As the US-China trade war intensifies, its impact on people’s well-being varies widely across China. The situation is a tapestry of mixed emotions and diverse experiences, shaped by individual circumstances and industries.
For some, the conflict fuels a sense of determination and innovation. In the bustling world of electric vehicles, companies like BYD are seizing the moment. They are in overdrive, unveiling sleek luxury models and cutting-edge self-driving features. Their latest battery-charging technologies promise to revolutionise the experience, allowing drivers to recharge their vehicles nearly as quickly as filling up a petrol tank.
Rather than being deterred by restricted access to the American market, these automakers are pivoting with strategic agility. They’re setting their sights on new horizons, particularly in rapidly expanding regions such as Southeast Asia. Here, they aim to rival giants like Tesla and capture the imagination of a burgeoning consumer base.
This wave of innovation is not just about business; it’s about national pride and resilience. For many, it represents an opportunity to showcase Chinese ingenuity on a global stage, transforming challenges into triumphs. While tensions with the U.S. loom large, this spirit of enterprise offers a silver lining for those who thrive in the face of adversity.
Amid the ever-changing landscape of global economics, whispers of an “engineer dividend” have begun to circulate. This term nods approvingly toward President Xi Jinping’s steadfast commitment to bolstering higher education in the sciences. It’s a vision that’s starting to bear fruit, altering perceptions of China’s global role.
The breakthrough success of DeepSeek’s reasoning model, unveiled with much fanfare in late January, marked a pivotal moment. It sparked a revelation that China is no longer merely the world’s manufacturing hub, a title now under threat from President Donald Trump’s aggressive tariffs. Instead, Beijing seems to have unearthed a novel growth paradigm.
This new model hinges on gaining significant traction in software services, an arena traditionally dominated by the United States. The implications are profound, suggesting a shift in the balance of technological power. Almost like clockwork, Chinese tech companies are rolling out innovative artificial intelligence models and applications on a weekly basis.
These developments mark a strategic shift from hardware to software, positioning China as a formidable competitor in the tech sector. As these advancements unfold, they paint a picture of a nation poised for a new era of digital dominance. The narrative of China’s economic journey is being rewritten before our eyes, one AI breakthrough at a time.
The luxury real estate market in Shanghai is experiencing a remarkable resurgence, fueled in part by a revitalised stock market. This newfound vigour is not limited to Shanghai alone. Other tech-centric cities, such as Hangzhou and Shenzhen, are also experiencing a revival in their property markets. After enduring a challenging four-year downturn, these cities are finally starting to see a glimmer of hope and prosperity.
This positive shift in the property sector comes at a time when China’s economy is redefining its global trade dynamics. Since the onset of Mr. Trump’s trade war in 2018, China has strategically reduced its dependency on American consumers. A decade ago, exports to the United States made up 20% of China’s total exports. However, by 2024, that figure had decreased to just 15%.
Even in a scenario where the entire trading route to the U.S. were to be severed, China’s economy is robust enough to weather the storm. Economic forecasts suggest that the impact would be a contraction of only about 3%. This resilience highlights China’s evolving economic landscape, which is capable of withstanding external shocks while continuing to grow internally.
Amidst an exterior of unwavering resilience lies a genuine apprehension among many, particularly blue-collar workers, about securing their livelihoods. The once-reliable boost from exports, a solitary beacon in an otherwise lacklustre economic landscape, is now dimming, threatening to intensify the scramble for low-skill employment. This challenge is exacerbated by the increasing automation of factories and the conclusion of a decade-long property boom. In 2024, just over 40% of migrant labourers found work in manufacturing and construction, a significant drop from more than half only a few years prior.
In the realm of US imports from China, apparel ranks third, trailing only communication devices and electronic gadgets. The textile sector traditionally employs over 25 workers for every million yuan (approximately S$179,500) in GDP it generates. However, the imposition of tariffs by Mr. Trump could lead to the elimination of approximately 16 million jobs, as projected by Goldman Sachs Group.
The future paths chosen by those displaced hold significance for the broader community of 425 million blue-collar workers. Recently, a mass migration into the gig economy has been observed, with individuals taking roles as housekeepers, drivers, delivery personnel, and social media influencers.
Yet, some of these fields are becoming saturated. In 2024 alone, the number of ride-hailing drivers surged by 27%, reaching 38 million, leading certain local authorities to caution against overcapacity. Not surprisingly, this glut has led to a decline in average monthly wages.
Consider the world of social media live streaming, populated by 18 million young individuals seeking a glamorous career. For most, however, the reality is far from luxurious; they are struggling to make ends meet. An academic study revealed that 93% of participants earn less than 3,000 yuan per month, which is less than half the average earnings of a delivery worker.
It seems improbable that Beijing will implement the kind of massive stimulus measures seen following the global financial crisis (GFC), when China’s exports last experienced double-digit declines. During that period, over a third of migrant workers—more than 80 million—were employed in the manufacturing sector. Now, as the landscape shifts once again, the journey ahead remains uncertain.
In the absence of widespread street protests, the government’s stance on blue-collar workers has been one of indifference cloaked in practicality. Their rationale is straightforward: many of these labourers possess limited skills, enabling them to be easily redeployed. If manufacturing jobs vanish, there’s no cause for alarm; these workers can transition to the service sector or return to their rural roots. This mindset was vividly demonstrated during the Global Financial Crisis when over 20 million displaced migrant workers found themselves back in the countryside, seeking whatever sustenance they could find.
The advent of a trade war only deepens the chasm between the elite and the grassroots. For those with skills and wealth, U.S. tariffs are a minor inconvenience at best. They’re busy contemplating new ventures and investments, even as Mr. Trump dismantles the established global order. Some are even eyeing gold as a lucrative opportunity amidst the chaos.
Meanwhile, anxiety festers among millions who are less fortunate. As economic uncertainties grow, these individuals face an increasingly precarious future. The government’s dismissive attitude towards their plight remains steadfast, unlikely to shift merely due to political changes across the ocean.
In a surprising move, US President Donald Trump abruptly closed a significant import loophole in February. This loophole had previously allowed inexpensive Chinese goods to flood into the US market without any taxes. The sudden change led to chaos at New York’s John F. Kennedy International Airport, as over a million parcels accumulated in just a few days. The sheer volume of packages threatened to overwhelm the customs infrastructure.
Faced with this logistical nightmare, authorities quickly reversed the decision to prevent further disruption. However, on April 2, President Trump reinstated his plan to end the tax exemption for imports from China and Hong Kong. He set a 30-day countdown, giving businesses and consumers a brief period to prepare for the changes.
As the deadline approaches on May 2, American shoppers are bracing themselves for the impact. The end of the exemption means that prices will rise for the affordable fast fashion and budget household items they have grown fond of. Popular Chinese e-commerce platforms like Shein and Temu will no longer be able to offer their products at the exact low costs.
This change marks a significant shift in the retail landscape, as consumers will need to adjust their spending habits. Many are left wondering how this will affect their access to the trendy and economical goods they’ve come to rely on. As the clock ticks down, both businesses and consumers are preparing for a new era of trade relations between the US and China.
In a significant policy shift, packages arriving from China that were previously exempt under the de minimis rule will now incur substantial charges. If these shipments are processed through the international postal network, they will be subject to a tax of 120 per cent of the shipment’s value. Alternatively, a flat fee of US$100 (approximately S$130.60) per package will apply, with this fee set to rise to US$200 by June 1.
For goods transported via other carriers such as FedEx or UPS, the stakes are even higher. Duties could soar up to 145 per cent of the item’s value. This dramatic change poses a daunting challenge for cross-border retailers like Shein and Temu. Their business model thrives on offering an extensive selection of products at unbeatable prices, often accompanied by free shipping.
The uncertainty looms large as to how these companies will navigate this new financial landscape. The impact remains unclear, especially given the unpredictable nature of U.S. policy shifts reminiscent of those under the Trump administration. For now, both retailers and consumers are left in suspense, wondering how this will affect their wallets and shopping habits.
Since April 25, Shein and Temu have increased the prices of various products. This adjustment is in response to recent changes in global trade rules and tariffs, which have increased their operating costs. From apparel and beauty items to home essentials like storage boxes and kitchen towels, the price hike ranges from 30% to a staggering 300%. Additionally, both companies have reduced their advertising expenditures on social media platforms. Ironically, this move has impacted American firms, with giants like Facebook, Instagram, YouTube, and X emerging as early casualties in this ongoing confrontation with Mr. Trump.
This de minimis skirmish forms just one segment of a broader tariff conflict initiated by the Trump administration, which aims to compel China to abandon what it perceives as unfair trade practices detrimental to the United States.
Furthermore, Mr. Trump is responding to the demands of lawmakers, law enforcement officials, and business groups who have long advocated for closing this loophole. They argue that it puts domestic retailers at a disadvantage while also facilitating the entry of illicit drugs into the country.
Under this arrangement, goods valued at less than $800 can be imported into the United States without incurring taxes and with less stringent customs inspections. This provision has inadvertently made it easier for drug traffickers to smuggle small quantities of fentanyl and other synthetic opioids concealed within seemingly innocuous packages, according to law enforcement agencies.
A 2023 congressional report revealed that American small and medium-sized enterprises have indeed faced an uneven playing field, as they are required to pay taxes while de minimis merchandise is sold at prices 30% to 50% lower due to the avoidance of customs duties.
The outcome of this de minimis battle will heavily hinge on the extent of hardship endured—how much discomfort Americans and American businesses are willing to bear —and how severely the tariffs will impact Shein, Temu, and the broader Chinese e-commerce landscape, testing their resilience.
The American Consumer’s Dilemma: Navigating the Shifts in Affordable Goods
In a 2024 study, the National Bureau of Economic Research, a renowned source of impartial economic research, uncovered a significant trend among low-income households in the United States. These families have become increasingly dependent on inexpensive products, particularly those imported from China. The research highlighted a stark contrast: in the poorest areas, up to 73% of direct shipments were classified as de minimis, a far cry from the 52% observed in wealthier regions.
Erica Tay, the director of macro research at Maybank, shared her perspective with The Straits Times. She pointed out that individuals who rely on these cost-effective platforms for essential daily items will soon face a financial pinch. With prices set to rise, they’ll be forced to either bear the increased costs or opt for more expensive alternatives available in local US stores. Either choice could contribute to a gradual uptick in inflation.
This shift may not only affect consumers but also small businesses that depend on affordable supplies from places like China. Shoppers might also experience longer delivery times as they await their purchases.
In a strategic move to highlight its significance in the US market, Shein commissioned a report from Oxford Economics. The March report detailed how the company had employed over 1,700 individuals and infused US$570 million into the American economy. This activity generated a broader economic impact, adding US$1.6 billion and supporting 10,900 jobs nationwide. Yet, if Shein reduces its footprint in the US, some of these jobs and economic benefits could be jeopardised.
Amidst these uncertainties, American consumers hurried to make last-minute purchases from Shein and Temu before the April 25 deadline. However, it remains uncertain whether they’ll seek alternative deals once the de minimis rule is no longer in effect.
The pressing question lingers: Even with new taxes in play, can American shoppers discover more affordable options elsewhere?
Consider a plastic iPhone case priced at US$2.33 on Temu; with added duties, the price increases to US$5.12. Meanwhile, similar cases at Target range from $13.99 to $49. As consumers weigh their choices, the landscape of affordable goods in the United States is poised for change.
Even with the imposition of tariffs, Temu and Shein may still be able to offer competitively priced products. This is mainly due to their exceptionally streamlined supply chains and their strategy of maintaining extremely low profit margins.
Shein’s business approach is one of “test and scale.” It begins with limited production runs of just 100 to 200 clothing items. These items are then rapidly scaled up if they prove popular, based on data gathered instantaneously from app interactions. This model is significantly bolstered by Shein’s deeply rooted supplier networks in China. In Guangzhou, for example, there are what have become known as “Shein villages,” where thousands of small garment workshops efficiently produce clothing at high speed.
Both Shein and Temu have managed to keep their expenses minimal by linking consumers directly with Chinese manufacturers. Orders are fulfilled within China and sent straight to customers in the United States, often bypassing American warehouses and distribution centres. However, this advantage may diminish when the de minimis exemption is lifted.
Nonetheless, this does not necessarily translate into a competitive edge for American companies over their Chinese counterparts. The trade war initiated by Mr. Trump with China may have adverse effects on American businesses. If they face increased costs for components or parts sourced from China, they could be compelled to raise their prices as well.
Delving deeper into the topic, it’s apparent that U.S. shoppers are already feeling the pinch of Trump’s tariffs on platforms like Temu, with some prices doubling. Moreover, the very parcels that Trump aims to tariff are already seeing a decline.
On the other hand, in China, the focus has shifted to defence strategies and finding workarounds. Prominent Chinese e-commerce and tech giants, including Jd.com, Temu’s parent company PDD, Alibaba, and Baidu, are stepping in to support exporters experiencing reduced demand from the U.S. They offer assistance in identifying new buyers within the domestic market or provide free advertising services.
These narratives highlight the complex dynamics at play in the global marketplace, where strategies and policies intersect with tangible economic impacts.
In the ever-evolving landscape of global commerce, companies frequently find themselves navigating a complex web of regulations and opportunities. A particularly intriguing strategy has emerged, albeit temporarily, in the form of a method playfully dubbed the “Tijuana two-step.” This clever manoeuvre involves businesses transporting large shipments into Mexico, only to later divide them into smaller parcels, each priced under $800. These parcels are then sent across the border to the United States, taking advantage of the country’s de minimis exemption.
However, major players like Shein and Temu aren’t relying solely on these tactics. Instead, they have embarked on a journey to broaden their horizons by shifting their market focus and diversifying their supply chains. The stakes are high for these companies, as the de minimis exemption has been a cornerstone of their remarkable success. Without it, they face tough questions about the sustainability of their business model, which heavily depends on their largest customer—the United States.
The significance of the US market is underscored by data from GlobalData, which reveals that in 2023, the US accounted for nearly 30% of Shein’s global sales. This figure surpassed the combined sales from other major markets such as Britain, Germany, and France.
Though Shein, a private entity with roots in China and headquarters in Singapore, keeps its financial cards close to its chest, insiders shared with the Financial Times in February that its sales in 2024 had climbed by 19% to reach $38 billion. Yet, this growth came with a caveat: net profits took a hit, dropping nearly 40% to $1 billion due to fierce competition from Temu.
Meanwhile, analysts had high hopes for Temu’s global gross merchandise value. From $17 billion in one year, it was projected to soar past $50 billion in 2024. Goldman Sachs even predicted that this number could skyrocket to $97 billion by 2026.
Amidst these figures, Ms. Alicia García-Herrero, chief economist for Asia-Pacific at Natixis in Hong Kong, provided a sobering perspective. “Their margins are already ultra-low,” she remarked. “It’s difficult to envision how they will endure.” The story of Shein and Temu is one of ambition and adaptation, set against the backdrop of a rapidly evolving global market.
In a conversation with ST, she suggested that the most probable outcome is their shift in focus towards nations such as Mexico, Brazil, or Turkey.
Regarding the de minimis provision, it’s noteworthy that many nations have similar tax exemption policies for goods of low value. However, none surpass the United States, which boasts the highest threshold among them.
American consumers have been reaping the benefits of this exemption since 2015, when the limit was significantly increased from $200 to $800. Following this change, the volume of packages arriving in the US increased nearly tenfold, reaching an astonishing 1.36 billion by 2024, according to data from US Customs.
Every day, up to four million low-value parcels enter the US under this duty-free policy, which aims to streamline administrative procedures.
A substantial portion—over 60%—of these packages originates from China. Notably, companies like Shein and Temu account for 30% of all shipments that fall under the de minimis category, as highlighted in a 2023 congressional report.
On April 16, 2025, in Guangzhou, located in southern China’s Guangdong province, an employee was busy organising clothing for Temu, a prominent Chinese e-commerce enterprise. On that same day, China admonished Washington to “cease its threats and blackmail” after US President Donald Trump asserted that it was up to Beijing to initiate discussions to resolve their ongoing trade conflict. Trump’s administration had imposed hefty tariffs on both allies and adversaries, with China receiving the harshest treatment—a 145% tariff on numerous Chinese imports. In retaliation, Beijing imposed its own set of tariffs on American goods, reaching as high as 125%.
As Shein, Temu, and other Chinese sellers on these platforms expand into new markets for growth, they are also increasing their warehouse capabilities in the United States simultaneously. This strategic move allows them to import goods in bulk for taxation purposes before distributing them to their eager American customers.
In recent times, Shein has been ramping up its efforts to fulfil more orders from its warehouses located in the United States. At the same time, Temu has opened its doors to US-based vendors, allowing them to sell their products on its platform. This marks a notable shift in strategy for both companies.
However, this shift also implies that they would need to maintain inventory, which could limit the range of products they offer. As discussions swirl around the possibility of Shein and Temu relocating their manufacturing operations from China to countries like Vietnam and Mexico, Maybank’s Ms. Tay remains sceptical about such moves happening anytime soon.
She points out that establishing a supply chain overseas is no small feat, requiring considerable time and effort. Additionally, with the current uncertainty surrounding Trump’s policies on trade with other Asian nations, Chinese businesses are hesitant to invest heavily in foreign territories.
Moreover, for factories that rely heavily on inexpensive labour, relocating production to the United States is simply not feasible.
Shifting focus to the broader implications, there are growing concerns about the future for various stakeholders. Shein and Temu, along with smaller online retailers and Amazon sellers who depend on sourcing from China under the de minimis provision, face challenges ahead. Even large American corporations haven’t escaped the impact, as Chinese e-commerce giants pull back on their advertising expenditures. Consequently, American consumers, particularly those in lower-income brackets, may face rising costs.
As Americans begin to realise the financial burdens of Mr. Trump’s aggressive stance against China and his push to rejuvenate American manufacturing, dissatisfaction with his administration’s economic strategies is becoming evident. Recent polls highlight this discontent, showing Mr. Trump with an approval rating ranging between 39% and 45%—the lowest for any president within the first 100 days over the past eight decades. Although Mr. Trump isn’t on the ballot in upcoming elections, the public’s frustration poses challenges for Republicans gearing up for midterm races. Early indicators of this unrest are emerging at town hall meetings where GOP representatives are encountering vocal opposition.
In the realm of global trade, two giants stood at the forefront. On one side was the United States, renowned far and wide as the world’s largest consumer. Opposing it was China, the unrivalled champion of production. This clash of titans unfolded like an epic saga, with many eagerly awaiting the emergence of a victor. Yet, as the story progressed, it became evident that no hero had yet claimed victory in this grand contest. Instead, the narrative revealed a landscape littered with those who had suffered losses, their tales woven into the fabric of this ongoing struggle.
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