Recently, the cross-border e-commerce industry has been in a state of constant flux. The DDP (Delivered Duty Paid) shipping from China to the US has seen an across-the-board price hike. This price fluctuation of the DDP shipping from China to the US has left numerous sellers crying out that they’re under “tremendous pressure”. Behind this, former President Trump’s decision on reciprocal tariff imposition is undoubtedly the “trigger” for this price surge in the DDP shipping from China to the US. To fully understand this policy and its impacts on the DDP shipping from China to the US, we first need to explore the background of Trump’s reciprocal tariff policy.​

The Background of Trump’s Reciprocal Tariff Policy: “America First” Amid Trade Imbalance​

During Trump’s tenure, he promoted the “America First” agenda, attempting to safeguard US interests on all fronts. In the trade arena, the US had been in a state of huge trade deficits for a long time, which became an urgent problem for the Trump administration to address. According to relevant data, the scale of the US foreign trade deficit was enormous. Trump believed that such deficits stemmed from unfair trade practices by other countries, such as setting high tariffs on US goods. Looking at the data from the World Trade Organization, the trade-weighted average tariff rates of the US’s top 15 trading partners were mostly higher than that of the US.

For example, India’s was 12%, South Korea’s was 8.4%, Brazil’s was 6.7%, Vietnam’s was 5.1%, and those of EU countries were 2.7%, all higher than the US’s 2.2%. Such tariff differences made Trump feel that the US was being “exploited” in international trade. To achieve so-called “fair trade”, implementing the reciprocal tariff policy became one of his crucial measures.​

Meanwhile, when Trump was campaigning, he promised to boost the return of US manufacturing, reduce dependence on overseas production, and create more domestic job opportunities. He thought that high tariffs could prompt foreign enterprises to avoid hefty tariffs by choosing to set up factories in the US, thus driving the recovery of US manufacturing. From a political perspective, catering to the demands of some domestic industrial groups was also an important factor. Some traditional US industries, like steel and automotive, were facing international competition pressure and hoped that the government would offer protection through tariff means. Trump’s reciprocal tariff policy, to some extent, met the expectations of these industrial groups.​

Trump’s Reciprocal Tariff Decision: A Far-reaching Policy Change​

During Trump’s tenure, he implemented a series of trade protectionist policies, among which was the decision on reciprocal tariff imposition. This decision aimed to protect US domestic industries and reduce trade deficits by increasing tariffs on imported goods. However, it backfired. Instead of achieving the expected results, it had a profound impact on the global trade pattern, and trade between China and the US, especially the DDP shipping from China to the US, was hit the hardest.​

Goods exported from China to the US faced high tariff costs. Many Chinese manufacturers, in order to maintain their profits, had to pass on this part of the cost to the product prices, leading to an increase in export commodity prices. For logistics enterprises engaged in the DDP shipping from China to the US, the increase in tariff costs directly affected their transportation cost structure, and the operational difficulties of the DDP shipping from China to the US also increased.​

The Impact on Transportation Costs: Multiple Intertwined Factors​

Under the conditions of Trump’s reciprocal tariffs, the costs of the DDP shipping from China to the US have been affected in multiple ways.​

Tariff costs have soared. Due to the increase in tariff rates, logistics enterprises have to pay more tariffs for each batch of goods shipped via DDP from China to the US. Take the clothing industry as an example. In the past, only a relatively low proportion of tariffs might have been paid, but now the tariff cost has increased significantly with the rise in the tax rate. This increased part of the tariff cost has become an important component of the rising costs of the DDP shipping from China to the US.​

Customs clearance costs have also gone up. With the change in tariff policies, the inspection standards and procedures of US customs for imported goods shipped through DDP from China to the US have been adjusted. To ensure the smooth customs clearance of the goods shipped via DDP from China to the US, logistics enterprises need to invest more manpower, material resources, and time costs. For example, more detailed customs declaration documents may be required, and more communication and coordination with the 海关 are needed. All these directly lead to an increase in the customs clearance costs of the DDP shipping from China to the US.​

Transportation resource allocation costs have also been affected. To cope with the uncertainties brought about by changes in tariff policies, logistics enterprises may need to adjust the transportation routes of the DDP shipping from China to the US, choose different modes of transportation, or change partners. These adjustments entail additional costs, further driving up the costs of the DDP shipping from China to the US.​

The Aftermath of the Sharp Increase in Transportation Costs: A Chain Reaction​

The sharp increase in the costs of the DDP shipping from China to the US has brought a series of consequences.​

For cross-border e-commerce sellers, the most direct impact is the compression of profit margins. In an already fiercely competitive market environment, it’s difficult for sellers to pass on all the increased costs of the DDP shipping from China to the US to consumers. Therefore, many sellers have to bear a part of the cost themselves, which makes their profits significantly reduced. Some small sellers even face losses, and their operating pressure has soared.​

From a market perspective, the increase in the costs of the DDP shipping from China to the US may lead to a rise in commodity prices, which in turn suppresses consumers’ purchasing demand. When American consumers buy imported goods, they will find that the price is higher than before. This may cause them to reduce their purchases or choose alternative products. This is undoubtedly a huge challenge for Chinese cross-border e-commerce sellers who rely on the US market.​

The stability of the entire supply chain has also been impacted. To cope with the increase in the costs of the DDP shipping from China to the US, logistics enterprises may adjust service quality or reduce service scope. This may lead to longer transportation times and reduced transportation reliability, affecting the operational efficiency of the entire supply chain. Some enterprises may reduce their order volumes because they cannot bear the increase in the costs of the DDP shipping from China to the US, which will further affect upstream production enterprises and downstream sales channels.​

Strategies for Reasonably Reducing DDP Transportation Costs: Responses from Cross-border E-commerce Sellers​

Facing the sharp increase in the costs of the DDP shipping from China to the US, cross-border e-commerce sellers are not without options. Here are some possible coping strategies:​

Optimizing the logistics plan is crucial. Sellers can have in-depth discussions with logistics enterprises and choose the most suitable modes and routes for the DDP shipping from China to the US based on the characteristics and transportation requirements of the goods. For example, for some heavy goods with relatively low requirements for transportation time, sea freight can be chosen. Compared with air freight, sea freight is relatively cheaper. At the same time, reasonable planning of transportation batches and adopting the method of centralized shipment can improve transportation efficiency and reduce the unit cost of the DDP shipping from China to the US.​

Negotiating cost-sharing with suppliers is also a viable option. Sellers can communicate with Chinese suppliers, explain the current dilemma of the rising costs of the DDP shipping from China to the US, and seek solutions for both parties to share the costs. For example, they can negotiate to lower procurement prices or cooperate with suppliers to strive for more favorable transportation terms.​

Enhancing the added value of products to increase consumers’ acceptance of price increases. Sellers can improve the overall value of products by optimizing product packaging and providing better after-sales services. When consumers feel that the value of the product has increased, their sensitivity to price may decrease, and they will be more willing to accept price adjustments due to the increase in the costs of the DDP shipping from China to theUS.​

Keeping an eye on policy developments and adjusting business strategies in a timely manner. Closely monitor changes in trade policies between China and the US, especially adjustments in tariff policies. Once there are favorable policy changes, sellers can promptly adjust the logistics plan and pricing strategy for the DDP shipping from China to the US, reducing transportation costs and increasing profit margins.​

Behind the overall price increase in the DDP shipping from China to the US lies Trump’s reciprocal tariff decision and a series of complex factors. For cross-border e-commerce sellers, although they are facing huge challenges, as long as they respond actively and reasonably reduce the costs of the DDP shipping from China to the US, they can still find opportunities for survival and development in this “storm”. It is hoped that the above analysis and suggestions will be helpful to sellers and enable them to move more steadily in the cross-border e-commerce field.