If you have ever bought a Christmas decoration, a button, an electric shaver or any other cheap manufactured product, there is a good chance it came from Yiwu, a city in east China’s Zhejiang province that is home to the world’s largest wholesale market.
Covering more than 4m square metres, tens of thousands of suppliers have booths in Yiwu International Trade City. As the US and China exchange increasingly hysterical rhetoric and threaten ever-higher tariffs, it is vendors at places like Yiwu who are at the frontline of the new trade war.
On Monday, US president Donald Trump threatened to impose an additional 50% duty on Chinese goods, which would take the total rate to more than 100%. Few in Yiwu are happy to hear about the new tariffs, but – having faced trade wars since at least 2018 – many are well prepared to focus their business on trade with countries outside the US.
Wang Guiying has been selling wholesale picture frames in Yiwu for 30 years. She says that fewer than 10% of her customers are in the US, a much smaller share than when she first set up shop. These days, most of her buyers are from the Middle East.
“Now business is getting harder,” she says. The margins are very tight, and we’re working with minimal profit. It’s tiring to do business but you can’t stop.” Her few US customers are “slowly reducing their orders”.
Like Wang, Ma Lin, who sells beauty accessories, does most of her trade with the Middle East. She says it is too soon to say what impact of the tariffs would be, but predicts they “will cause a huge loss in trade between China and the US”.
Vendors in Yiwu are more worried about the global economic shock caused by Trump’s tariffs than on US taxes on Chinese goods specifically. Clementine, 23, graduated from university two months ago and joined a perfume exporting business in Yiwu. She says she’s “not optimistic at all” about the economic situation.
“But I think we have no choice. We just have to accept it,” she says. Trump “can do whatever he wants”.
China’s government is keen for its exporters to pivot away from the US. About 15% of China’s exports go to the US, down from 19% in 2017. Many Chinese goods still end up on US shelves via third countries, but the overall push to reduce exposure to the US is evident in official statements as well as the statistics.
Yiwu’s official reporting of its 2024 trade statistics, for example, says the city’s imports and exports last year were worth 669bn yuan, a year-on-year increase of more than 18%. The local government noted that 18% of this trade was with Africa, 17% with Latin America and 10% with Asean countries. It made no mention of the US.
“Despite grappling with significant economic headwinds … China enters this trade confrontation with multiple structural advantages that significantly strengthen its hand against the United States,” says Diana Choyleva, founder and chief economist at Enodo Economics, a forecasting firm.
Choyleva notes that if Trump follows through with his threat to slap an extra 50% tariffs on Chinese goods, it would be US consumers who would pay the price. “Simply forcing Trump to implement his threatened 50% tariff may ultimately inflict more self-damage on the American economy than any additional Chinese measures.”
Wall Street traders interviewed by the Guardian say that Trump’s tariffs on third countries are merely bargaining chips to persuade those countries to raise tariffs on China. That is exactly what sellers like Cheng Xiaoyan, who exports novelty ashtrays, worries about.
“If it was just about the US, it would be OK as I don’t have many customers there,” she says. “But I’m worried that other countries will follow the US and impose similar tariffs.”
“We’ll have to raise our prices. As our profit margins are very thin already, they wouldn’t be enough to cover the tariffs. We won’t be able to absorb the cost.”
Cheng says she tries to be optimistic, but “this is something only the government can negotiate. What can ordinary people do?”
Additional research by Jason Tzu Kuan Lu
