them if the products end up not selling. They could end up with a room full of purchased merchandise that nobody wants.

In Conclusion

Amazon sellers will continue to be affected by the US-China trade war because tariffs continue to be applied to Chinese imports, which include many of the everyday products sold on Amazon. There are options available to third-party sellers, but all options could potentially affect the seller or consumers in a negative way.

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