TLDR: China has begun selling Chinese Goods direct to American Consumers on Ecommerce platforms. This is an unprecedented mechanism for circumventing the US economy to extract wealth from the US consumer base and funnel it directly to China.
The result is devastating to the US ecommerce industry; the broader US retail sector; to US manufacturing and the US businesses which support them.
- Yes it makes sense
- No, Too Confusing
- No, Too Long
The “Made in China” issue has evolved into the “Sold By China” issue, an even greater threat to the US economy.
Internet shopping has opened the doors for foreign companies, predominantly from China, to have unlimited direct access to the American retail consumer- circumventing US businesses, extracting massive wealth from the US economy, reducing US tax revenues and avoiding potential regulation.
Here’s what’s happening:
Market Displacement: Foreign sellers sell direct to American consumers through online platforms like Amazon, Tik-Tok Shop, Shein, Temu, and Aliexpress - circumventing US businesses which have historically provided these products to American consumers. This trend has increased exponentially over the past 5 years with today over 63% of all Amazon 3rd party sales being sold directly by Chinese companies on the platform (SOLD BY CHINA); and, with TEMU which features products exclusively Sold by China having risen to become the number 2 ecommerce retailer in the United States behind only Amazon.
Foreign companies selling direct in Ecommerce take white collar jobs directly from Americans as high paying jobs in Marketing, Creative, Analysis, Finance, Accounting, Supply Chain, Forecasting, etc all get employed in the Foreign country for the Foreign company/brand/manufacturer.
The foreign company manufactures the product, owns the brand, and then sells directly to the US consumer effectively pulling the entire vertical out of the US and placing it into China.
With consideration to the rapid influx of Chinese sellers and products into the US retail sector by way of Chinese retailers; huge swaths of the US Market are being funneled to foreign businesses creating an existential threat to US Ecommerce, US Retail as a whole and the industries which support them .
Too many large iconic US retailers like JCPenney and Bed Bath & Beyond; marketplaces like eBay and Etsy; and countless US small businesses are struggling and too many have already given up.
We’re giving away the US consumer markets and all of the jobs which support them to China, and this trend is accelerating at an alarming rate.
Ripple Effects:
Where previously only manufacturing was displaced, the recent proliferation of ecommerce has now made it possible to cut American companies out of the US economy entirely.
The economic disruption extends beyond the US companies competing directly with Chinese Sellers online, to traditional brick and mortar and the US retail sector as a whole, who see year over year losses of market share as more buyers purchase directly from China.
The retail sector itself is the front line for a broad collective of service businesses which support them; and, the influx of Chinese sellers has ripple effects which impact US based service provides in marketing, advertising, buying, quality control, product sourcing, customer service, graphic design, photography, product development, shipping, logistics, warehousing, technology, Finance, Accounting, Data Analysis and of course U.S. manufacturing, supply and so much more.
This cascading effect is ripping through various sectors of the economy, leading to job losses, reduced innovation, and slower US economic growth while China’s Ecommerce presence in the US is EXPLODING. This impact ultimately extends to local communities, affecting everything from tax revenues to real estate markets in areas where these retail businesses and their ecosystem partners are concentrated.
Lost Tax Revenues and Regulatory Evasion:
As broad portions of the US retail sector move to Chinese Businesses, the economic activity which was taxable under those now shuttered US Businesses’ Profits are instead now falling outside of U.S. Federal Tax Jurisdiction, depriving the U.S. government of substantial tax revenue from US based retail sales activity. The profits AND tax revenues are going to the Chinese economy instead of our own. Recall the previously mentioned 63% of 3rd party Amazon sales going directly to China and the fact that Temu is now the second largest online retailer in the United States, these profits are taxed to the benefit of China and not the US.
Foreign businesses are also able exploit loopholes to avoid paying tariffs and sidestep consumer protection regulations, creating significant consumer risks and leaving consumers with no effective mechanisms for recourse or remedy in cases of faulty or dangerous products.
Single-parcel shipments into the U.S. make oversight nearly impossible, allowing foreign entities to engage in widespread non-compliance, all while depriving the U.S. government of critical tax revenue. (See other proposal on De Minimis Rule) In 2022, Temu paid no U.S. import duties on its products due to the de minimis rule and may have paid no Federal Income taxes at all.
China also maintains an unfair shipping cost advantage subsidized by the US! Its status as a developing country in the Universal Postal Union establishes their international postage rates at significantly lower than the United States. In most cases the cost for a Chinese company to ship an single parcel e-packet from China to the US is cheaper than it is for a US business to ship the same package domestically! This is made possible by Chinese international mailing costs being subsidized by the US tax payer through the UPU! US Businesses are literally subsidizing the Chinese businesses that are displacing them!
The Proposal:
1- Restrict foreign retailers and businesses from selling to US retail consumers online
2- Restrict access to the U.S. ecommerce market to U.S. owned online marketplaces only
Controlling “Sold by China” products is a major step toward protecting and strengthening the US Economy that will generate and protect federal tax revenues; preserve the fertile U.S. consumer markets for the benefit of American businesses; and, protect consumers from potentially dangerous, unregulated foreign products. Please Vote for this proposal!
