Cross-border eCommerce not Worried, but Long Way to Go in Chinese-American Trade War

On March 22, US President Trump signed a trade memorandum with China. According to the press release of the White House, the United States will impose a 25% tariff on products such as aerospace, information and communications technology, and machinery, and the amount involved can reach 60 billion US dollars. There are more than 1,300 products that may be affected. In 2017, the US trade deficit with China reached 375.2 billion dollars, which represents 66% of the total trade deficit of the United States. The purpose of Trump is to reduce this figure by 100 billion US dollars.

The short-term impact of cross-border e-commerce is limited.

In comparison with cross-border e-commerce and traditional trade, there are some differences in terms of process, policies, regulations. The trade war between China and the United States will not have a significant impact on cross-border e-commerce.

On the export side, the United States is mainly targeting the Chinese aerospace industry, information and communications technology, machinery and other industries, and cross-border e-commerce exporting products currently to the United States remains clothes, hardware, that doesn’t show its great relevance.

In fact, the United States enacted a new trade bill in 2016, which raised the duty-free quota for imports sent by US mail to US$800. The previous quota was only US$200. As long as the amount of the purchase is within the tax exemption limit, US consumers do not have to pay import duties. In addition to this, the entry products do not need to go through formal customs clearance procedures, which speeds up the customs clearance process for importation into the United States.

Potential risks in long term needs to be concerned.

Despite the current situation, trade war has little effect on cross-border e-commerce, but if in the future the two sides move a greater more further, it is likely to be the direct target of cross-border business sanctions.

According to data from the United States Census Bureau, US imports of 5 categories from China in 2017 were,

  • electrical machinery and equipment ($ 147 billion)
  • mechanical equipment ($ 109, 6 billion)
  • furniture, bedding, lamps and lighting Signage ($ 31.9 billion)
  • toys, games and sporting goods ($ 25.5 billion)
  • plastics ($ 16.3 billion)

Among the furniture, bedding, lamps and toys is the main category of China cross-border export, and has been considered a quality infraction or, if to be cut, nothing unexpected.

From an optimistic perspective, Trump’s goal is to reduce the trade deficit between China and the United States. To achieve this goal, it is not just about limiting China’s imports. The increase in exports to China also helps to reduce the trade deficit. So, does this mean that there will be greater opportunities for the cross-border commerce? For example, China and the United States will create more favorable conditions in the future to orient American products to the Chinese market.

In any case, China cross-border e-commerce players in Sino-US trade war can not have a very direct impact in the short term, but by dripping blurred long-term situation, should be protected against future risks.