The city of Yiwu, near Shanghai, China, comes alive with Christmas preparations much earlier than most places.
This city of two million is known for producing approximately two-thirds of the world’s Christmas decorations. International traders were recently seen searching Yiwu Market for holiday samples. Orders usually begin in April, factories produce the goods, and shipments are sent globally by July.
However, this year is different. Zhang Xiu Fang, owner of New Di Man Christmas Craft shop, notes that American clients are checking prices but not yet placing orders.
The reason for the slowdown is the tariffs imposed by President Donald Trump on Chinese goods. These imports now face a levy of at least 20%. These tariffs significantly impact China’s vast manufacturing sector, which produces a wide range of goods.
Yiwu, far beyond its Christmas fame, is central to this trade. The World Bank recognizes it as the world’s largest small commodities market, with about $70 billion in annual sales. Christmas items only occupy a small portion of Yiwu Market, which consists of seven large buildings covering over 500 football fields and housing around 70,000 shops. If China is the world’s factory, then Yiwu is its shopping center, displaying products from various nations.
Louisa Line, an Australian businesswoman, appreciates the cultural mix in Yiwu. She highlights the market as a unique city and admires it greatly.
However, locals are concerned about a potential trade war between the world’s two largest economies. China’s trade surplus hit a record $1 trillion in 2024, supported by $3.5 trillion in exports. With weak domestic spending, exports are crucial to China’s economy. But, economists predict that extended tariffs could cut U.S. exports by a third.
Lina Liu, owner of Pet Fang Gang, says 40% of her sales go to the U.S. She mentions that customers are delaying orders, awaiting potential tariff relief. Trump recently suggested he might lower tariffs on China in exchange for a deal involving TikTok.
Liu admits to some worry but is looking to expand elsewhere, considering sending products to U.S. clients via other countries.
Uncertainty has caused many U.S. retailers to pause restocking, hoping for a resolution. However, even if tariffs are reduced, limited supply due to idle factories may increase prices. Trump has also increased tariffs on foreign-made cars and threatened reciprocal tariffs on all countries from April 2.
Albert Hu, an economics professor, notes that it’s difficult for U.S. consumers to find alternatives. He adds that costs will likely be passed onto consumers because of the thin profit margins.
Lin Zhou, owner of Tuoxu Outdoor Lighting, explains that with minimal profit margins, there’s no room to cut costs. She believes U.S. traders will absorb the costs to maintain customer relationships.
Line suggests that more leaders should see Yiwu’s cooperative commerce. She argues that the tariffs will mostly hurt small retailers and consumers.
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