Under the threat of tariff sanctions, can the US market be given up?

In the past week, the global capital market has been in a state of disarray.

On April 2nd, Trump signed an executive order to impose "reciprocal tariffs" on multiple countries. This not only led to a significant decline in the three major U.S. stock indexes but also triggered continuous turmoil in markets such as Asian stock markets, crude oil futures, cryptocurrencies, and precious metals.

Compared with the panic and pessimism in the capital market, foreign trade practitioners under this round of tariff "sticks" seem much calmer, or even numb. Since Trump came to power again, although foreign trade enterprises and cross - border merchants have been mentally prepared, some people were still caught off guard when the "boot" really dropped.

No one knows how this so - called "economic revolution" by Trump will end.

1. Who are the losers and who are the winners?

According to the executive order on April 2nd, almost all Chinese goods exported to the United States will be subject to an additional 34% tariff. After adding the previous tax rates, the total tax rate for some goods (such as textiles and machinery) can be as high as 54%. A report from BOCI estimates that if factors such as the fentanyl issue are considered, the actual tax rate on China may rise to 65% - 70%.

"This is devastating for 80% of the sellers who use direct small - package shipping," said Jason, who runs a DTC eyewear brand, helplessly.

Jason's eyewear brand was launched in early 2024 and quickly entered the U.S. market. With high cost - effectiveness and a fast new product launch speed, the repurchase rate once reached 20%. However, since this year, as the Sino - U.S. trade environment has become increasingly severe, he has been forced to gradually shift the focus of his business to other developed countries. "Anyone engaged in cross - border goods trade is affected," said Jason. Currently, he is in a state of "making do as long as possible" and is ready to completely withdraw from the U.S. market at any time.

Compared with cross - border "newcomers" like Jason, Su Jian, a large seller from Yiwu, has experienced multiple "baptisms" of trade frictions since the "Trump 1.0" era. "It definitely has an impact on us, but we're used to it." In the past few years, Su Jian has expanded the main export markets to dozens of countries around the world. Therefore, the impact of this round of tariff increase on the overall business volume is relatively limited.

To avoid the risk of U.S. tariffs, many enterprises previously transferred their supply chains to Southeast Asian countries. The biggest difference in this round of U.S. tariff increases is that it targets not only goods from China but also more than 100 trading partners around the world. Even enterprises that have built factories in Southeast Asia are not spared.

Vietnam was the biggest winner in the Sino - U.S. trade war. In the past decade, it has undertaken 30% of China's transferred production capacity, and its export volume has soared from $150 billion to $600 billion. However, the tariff rate proposed for Vietnam in this "reciprocal tariff" is as high as 46%, one of the highest levels among all countries and regions. According to media reports, to avoid the impact on the domestic economy, Vietnam's top leader has relented, saying that they are "ready to negotiate to reduce import tariffs on U.S. goods to zero."

In contrast, Mexico may be one of the few countries that could benefit from the "reciprocal tariffs." Paragraphs (d) and (e) of Article 3 of the "Executive Order" stipulate that the tariff policy that took effect in early March 2025 still applies to goods imported from Canada and Mexico - a 25% tariff will be imposed on all Canadian or Mexican goods that do not meet the origin requirements of the United States - Mexico - Canada Agreement (USMCA) (a 10% tariff will be imposed on energy/energy resources and potash imported from Canada). Xue Feng, a partner at Fangda Law Firm, interpreted that this clause means that the reciprocal tariffs do not apply to Canada and Mexico, and some key goods (such as automobiles, agricultural products, textiles, and pharmaceuticals) exported to the United States will continue to enjoy duty - free treatment.

2. Choose to give up or grit your teeth and persevere?

It is not new for Trump to use tariffs as a weapon and a bargaining chip, and for enterprises forced to be "chess pieces." The key question is where the bottom line that enterprises can bear lies and whether they can accept the necessary costs.

In February this year, Huo Jianguo, the former director of the Chinese Academy of International Trade and Economic Cooperation, revealed at an event of the China Enterprises International Service Center that according to a bill not yet initiated by the U.S. Congress, the tariff on China will ultimately be increased to about 40%. At that time, Trump had just announced a 10% tariff increase on Chinese goods. When Huo Jianguo visited Zhejiang, he learned that enterprises generally believed that "they could handle a 10% tariff. If they had to share the cost, enterprises would bear 30%, importers would bear 30%, and the remaining 30% would be passed on to consumers."

Han Ling, who runs a high - end women's lingerie brand, once told us, "We can cover the additional 10% tariff by raising the selling price by $1 - 2." However, as the tariffs have suddenly increased, foreign trade enterprises have to recalculate the cost sharing. Some merchants angrily posted an email from a U.S. customer on Xiaohongshu, in which the customer asked for a lower supply price. "It's better not to do this kind of business."

In reality, enterprises' reactions can be roughly divided into three categories:

01 The short - term suspension group

The company where Li Jing works just built a factory in Cambodia at the beginning of this year. "We originally planned to go there on a business trip during the Tomb - Sweeping Festival holiday. But as soon as the policy came out, all the projects there were suspended." Li Jing is not alone. Many merchants on social media said that as soon as Trump's executive order was issued, they received notices from North American customers to temporarily suspend orders and production.

02 The precautionary group

After Trump won the election again last year, some enterprises were worried about a new round of tariff war and tried to shift their business to emerging markets such as Southeast Asia and the Middle East in advance, or reduce their investment in the U.S. market. Some small and medium - sized merchants began to increase their layout of overseas warehouses to avoid tariffs on directly exported goods. Cross - border e - commerce platforms such as Temu and SHEIN also started to increase their investment in the "semi - managed" model last year to guide merchants to choose overseas warehouses.

03 The no - way - out group

However, not everywhere in the world can be a "substitute" for the U.S. market. Take cross - border e - commerce as an example. According to data from multiple institutions such as FTI Consulting, the United States, where e - commerce giants like Amazon and Wish were first born, had an e - commerce sales volume of about $1.2 trillion in 2024. Its market size is 9 times that of the entire Southeast Asian market and 32 times that of the Middle Eastern market.

"Brands with the ability to grow rapidly overseas will definitely choose the U.S. market first. Only by establishing a foothold in the United States can a brand be considered a truly global brand," said a cleaning appliance brand.

If the lack of better options is the reason why some enterprises are reluctant to give up the U.S. market, some enterprises simply have no choice. The brand Han Ling runs is backed by a large traditional foreign trade enterprise that has long been doing OEM for European and Middle Eastern customers. "To avoid harming the interests of our customers, our own brand cannot target the European and Middle Eastern markets. The consumption levels in Southeast Asia and South America cannot support our brand positioning, and the aesthetic orientation doesn't match either."

Therefore, no matter how the tariff war develops, Han Ling has to face it. On the one hand, she tries every means to compress the production cost of the factory. "We can cut 10% from raw materials or labor." On the other hand, she plans to raise the product price on the e - commerce channel by 20% in mid - April. "In the end, it will still be passed on to consumers."

In Huo Jianguo's view, high tariffs are a negotiation strategy that Trump has always used. "He sets a high price first to force you to negotiate. Currently, we are also exploring how to ease these contradictions. We still need to safeguard the country's major interests and do what we have to do."

In response to the new tariff policy, China quickly took a series of countermeasures:

The Office of the Tariff Policy Committee of the State Council announced that starting from 12:01 on April 10th, an additional 34% tariff will be imposed on all imported goods originating from the United States on top of the current applicable tariff rates.

The Ministry of Commerce decided to include 16 U.S. entities such as High Point Aviation Technology Company in the export control list; include 11 entities such as Skydio in the unreliable entity list; and initiate an anti - dumping investigation into imported relevant medical CT tubes originating from the United States and India starting from April 4th.

The General Administration of Customs decided to suspend the qualification of one U.S. involved enterprise to export sorghum to China, the qualification of three U.S. involved enterprises to export poultry meat and bone meal to China, and the qualification of two U.S. involved enterprises to export poultry meat products to China.

The Ministry of Commerce, together with the General Administration of Customs, issued an announcement on April 4th regarding the implementation of export control measures on seven types of medium and heavy rare earth - related items such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

"It's too early to call it a done deal. We really don't know what else Trump will do." For foreign trade people like Han Ling who are used to the ups and downs, whether it's the increased tariff policy or the cancellation of the small - value tariff exemption policy that will take effect in a month, it's all just the beginning. All they can do is wait and see and try their best to cope.