US-China Trade War Heats Up: American Households' Dependence on and Challenges with Chinese-Made Products

Taiwan • Business • 04/27 12:30
US-China Trade War Heats Up: American Households' Dependence on and Challenges with Chinese-Made Products

The US-China trade war is escalating, with tariffs reaching historic highs, and the reliance of American households on Chinese-made goods has become a central issue. Most everyday items, such as kitchenware, toys, and personal care products, are sourced from China. Even though some production has moved to countries like Vietnam and Mexico, the supply chain continues to rely on Chinese components. The high tariffs have resulted in price hikes, and retailers are worried about disruptions in the supply chain. Experts highlight that it is challenging for the US to fully replace the Chinese supply chain in the short term.

Key Updates

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Hwa Sheng Co. sells its Chinese subsidiary's shares and reinvests in Taiwan to invest in new businesses to mitigate risks from US-China tariffs.

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04/27 12:30

US-China Trade War Heats Up: American Households' Dependence on and Challenges with Chinese-Made Products

The US-China trade war is escalating, with tariffs reaching historic highs, and the reliance of American households on Chinese-made goods has become a central issue. Most everyday items, such as kitchenware, toys, and personal care products, are sourced from China. Even though some production has moved to countries like Vietnam and Mexico, the supply chain continues to rely on Chinese components. The high tariffs have resulted in price hikes, and retailers are worried about disruptions in the supply chain. Experts highlight that it is challenging for the US to fully replace the Chinese supply chain in the short term.

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04/26 06:31

Kyle Bass, Investor: An Analysis of Why the U.S. Holds the Advantage in the U.S.-China Trade War

Renowned hedge fund manager Kyle Bass stated that the United States holds an advantageous position in the US-China trade war because the trade imbalance exerts greater pressure on China. Bass pointed out that China's weak economy, anomalies in the bond market, and weakness in the consumer market weaken its negotiating power. The US, on the other hand, is able to endure pressure for a longer period thanks to robust domestic demand and stable consumer spending. Bass believes that recent indications of concessions by China indicate that it is at a disadvantage in the trade war.

China's Ubiquitous Presence in the Kitchen

According to an analysis by The New York Times, almost all toasters in American households (>99%) come from China. Other common kitchen items such as cutlery (80%), cookware (82%), and kitchen utensils (70%) are also heavily reliant on Chinese imports. Even large appliances like gas stoves (51%) and coffee makers (40%) have a significant proportion coming from China.

This dependence is not accidental. For decades, the Chinese government has invested billions of dollars in supporting manufacturing, making China the world's largest manufacturing base, producing nearly one-third of the world's tangible goods, surpassing the combined total of the United States, Germany, Japan, South Korea, and the United Kingdom.

Living Room and Bedroom: China's Influence from Toys to Furniture

In the living room and bedroom, Americans also find it hard to escape Chinese manufacturing. In 2024, 75% of toys purchased by Americans are expected to come from China, including dolls, tricycles, and scooters. During the Christmas season, toy giants like Hasbro and Mattel still rely on China for 40% to 50% of their production capacity.

Additionally, everyday items such as artificial plants (96%), wall clocks (75%), children's books (93%), and puzzle toys (76%) mainly come from China. Even holiday celebration items like fireworks (96%) and Christmas decorations (87%) are almost entirely dependent on Chinese imports.

However, since 2018, the production of some furniture and appliances has gradually shifted to Vietnam, Mexico, and Thailand. For example, the main supplier of vacuum cleaners has shifted from China to Vietnam.

Bathroom and Personal Items: The Invisible Presence of Chinese Manufacturing

In the bathroom, personal grooming items like makeup brushes, nail clippers, and combs almost entirely come from China. Despite the U.S. ban on imports of Xinjiang cotton, leading to a shift in the source of some cotton products to other countries like Nicaragua (T-shirts), India (towels), and Bangladesh (jeans), China's dominance in the personal items sector remains solid.

Electronics and Auto Parts: An Irreplaceable Supply Chain

In the tech sector, China's role is even more critical. Over 75% of the world's iPhones are produced in China. Even though the U.S. has imposed tariffs as high as 145% on Chinese products, smartphones have temporarily been exempted, but other electronic products like batteries and components face high tariffs.

In the automotive sector, although it's nearly impossible to find Chinese-made cars in the U.S. market, many auto parts still come from China. Especially for electric vehicle batteries, which are primarily supplied by China, with new tariffs reaching as high as 173%.

Tariff Impact: Price Increases and Supply Chain Restructuring

According to The Wall Street Journal, the American Apparel & Footwear Association points out that about 97% of clothing and footwear in the U.S. market rely on imports, mainly from Asia. UBS analysts predict that in response to new tariffs, U.S. retailers may increase prices by 10% to 12%, ultimately passing these costs on to consumers.

Retail giants like Target, Walmart, and Home Depot have expressed concerns to the government, believing that high tariffs will lead to supply chain disruptions and rising product prices, further undermining consumer confidence.

Moreover, with the U.S. canceling the tax exemption policy for small packages under $800, cross-border e-commerce platforms like DHgate have seen a surge in downloads in the U.S. market, indicating that consumers are actively seeking cheaper Chinese sources.

Expert Views: The Reality and Limitations of Supply Chain Shifts

Although some production has shifted to countries like Vietnam and Mexico, The New York Times points out that these countries still heavily rely on Chinese components. For example, although Nintendo game consoles are assembled in Vietnam, most of the parts come from China.

Gabriel Wildau, Managing Director at Teneo, notes that after seven years of effort, China has significantly reduced its dependence on the U.S., demonstrating a certain level of economic resilience. For the U.S., completely replacing the Chinese supply chain in the short term remains highly challenging.

References

People Also Ask...

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The trade war between the US and China is heating up. How will this affect the prices of our everyday items?

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Could the reliance of American families on Chinese-made products impact the consumption habits and prices in our community?

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American families are so dependent on Chinese-made goods, will the trade war between the US and China cause our everyday items to become more expensive?