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Why Trump's Tariffs Does not Affect DropShipping Business

Create Date: 2019-08-06 00:59:48

Again! The US president Trump announced on Twitter last Thursday that he will impose a 10% tariff on a list of Chinese imports from September 1st.


This is not the first time Trump has announced an increase in tariffs on Chinese imports. The back-and-forth between the US and China began in early 2018, when President Trump announced the imposition of tariffs on solar panels, followed by tariffs on steel and aluminum for all countries. As a major player in the solar panel and steel industry, China retaliated by levying tariffs on US imports worth $3 billion. Tariffs on $50 billion worth of goods announced in June 2018 were regularly introduced in the summer. After the first round of negotiations failed, in September 2018, the second round of tariffs came into effect, then at the lower percentage rate of 10 percent in the case of the US and 5-10 percent in case of China.

Source: Statista

We have to admit that the global economy is threatened by an unfolding trade war now. Tariffs would increase consumer prices, raise the costs of companies that use imported materials in manufacturing. As the conflict has expanded, the shipments of ports and air terminals around the world are slowing down. The price of key raw materials is rising... However, dropshipping business is an exception, and trump’s tariffs have not affected this industry.

  1. Packages with a value below a certain threshold can be tax-free. As a result, many products are tax-free when they enter the United States, and U.S. importers must pay customs duties on bulk goods. Normally, packages priced lower than $200 are exempt from duty.
  2. Reasonable price of made-in-China products. Although labor costs in China have risen a LOT, for online sellers such as dropshippers and Amazon private labellers, purchasing products from China is usually much cheaper, even if there are shipping costs.
  3. Chinese online sellers receive a large number of ePacket discounts when shipped to the US, but not the other way around. Sending a widget from China to the US is usually cheaper than in the US itself.

In summary of the above three reasons, tariffs have little impact on the dropshipping business, and it is worth noting how important to find a China-based dropshipper.

In China, CJDropshipping is a non-negligible existence in the dropshipping market. It helped many dropshippers to start their dropshipping business at the very beginning. Most product price is competitive and some product price is much lower than AliExpress or eBay suppliers. It is also worth mentioning that CJDropshipping has 3 warehouses in the USA, there are around 1,000 SKU over there. Therefore no import duties or other taxes are required.

This post is not meant to rub your shoulders and whisper softly," Look - most of the goods we sell are not on the tariff list. Don't worry!"

No, what we want to do is to help explain the situation, so in the future, if things between China and the US escalate, you can find a reliable dropshipping business partner and you don’t have to to be afraid.