How trade wars between the USA and China will affect e-commerce businesses?
The trade war between China and the USA will affect both countries as well as the e-commerce business at a mass level. The reason behind this is the reign of President Trump as he tried to save his economy and also tried to leash the emerging economic power. The emerging economic power of China is a threat to the USA. In the same context, President Trump is practically trying to hamper the economic market in his country. Trump has imposed tariffs almost 25% on different exports of China in 2018. Furthermore, he also increased tariffs on electronics, furniture and on the other products of China in 2019. This situation is awful for Chinese economy.
Consequently, China also imposed tariffs on USA products by following the policy of tit- for- tat. Ultimately this situation has decreased the trade volume between the countries. By the dint of this, it has cultivated powerful impacts on e-commerce and it has lessened the investment from both the giants. The resulting number of companies are facing difficulties to survive on the horizon of economy. A large number of companies are in hot water due to increases in unnecessary taxes by the both powers. In this regard the international monetary fund (IMF) has warned that the trade war will affect the global economy. The other implication will be on e-commerce businesses.
In this very context, a number of international companies are changing their ways and are reluctant to grow their businesses in these countries. All dealings and international investments can be difficult directly or indirectly. For example, Amazon is the biggest USA based company and it has dealings with more than 50 countries. As the result of this US-China trade war, Amazon is changing its market place and its stakes. Its direct impact will be e-commerce and all online dealings from the plenty of countries. The same is the case with Alibaba. In short, this is the very first impact that the ongoing trade wars have on e-commerce businesses.
Next in line to be affected by ongoing trade wars are e-commerce end consumers. Chances are that prices will increase drastically because of tariffs. The prime or intermediate goods will become expensive by imposing tariffs so the end product will be difficult to buy for the customers. Both countries will face this e-commerce setback.
Furthermore, due to this trade war, companies, e-commerce and brick & mortar stores alike, are going down day by day because of the increase in the cost of labor. Consequently, companies are at the verge of deficit and its ultimate impact will be on online businesses. Needless to say that this is an alarming situation.
All these problems are threats to e-commerce, the economy, and its stakeholders but all these can be solved through multiple ways. There are a number of companies that are trying to solve the problems of lessen the cost for e-commerce businesses. For example, Xint Solutions is a company that provides solutions to solve these types of e-commerce challenges. Other companies include Finances Online and Floship.
Floship is an e-commerce order fulfillment provider based in Hong Kong. Shipping through Hong Kong has a lot of benefits in terms of taxes and tariffs. We can help you ship to the USA avoiding trade war tariffs. Want to learn more? Reach out to us and we’ll provide you with a custom solution to your unique business challenges.
Read this article to find out more about how shipping through Hong Kong can help you avoid tariffs.
In short the firms are facing deficit problems and high amount of taxes due to the trade war. But all these problems can be solved with proper management, planning, and strategy. The business of e-commerce is facing the storm of tariffs and taxes. All of these challenges can be faced with proper allocation of resources and management.