US traders, consumers to bear brunt of tariffs for Christmas

Americans expected to spend more thanks to Trump’s policies

The heightened trade row between China and the US will cause more suffering for American retailers and consumers of Christmas decorations than their Chinese counterparts, and US importers may find themselves unable to find alternate suppliers, Chinese merchants said.

“We’re now racing day and night to produce Christmas decorations so that they can be placed on shelves in the US in October. The traditional production hikes for Christmas are in June and August, and this year orders from the US have so far stayed the same as last year,” Chen Zhenfeng, manager of Weichen Gongyi, based in Shantou in South China’s Guangdong Province, told the Global Times over the weekend.

Chen’s company manufactures a variety of Christmas decorations, including Christmas trees, Christmas stockings and decorative lights. Although the US has been one of his company’s largest export destinations, Chen said he is “not very worried” about escalating China-US trade tensions, since US importers are the ones that will actually pay for the extra tariffs under the current business contract.

On July 10, US President Donald Trump released a new tariff list for 10-percent tariffs on $200 billion of Chinese imports, including some textiles and consumer goods.

Chen explained that in international trade, most Chinese manufacturers have agreed on “free on board” prices with foreign clients, in which Chinese sellers pay for the delivery costs to designated Chinese ports, and US agencies take responsibility for the remaining costs, including tariffs charged by US customs.

“If the proposed tariff takes effect later, US importer agencies will be reeling as they are subjected to much more immense pressure than we are,” Chen said.

Chen’s opinion was echoed by Ying Junfeng, manager of Shifeng Decorative Lighting Co based in Yiwu in East China’s Zhejiang Province. Ying told the Global Times on Monday that the influence of the China-US trade row on his factory’s Christmas shipping is also “negligible.”

“Most of my clients in the US are regular customers, and I did not see any fluctuation in Christmas lighting orders from the US this year. We’re not even in a rush to manufacture Christmas exports on expectations of upcoming tariff increases,” Ying said.

However, both Ying and Chen pointed out that if the trade row lingers on, their businesses may face greater uncertainty due to fluctuations in exchange rate and moves by US clients to depress prices in a bid to contain costs.

As such, Ying noted that he is now developing other markets and shifting the firm’s focus to European and South American markets.

Finding alternative suppliers

While finding alternative markets could make up for the potential withering of US business for Chinese vendors, the task of finding alternative suppliers of Christmas decorations may not be easy for US retailers, taking into account the price advantage of Chinese products, industry insiders said.

“Currently, ‘Made in China’ Christmas decorations have dominated the US market, with virtually no competitive rivals,” Ying stressed.

This is because China has established a complete industry chain for manufacturing Christmas decorations, such as lighting and toys, which means that the cost of producing such seasonal products is relatively low compared with firms in Southeast Asian countries, where downstream and upstream suppliers are still located in China, Yang said.

“China supplies the cheapest Christmas decorations. And if Trump slaps on the proposed tariffs, US consumers may end up with a more expensive Christmas holiday this year,” He Lihong, the owner of a wrapping paper factory in Suxi county, Zhejiang, told the Global Times on Monday.