Chinese e-commerce exports to the US have crashed as steep tariffs drive up prices and shift trade flows toward Europe.

The dramatic fall by 65% in Chinese e-commerce shipments to the US reflects the distorting effects of protectionist tariffs on global trade patterns. Platforms like Temu and Shein face a severe contraction in demand as higher import duties erode price competitiveness—key to their fast-fashion and low-cost appeal. US consumers are starting to encounter significantly higher prices, reducing their consumer surplus and shifting demand elsewhere. In response, firms are reallocating resources and marketing efforts toward the EU, where trade remains less restrictive, highlighting potential structural changes in global supply chains.

Chinese e-commerce exports to US plummet by 65% in face of tariffs | Trump tariffs | The Guardian

1. Explain the likely impact of tariffs on the prices of imported goods for consumers in the US. How does this affect their consumer surplus?

2. Discuss how the tariffs are likely to affect the profitability of Chinese e-commerce firms, such as Temu & Shein.

3. Evaluate strategies that Chinese e-commerce firms could use to reduce the negative impact of the tariffs.