Amazon Sellers Love Trump Because of This

One of the fairer criticisms of China oft cited by Trump supporters were the unfair trade practices the Chinese subjected American businesses to, from sharing technology and entering into joint ventures to outright market bans. In 2023 I joined a mastermind of elite Amazon sellers, and the vast majority are huge Trump supporters because they believe Chinese businesses have unfair access to our domestic market, which in reality they do.

Years before the rise of Trump, when I lived in Bogota, I taught English to workers at Nokia Siemens. They had unending disdain for Huawei for their tactics of copy-and-paste technology while undercutting on price. That was the only time I came face to face with people whose livelihoods were affected by Chinese business practices.

In the last few years I’ve joined professional networks of Amazon sellers. It’s remarkable how much antipathy they have for China, and how much they love Donald Trump. My business doesn’t source anything in China, so it doesn’t affect me. But as you can imagine, most Amazon sellers are producing widgets in China, so everything is vulnerable to the same copy-and-paste-and-undercut tactics.

But they’re not just undercutting because they have lower payroll. Chinese companies don’t pay U.S. corporate income tax. And as members of the Universal Postal Union, they don’t pay much in shipping either. Before 2020, it was often cheaper to ship something from China than within the United States (see why).

Trump’s recent tariffs on Chinese imports just made it a little harder by cutting the “de minimis exception.” From What to Know About Changes in a Trade Loophole for Online Goods:

President Trump’s executive orders on Saturday imposing broad tariffs … also scrapped a shipping workaround for low-cost products, a move that is poised to alter how many online purchases are taxed.

The provision, known as the de minimis exception, has been used by many e-commerce companies to send goods to the United States from China without having to pay taxes on them…

Mr. Trump’s order on Saturday required that all goods leaving China must follow the same rules for higher-value shipments … Fast-fashion retailers like Shein and Temu, which rely on Chinese vendors … have been able to expand their market share largely by exporting goods into the United States without being subject to duties… a huge tax advantage.

In 2016, Congress raised the entry threshold to $800, from $200. Since then, the number of duty-free parcels has risen tenfold… Retailers have increased their reliance on the workaround in recent years… It underpins major business models, as Shein, Temu and many sellers on Amazon have used the de minimis exemption to bypass taxes.

A report released last week by the Congressional Research Service found that Chinese exports that are exempted by the de minimis rule soared to $66 billion in 2023 from $5.3 billion in 2018.

I sent this to a “business class” Trumpian friend. Here is his take:

Americans buy too much cheap, Chinese throwaway trash. As you know, in Latin America, when your sandal breaks, you spend $2 to get it repaired. In the US when your sandal breaks, you throw it away and order a new set, most likely manufactured in China. Tons of waste, tons of economic inefficiency.

I hope DJT closes that loophole once and for all. I don’t mind paying slightly more for a new phone charger cable or a mosquito net. I don’t buy trash from Temu or Shein.

I agree with him that the amount of stuff you see in the American economy of abundance feels wrong, but less from an economic efficiency standpoint and more environmental and sustainability.

I feel for those Amazon sellers that have to compete with Chinese manufacturers. They are all delighted with this little-known part of this opening salvo in the trade war. They want Trump to go further, specifically with an External Revenue Service charging Chinese sellers on their income. Good luck with that!

To be clear, these people are not hurting. Most are millionaires. But they work hard and smart. They innovate and deliver value. I haven’t written much about this new world I’m leaning into of Amazon sellers. I got into e-commerce via happy accidents. I know people are curious about it. If you’d like to read about that world, let us know in the comments.

Here is a nice video explainer on the de minimis exception.