Viewing Trump’s Trade War From the World’s Shopping Mall in China

Christmas comes early to Yiwu, a bustling entrepôt just a couple hours by train from China’s coastal megacity of Shanghai.

This city of two million reputedly produces nearly two-thirds of all the Christmas decorations purchased worldwide. On Sunday, traders of every nationality were already scouring its labyrinthine International Trade City, colloquially known as simply Yiwu Market, for samples of festive baubles and tinsel. Typically, orders arrive from April, nearby factories then get to work, and by July containers are loaded for shipping around the globe.

This year, however, things are a little slower here in Santa’s real workshop. “American customers have been checking our prices but haven’t put orders in yet,” shrugs Zhang Xiu Fang, surrounded by the reindeer hairbands and crimson stockings that adorn the New Di Man Christmas Craft shop she opened two decades ago.

The reason for U.S. restraint is clear: the slew of trade tariffs that President Donald Trump has launched against China, the world’s top exporter. Imports now face a levy of at least 20%. Trump’s tariffs strike at the heart of China’s manufacturing colossus—a network of factories and assembly lines that produce pretty much everything, from toys and clothes to solar panels and plastic bowls.

And far beyond its festive reputation, Yiwu lies at the heart of that trade. According to the World Bank, it is the world’s largest small commodities market, selling around $70 billion of goods annually. Today, Christmas paraphernalia occupies just a slither of Yiwu Market’s seven cavernous buildings, which occupy an area equivalent to over 500 football fields and together house some 70,000 individual shops and stalls. If China is the world’s factory, Yiwu is its shopping mall, where every product large or small is on display: from bongs and drones to drill bits and socks. It’s a cornucopia that attracts traders from Australia to Zambia and pretty much everywhere in-between.

“You’ve got so many dichotomies of cultures in Yiwu,” says Louisa Line, a Melbourne-based businesswoman who first imported containers of fake white flocked Christmas trees from Yiwu in 2019 and was last week searching for new jewelry lines. “The market itself is its own little city. I’m thoroughly impressed by it.”

Locals are less impressed by the prospect of a trade war between the world’s top two economies. China’s trade surplus with the world rose to a record $1 trillion in 2024 on the back of exports worth $3.5 trillion. In the face of weak domestic consumption, exports have taken on renewed impetus to prop up China’s flagging economy, though prolonged tariffs could result in exports to the U.S. dropping by up to a third, say economists.

Lina Liu, owner of Pet Fang Gang, a supplier of pet merchandise like dog beds and cat litter trays, says that 40% of her business goes to the U.S., either to high street chains or traders selling via Amazon. She says customers are holding tight instead of putting in orders, waiting to see if there might be any relief from the tariffs in the pipeline. On Thursday, Trump said he would be willing to reduce tariffs on China in exchange for a deal with TikTok’s Chinese parent company ByteDance to sell the social media app used by 170 million Americans before an April 5 deadline that would see it banned on national security grounds.

“I’d be lying if I didn’t worry a little, but we’re trying to expand the business elsewhere,” Liu says. Asked whether her products could be sent to U.S. clients via third countries, she replies, “that’s maybe an option.”

It’s uncertainty that has prompted many American retailers to simply pause replenishing stocks in the hope that a deal is thrashed out. But with factories lying idle or selling elsewhere, even if tariffs are reduced, diminishing supplies mean prices are likely to rise either way. On Thursday, Trump hiked additional 25% tariffs on foreign-made cars on top of a 100% existing tax on Chinese EVs. And he has vowed to impose reciprocal tariffs on every country from April 2 (though the complexity of such a threat has trade officials scratching their heads).

“It’s hard for American consumers to find substitutes for these suppliers,” says Albert Hu, an economics professor at the China Europe International Business School in Shanghai. “And they operate on thin profit margins, so it’s quite likely that if tariffs are imposed on those products, the cost will be passed onto consumers.”

Indeed, Lin Zhou, owner of Tuoxu Outdoor Lighting in Yiwu, says that when she clears just 3 rmb (41 cents) profit on each 28 rmb ($3.85) flashlight sold, for example, there is no way to cut costs further. “U.S. traders will just take the hit in order to maintain good relations with their customers,” she says.

For Line, the Australian businesswoman, more people need to visit Yiwu to see its unique brand of cooperative commerce in action. “World leaders and politicians should take Yiwu Market as a prime example of how everyone can work together to cooperate,” she says. “These tariffs are going to hit small retailers the most and consumers at the end of the day.”