US tariffs on Chinese imports are expected to increase prices for fast fashion, electronics, and toys.

A new tariff imposed by the United States on products originating from China is likely to lead to higher prices for American consumers across a range of goods, from inexpensive clothing sold on e-commerce sites to toys and electronic devices like computers and smartphones.

The 10% tariff on all Chinese imports came into effect after President Donald Trump decided to pause his proposed tariffs on Mexico and Canada for a month. This temporary reprieve followed negotiations regarding Trump’s demands for these North American nations to take measures against illegal immigration and the influx of drugs, including fentanyl, into the United States.

In retaliation to the U.S. tariff, China announced plans to impose its own tariffs on various American goods starting next week. Given the extensive variety and volume of products made in China that are available in the U.S. market, consumers can expect the prices of numerous typically affordable items to rise if the trade tensions continue to escalate.

Certain categories are particularly susceptible to these changes, including electronics, household items, and automotive parts. According to the U.S. Census Bureau, the U.S. imported approximately $427 billion in goods from China in 2023, with consumer electronics—such as smartphones and laptops—being the largest import segment. China plays a crucial role in manufacturing tech products, especially for American brands like Apple, with 78% of U.S. smartphone imports and 79% of laptop and tablet imports originating from there, as revealed by the Consumer Technology Association.

The tariff could also influence the cost of everyday products, including clothing, footwear, and kitchen essentials, alongside major purchases like appliances and furniture. Jay Salaytah, who operates an auto repair shop in Detroit, indicated that he expedited the purchase of some equipment, anticipating price hikes linked to the tariffs, particularly on products manufactured in China.

Furthermore, the new tariff not only affects various Chinese goods but also suspends a little-known customs exemption that previously permitted duty-free entry for goods valued at less than $800. This exemption, known as “de minimis,” had been scrutinized in recent years due to the rise of low-cost imports from China via prominent online retailers such as Shein, Temu, and Alibaba’s AliExpress.

In response to the tariff actions, the U.S. Postal Service initially decided to halt the acceptance of packages from China and Hong Kong, only to reverse its decision and indicate that it would collaborate with Customs and Border Protection to manage the incoming shipments without causing delivery issues.

Earlier moves by the administration of former President Joe Biden also targeted the de minimis policy, trying to tighten regulations on small-value parcels, but these proposed changes did not take effect before Biden left the office. Companies like Shein and Temu have rapidly gained popularity by offering a continuously updated array of low-cost apparel and accessories shipped primarily from China, creating competition for American retail businesses.

There is uncertainty regarding the extent to which prices will increase due to these new tariffs. With the change in rules, shipments from China will now be subject to existing tariffs along with the newly implemented 10% tariff. Analysts suggest that the overwhelming majority of orders from platforms like Shein and Temu fall below the $800 threshold, meaning they will be impacted by these new tariffs.

Marketplace Pulse founder Juozas Kaziukenas believes that while price increases may occur on these platforms, they will likely be minor, and the affordability of the products will persist. However, he cautioned that this new requirement would likely lead to delivery delays as packages must now undergo customs procedures.

The tariff will also affect third-party sellers on platforms like Amazon, contributing to a situation where some of the new costs will be absorbed by sellers, with the potential for mid-single-digit percentage increases for consumers. Other e-commerce sites that host various vendors, like Etsy, are also expected to feel the impact.

Amidst these changes, Temu, owned by China’s PDD Holdings, has stated that its growth trajectory isn’t necessarily reliant on the de minimis policy. To mitigate risks associated with changes in trade rules, Temu has been actively recruiting Chinese merchants to store inventory within the U.S.

U.S. retailers, particularly in the fashion sector, have also begun strategizing ahead of the tariffs. For instance, Brieane Olson, CEO of the teen clothing brand PacSun, travelled to Hong Kong shortly after the November elections to engage with factory leaders for planning purposes. About 35% to 40% of PacSun’s garments are sourced from China, although the company has been exploring alternative suppliers in other countries.

Olson shared that the anticipated impacts of the 10% tariff were not as severe as feared, and for now, the company does not plan to raise prices on its goods or relocate manufacturing away from China. The toy industry, heavily reliant on imports from China, is bracing for similar challenges. Greg Ahearn, president of The Toy Association, indicated that toy companies may absorb the initial costs of the new tariffs temporarily, but inevitable price increases for consumers will follow in due course.