Great news! Many cross-border sellers are experiencing a boom

This week, the Office of the United States Trade Representative restored tariff exemptions for some Chinese imports. Driven by this major positive news, the cross-border e-commerce sector rose strongly. Many big sellers responded that the move will have a positive impact on the company.

The United States has previously imposed tariffs several times, and the tax costs of a large number of sellers in the industry have risen. After the implementation of this exemption, the relevant products will be "relaxed" and sellers will have greater profit margins.

Many cross-border e-commerce companies welcome good news

Yesterday, the cross-border e-commerce sector rose, and many stocks in the industry, including the parent company of Zebao Technology, Xinghui Shares, the parent company of Youkeshu, Tianze Information, Jihong Shares, ST Cross-border, Lianluo Interactive, and Biyi Shares, hit their daily limit.

The catalyst for the rise of the cross-border e-commerce sector is the new US policy of tariff exemption.

On March 23, the Office of the United States Trade Representative (USTR) announced on its official website that it would restore tariff exemptions for some Chinese imports, involving 352 of the 549 previously pending products. The regulation will apply to goods imported from China between October 12, 2021 and December 31, 2022.

As soon as the news came out, it attracted widespread attention from sellers in the industry.

Judging from the list of tariff-exempt goods, they mainly involve electrical equipment such as motors and water pumps, mechanical equipment such as filters and water purifiers, consumer goods such as furniture, bicycles, textiles, some plastic products, some auto parts, base metal products such as steel, medical equipment such as X-ray hardware, and certain chemical products.

According to a research report by Guotai Junan, based on the 2021 data from the U.S. Customs, the amount involved in this exemption of products is approximately US$61.9 billion, accounting for approximately 21% of the total amount of tariffs imposed (US$287.8 billion in 2021) and approximately 12% of China’s total exports to the United States (US$536.1 billion in 2021).

Some electronic products, household products, clothing products, etc. that are sold in large quantities by domestic cross-border sellers are included in the exemption list. Under the new policy, cross-border e-commerce sellers will usher in major benefits. Currently, some major cross-border sellers including Zebao, Youkeshu, Giant Star Technology, and Yibai Network have already tasted the sweetness.

Huakai Creative, the parent company of Yibai Network , said that according to preliminary estimates, the product SKUs that the United States has announced to be exempted from tariffs currently account for 22.02% of the company's total SKUs of products sold in the United States. The exemption of tariffs will help improve the competitiveness of the company's exports to the United States, help expand the company's sales scale in the United States, and will have a positive impact on the company's future performance.

Giant Star Technology mentioned that the company's tariff exemptions mainly include some furniture products, such as lockers, hat racks, hat hooks, brackets and similar products, LED portable work lights, special products such as electrical tape, small vacuum cleaners, etc. Since the exemption date is applicable from October 12, 2021 to December 31, 2022, it is expected to have a certain positive impact on the company's business in 2022.

Boosted by the positive impact of tariff exemptions, as of the midday close on the 25th, Xinghui Holdings and Tianze Information had hit their 20cm daily limit, with an encouraging momentum. Cross-border e-commerce sellers Zebao and Youkeshu have become the hot commodities of their parent companies.

In addition, relevant securities firms pointed out that companies such as Lejia Holdings and Yingqu Technology , which have high additional tariffs on exporting products to the United States and have a high proportion of revenue from the United States or overseas, will benefit.

Xinlong Health said that the re-exemption of import tariffs on bicycles and carbon fiber frames imported from China will promote the sale of Chinese bicycles and carbon fiber frames to the United States, which will have a positive impact on the Chinese bicycle industry and the company; Jiya shares also said that the company's wet wipes products are exempted from tariffs. The exemption of additional tariffs is conducive to the company's development of new customers, and it is also conducive to the company's existing customers to reduce procurement costs.

Of course, it is not just the cross-border big sellers, but also small and medium-sized sellers whose products fall within the scope of the exemption will benefit. Nowadays, the competition among sellers on third-party platforms is becoming increasingly fierce, and the sellers’ profits are being eroded. This exemption may directly increase the sellers’ profits.

Tariff exemptions relieve pressure , some companies may adjust their business strategies

The adverse impact of Sino-US trade frictions on the operation of cross-border enterprises is specifically reflected in the US's imposition of tariffs on Chinese goods.

In the first round of tariff increases, the US government imposed a 25% tariff on $34 billion worth of Chinese goods starting on July 6, 2018, and a 25% tariff on $16 billion worth of Chinese goods starting on August 23, 2018;

In the second round of tariff increase, a 10% tariff was imposed on $200 billion worth of Chinese goods from September 25, 2018, and a further 15% tariff was imposed on these goods from May 10, 2019, for a total increase of 25%;

In the third round of tariff increases, the United States imposed a 15% tariff on $300 billion worth of Chinese goods starting September 1, 2019, and the rate was reduced to 7.5% starting February 14, 2020.

The impact of tariff costs on sellers' profits is significant, and several companies have mentioned this in their financial reports.

Between 2018 and 2020, the proportion of Solaris Parker 's revenue from the United States to its main business revenue was 61.30%, 65.57% and 71.38% respectively. The company's products were included in the U.S. tariff list for a total of 854 SPUs, of which 403 SPUs were involved in products subject to a 7.5% tariff, and 451 SPUs were involved in products subject to a 25% tariff.

The second and third rounds of tariff increases by the United States involve about 90% of the products sold by Zhiou Technology in the US market. The impact of the tariff increase on its products is as follows:

Products subject to additional tariffs include: metal products (excluding stainless steel products) (such as wrought iron umbrella stands, iron mesh cabinets), plastic products (such as plastic cabinets, plastic clothes hangers, etc.), most wooden and bamboo furniture and home products (such as wooden shelves, bedside tables, TV cabinets, etc.), and textiles (such as fabric storage bags, sofas, and pet beds).

This directly pushed up the sales cost of Zhiou's products in the US market and affected the gross profit margin of its US business to a certain extent.

After the implementation of this tariff exemption, the relevant products on the list will no longer face tariff pressure and will have greater advantages in market competition. The export business details of some companies may also be adjusted. RuBiYi shares said that it will pay full attention to the impact of tariff exemption and adjust the company's business strategy accordingly.

At present, the growth of the entire cross-border export industry is relatively slow, especially after the rectification of third-party platforms last year, the industry is shrouded in a low pressure. The US's move to exempt some tariffs on China is undoubtedly a major good news for the entire industry, and may bring more upward development flexibility to cross-border companies.

Huakai Creative also mentioned that this incident symbolizes that the Sino-US trade war is easing, and the external environment of the export cross-border e-commerce industry is warming up, which has a positive impact on the company's cross-border e-commerce business. This is also the resonance of many export companies.

At a press conference of the Ministry of Foreign Affairs on March 24, Shu Juting, spokesperson of the Ministry of Commerce, said that in the current situation where inflation continues to rise and the global economic recovery faces challenges, it is hoped that the United States will proceed from the fundamental interests of consumers and producers in both China and the United States, cancel all additional tariffs on China as soon as possible, and push bilateral economic and trade relations back to normal track as soon as possible.

If the scope of cancellation of additional tariffs continues to expand, it will be a great boon to domestic export business.

USA

tariff

exit