Will Donald Trump's War KILL Dropshipping & Amazon?! (Why Chinese Products Are So Cheap)

Will Donald Trump's escalating Trade War with China kill dropshipping & Amazon FBA?!
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PLEASE NOTE: This channel is politically neutral. We will not talk about any political opinions on it. The comment section however is free for you to sound-off your opinions.

WHAT is a Trade War? For those who don’t know:

It’s when Country A increases tariffs (import taxes on products imported from country B) to discourage people from importing them in the first place

In retaliation, Country B increases their tariffs (import taxes on products that they buy from Country A)

Which becomes a back-and-forth retaliation.

This is China and USA’s current situation. On June 15th, Donald Trump declared that the US would impose a 25% tariff on $50 billion dollars’ worth of Chinese imported goods in response to unfair trading practices. This was enough to kill profit margins for many sellers - and potentially kill a lot of businesses.

Trump also added if China responded with their own tariffs the US would impose 10% tariffs on an ADDITIONAL $200 billion dollars’ worth of Chinese imported goods. China responded pretty much immediately by imposing their own similar tariffs on US imported goods. Which has now locked both countries into an economic battle.

So, what does this trade war mean for YOU as an online seller?

It’s a common assumption that products are cheap in China due to cheap slave labour. And while there’s some truth in this, working conditions have MASSIVELY improved. For example: The Pearl River Delta region of China - notorious for the production of big brand toys - used to have terrible conditions between the 90s - 2000s that left many workers injured. This is much different today where enormous labour reforms have been put in place to protect the rights of the workers.

Due to this, the cost of labour rose, but still remains cheap for online sellers to source products from China. How is this so?

*THE BELT ROAD INITIATIVE*

For those who don’t know, this is:

China’s development strategy to create roads, train tracks and shipping ports that connect to Europe, Asia and the Middle East.

The Silk Road Economic Belt - a series of 6 land corridors - contains roads and train tracks to connect China to a slew of countries.

The dark side to this development was its funding strategy. In the past, China loaned $8 billion dollars to a country you’d consider “too risky” to loan - Sri Lanka. China knew they most likely WON’T pay this back, but they didn’t mind. They instead used this debt to further their Belt Road Initiative.

As a result of not being able to pay the debt, the Sri Lanka government made a compromise: They would give them a 70% stake and a 99-year lease of their shipping port, Hambantota, which had been built with money they had initially borrowed from China.

This made it cheaper and easier for China to export its goods around the world AND import key raw materials, like oil and iron ore. They then turn these raw materials into goods and export them back out again. As a result, this infrastructure network lowers the cost of producing goods, hence why we all import from China.

So why don’t online sellers need to worry about this Trade War? Well first, China is king of producing common, everyday goods. In fact, the majority of goods imported by the US from China fall under the bracket of “everyday goods” - like electronics, clothing and kitchenware. And it’s these goods that are similar to what most online sellers focus on.

But Donald Trump has NO INTENTION to compete with China over these. He doesn’t care about manufacturing everyday goods. What he’s interested in, is competing with China with HIGH-TECH GOODS.

High-tech fields like robotics, automobiles, and pharmaceutical products are currently dominated by other countries, including the United States. And THIS is what Donald Trump’s tariffs are all about. NOT the types of items most small online sellers import and sell.

Remember back at the beginning of this video when I talked about how the US has imposed 25% tariffs on billions of dollars of Chinese imported goods? The vast majority of these products include raw materials and industrial goods used in high-tech industries.

Dropshipper and Amazon FBA sellers don’t sell these types of goods. And the vast majority of products they DO sell aren’t even on the list. Besides this, import packages need to exceed $800 to be even eligible for tariffs. An amount that most importing packages online sellers make never exceed.

Additionally, the $200 billion dollar worth of goods that Trump threatened to target in retaliation isn’t much of a threat to online sellers. The majority of products on the list are related to high-tech fields, raw materials or food (which again, has nothing to do with online sellers).