Like squirrels storing nuts for the winter, Chinese e-commerce sellers are turning to Canada to hoard goods in response to frosty conditions.
Driving the news: Chinese sellers waiting out the China-U.S. trade war have turned to warehouses in Canada to stash U.S.-bound goods. Data showed a 50% jump last week in Chinese consignments at Canadian warehouses, led by third-party Amazon and Walmart sellers.
- More than half of top third-party sellers on Amazon ship out of China. Walmart has 28% of active sellers shipping from China, but the number has trended aggressively upwards.
- Sellers are using bonded warehouses, which allow for the duty-free storage of items until they are released for sale, with the plan of holding goods until tariffs drop.
Big picture: That bet may pay off, as the U.S. and China have signalled they are open to talks to bring down punitive tariffs. One official told the Wall Street Journal that tariffs on many Chinese goods could drop from 145% to between 50% and 65%.
- The U.S. is also reportedly considering a tiered approach that would see 35% tariffs on items that don’t pose national security risks, and ~100% tariffs on those that do.
Why it matters: Besides calming market turmoil, a quick tariff resolution would free up Canadian bonded warehouse space, which is at risk of becoming clogged up with goods not even destined for this market.—QH