As the U.S. tightens its grip on Chinese imports, small online retailers—especially dropshippers—find themselves caught in the crossfire.
Amid rising tariffs and delayed shipments, many entrepreneurs are watching their profit margins shrink to razor-thin levels.
Online seller Kamil Sattar says his revenue has already dropped by 33%.
He sells products like phone accessories and jackets via a dropshipping model, where items sourced from Chinese suppliers are shipped directly to customers. “You don’t pay for the product until someone buys it,” he explains.
But what was once a low-risk, high-reward business model is now being squeezed by new trade barriers.
A 145% cumulative tariff on Chinese goods is taking its toll. Products are not only becoming more expensive—they’re also getting stuck at borders. “It’s not just lost margins,” Sattar warns, “it’s refund requests and angry customers.”
Dropshippers previously relied on the de minimis exemption, which allowed goods valued under $800 to enter the U.S. duty-free. However, that exemption ends on May 2.
The White House has confirmed incoming tariffs: 30% or $25 per item, rising to $50 by June 2025. A temporary suspension of the exemption in February left over a million parcels stranded at U.S. ports.
Yinglan Tan of Insignia Ventures says this will “gut” micro-entrepreneurs with single-source supply chains.
“They’re going to be in deep trouble,” he says. Julia Xu of Wayo echoes the concern, suggesting business models built on low-cost Chinese imports may not survive the new trade environment.
Meanwhile, Sattar has shifted focus from the U.S. market, reducing U.S. sales from 60% to 20–30%. “We’re now focusing on Europe,” he says, adjusting to what he calls “daily chaos.”
His sentiment is echoed across China. A Shenzhen-based e-commerce group reports that nearly 70% of small exporters are freezing plans or shifting to new markets.
Xin Wang, head of the Shenzhen Cross Border E-commerce Association, says many sellers are struggling. “Very few are optimistic,” she said in a translated statement.
For consumers, the impact is felt in higher prices: added duties are being passed onto final costs.
Still, some see a silver lining in the uncertainty. Sattar believes the most adaptable entrepreneurs will find opportunities others overlook.
“Those that stick around and are smart will make the most money,” he says. “But the window is closing fast.”
You May Also Like: Trump’s Tariffs: A Blueprint for Higher Unemployment and Economic Uncertainty
