‘Very disruptive’: China started flooding countries with cheap goods before Trump tariffs came in

Trump tariffs have opened the gateway for the inflow of cheap Chinese goods into the market, which can “prove disruptive” to emerging economies like Asia, an analysis by Japan-based Nomura Holdings Inc. said.

The buying and selling of inexpensive Chinese knock-offs or products can trigger bigger trade imbalances, stronger disinflation and greater fiscal spending, according to the report.

Nomura economists, led by Rob Subbaraman, analysed data from 45 countries to examine the impact of China’s imports on local manufacturing. Their research showed that countries experiencing the biggest rise in Chinese imports often faced the most significant declines in domestic manufacturing activity.

Additionally, they identified a clear inverse relationship between China’s share of imports and producer price inflation, suggesting that as Chinese imports grew, local producer prices tended to fall.

The research also revealed that China began selling cheap goods into markets across the world way before US President Donald Trump even assumed office in January.

“Unsurprisingly from these results, the year 2024 marked a significant rise in the total number of trade investigations initiated against Chinese imports to a record high, mostly in the form of anti-dumping measures,” Subbaraman said.

“This year, with a full-blown US-China trade war in full force, the results illuminate just how exposed economies are to the flood of cheap China imports turning into a deluge, particularly those in Asia,” he added.

How buyers are flocking to cheaper goods

Buyers across the world are seeking cheaper products to bypass the Trump tariffs. A report by the South China Morning Post says that shoppers from France are using Chinese e-commerce platforms like ‘Taobao’ to purchase luxury goods.

Luxury items like bags and other accessories from high-end brands like Birkin are being sold at much lower rates after manufacturers in China revealed the “hack” on TikTok.

One of the most-watched TikTok videos, nearing 10 million views, features a woman standing in front of factory equipment, promoting yoga pants produced in the same facility as Lululemon’s, selling them for just $5 to $6, a fraction of the typical $100 retail price.

Trump closes loophole

As soon as Trump found out that buyers from his country had found a loophole to avoid his tariffs, he closed it.

Earlier this month, lower-value shipping offered by Chinese e-commerce platforms was slapped with a 30 per cent tariff of the “value of the postal item containing goods for merchandise” and a minimum fee that will eventually rise to $50.