Hey guys, so today we're going to be talking about something that is very, very important
for online sellers and small business, and that is the ongoing trade war between China
and the United States.
Trade wars aren't so bad.
Well, understandably not all Wholesale Ted subscribers are sure they agree.
I've recently received a lot of comments from sellers and viewers who were quite scared
about what's going on, and want to know if this will impact or kill their businesses.
You see, for those of you that don't know, there has been an ongoing trade war this year
between the USA and China.
So a trade where is where country A increases the tariffs on imports from country B, and
so in retaliation, country B increases the tariffs, IE the import taxes of country A's
items that they buy from them that are important to their country, and this back and forth
retaliation is a trade war.
And this is exactly what has been happening between China and the USA.
On June 15th, Donald Trump declared in a short statement that the United States would impose
a huge 25% tariff on $50 billion worth of Chinese imported goods, in response to unfair
trading practices.
A lot of online sellers were quite scared at this announcement, because a 25% tariff
would be more than enough to kill the profit margins for many online seller, and thus potentially
kill their businesses.
In addition, Trump also announced that if China retaliated with their own tariffs, that
the USA would impose 10% tariffs on an additional $200 billion worth of Chinese imported goods.
Well, China did respond pretty much immediately, and they ended up imposing their own similar
tariffs on USA imported goods.
And thus China and the USA are now locked in an economic battle.
Most of my subscribers here at WholeSale Ted either own or are starting online businesses
and stores like drop shipping, and Amazon FBA, private labeling business that rely on
importing goods from China.
And so of course the question here is, what does this mean for you as an online seller?
Is Donald Trump's trade war going to kill your business?
Let's find out.
So let me ask you a question, why do you think it is cheaper for you to import your products
all the way from China into the United States, rather than just working with USA based manufacturers
and suppliers?
A lot of people think that the reason why is because China uses cheap slave labor.
Child labor included, to manufacture its goods.
And while it is true that there are still some factories in China that have very poor
working conditions, but in general the working conditions in China have massively improved.
You see, when most people think of Chinese factories, they think of the hellish conditions
that existed in the '90s.
Take the Pill River Delta region of China, it has a lot of factories that produce toys.
They even produce toys for some of the biggest brands in the world, including Disney.
Back in the '90s and early 2000s, every year, more than 40,000 workers from these toy factories
would break or even lose fingers on the production line and really nobody cared.
But since 2008, things have been drastically changing.
With the introduction of sweeping labor reforms that have been designed to protect the rights
of the workers.
As a result, the cost of labor in China have gone up a lot, yet it's still usually way
cheaper for online sellers like drop shippers, and Amazon private labelers to source their
products from China, even with the expensive shipping costs.
So how can that be?
Well it's not because they're cheating with rampant child labor.
An unfair leftover stereotype, perhaps the biggest reason is because of the belt road
initiative.
The belt road initiative is China's ongoing development strategy to create roads, train
tracks, and shipping ports to connect it to Europe, Asia, and the Middle East.
The silk road economic belt is a series of six land corridors that will contain roads
and train tracks to connect China to a slew of countries, all the way over to the UK.
And that's not all.
They also have the maritime silk road that they are building.
This is a series of shipping ports that will connect the South China Sea all the way to
Africa.
China officially announced this development strategy in 2013.
But the reality is that they've actually been massively investing in this trade network
and infrastructure since the 1980s.
In the '90s and the 2000s, China invested 9% of its GDP into infrastructure.
Whereas most western countries invested just two to 4%.
And some of the ways that they've been building this network have been pretty controversial
to say the least.
What China has done is it has offered large loans with a relatively few barriers to countries
that normally would be considered too risky to loan money to.
Like Sri Lanka.
Sri Lanka is a risky country to loan money to, because corruption level and political
instability are so high.
So if you loan money to them, you're probably not going to get it back.
But China doesn't mind this, in fact they welcome it, because what it lets them do is
use that debt to further their belt road initiative.
As a result of not being able to pay back the debt that they had racked up to China,
which was over $8 billion, the Sri Lankan government made a deal with China.
They would give them a 70% stake, and a 99 year lease of their shipping port, Hambantota,
which had been built of course with the money that they had initially borrowed from China.
Not only has it made it cheaper and easier for China to export its goods around the world,
it's also made it cheaper and easier for China to import key raw materials, like oil and
iron ore.
They then take those raw materials, and turn them into goods, and export them back out
again.
Sri Lanka gets a new port, and China kind of gets one as well.
Other people view this quite differently though, and have called it the China debt trap.
This channel is politically neutral, I don't talk about my political opinions on it, however
as this is quite a controversial topic, the comments section is free game.
So feel free to sound off on your opinion in it.
But not matter what your opinion is on China's plan, it has undeniably had a massive impact
on their position in the world when it comes to manufacturing and trade.
Even though the United States is not connected to this economic silk road, this massive infrastructure
network has dramatically lowered the cost of producing goods.
Which is why we all import items from China.
If China's huge trade network sounds incredibly intimidating, as in so intimidating that the
idea of trying to compete against them seems insane, you would be right.
And the United States government would agree with you, in fact Donald Trump would agree
with you, and this is why most online sellers don't have to be worried about this ongoing
trade war.
You go to a mall, you go to K Mart, you go to Wal Mart, you go to Target, what do you
see?
Chinese goods, Chinese goods everywhere.
China has built the common goods empire, they are the undisputed king when it comes to producing
common, every day goods, like this little vegetable slicer, or this avocado slicer.
In fact if you look at the top products that the USA imported from China, you'll quickly
see that yes, the top categories include common, every day goods that average people buy, like
electronics and clothing.
And of course it's these types of items like kitchenware, clothing, and little electronics
that most online sellers like Amazon, FBA private labelers, and drop shippers resell.
Well you know what?
Donald Trump does not want to be competing with China over these types of items, he doesn't
want American factories to be producing their own avocado slicers, no.
What he and the American government are interested in doing is competing with China when it comes
to high tech goods.
You see China may have built the common goods empire, you go to a mall and you struggle
to find anything that they haven't produced.
But in high tech fields like robotics, aerospace, automobiles, and especially in pharmaceutical
products, they are dominated by other countries, including the United States.
But China has announced that they want to change that, with their 2025 plan, which outlines
their strategy for moving in and taking a slice of these industries for themselves.
And this is what the United States is warring with China about.
This is what Donald Trump's tariffs are all about.
They're not about the small types of items that most online sellers sell.
In fact, remember at the start of the video, where I talked about how the United States
has implemented a 25% tariff on over $50 billion worth of Chinese imports?
Well, let's take a look at the products that did get slapped with a tariff.
If you don't recognize half of what's on this list, then you would be well forgiven.
That's because the vast majority of products on here are either raw materials, or industrial
goods that are used in those high tech industries.
These types of items that most people are importing and selling on Amazon FBA warehouses,
these are not on the list at all.
The same goes for all express items.
Donald Trump could care less that you're importing and selling a self stir mug from China, and
besides, for import packages to be eligible for tariffs, their value needs to exceed $800.
So as most drop shippers are importing packages that are worth less than $50, there is really
no concern for drop shippers at all.
But what about those $200 billion worth of Chinese goods that Trump threatened to target
in retaliation?
Will we be impacted by that?
The answer is that it's extremely unlikely that you would be.
I've gone through the 200 page document outlining all the products that would be targeted.
The vast, vast majority of products on this list are either related to high tech fields,
raw materials, or food, and food is another controversial area for the USA and China when
it comes to trade.
Now there were actually a few common good items that were on the list that might impact
a hand full of sellers, but as expected, the vast, vast, vast majority of common goods
were not targeted.
With this video, I didn't just want to come out and be like, oh hey look, most of the
items that we're selling aren't on the tariff list.
Don't worry about it.
No, with this video, what I really wanted to do was I wanted to explain the situation
so that if the trade war escalates between China and the USA, you don't need to worry
because you know that your types of goods are not being targeted.
Because it's not common goods like this that are being targeted, Donald Trump does not
want America to start making their own avocado slicers.
He is more than happy for America to keep importing them.
Thanks for watching, here at Wholesale Ted, we're not afraid to tackle the real issues
when it comes to selling online, so if you'd like to get even more videos like this, then
be sure to subscribe to us, and click that little notification bell next to it so that
you don't miss out on any of our videos.
And before you run off, I've got one last freebie I'd like to give you.
Here at Wholesale Ted, we have a free ebook that teaches you the six steps that six figure
drop shipping stores follow to make over $10,000 every month.
To get that ebook for yourself, simply click on the link in the video description below.
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