[Source/Observer Network, Ruan Jiaqi]

The Financial Times reported on the 23rd that according to six sellers, logistics providers, and consultants, some third-party sellers of American large retailers Amazon and Walmart are stockpiling goods imported from China in Canadian warehouses, waiting for the Sino-US tariff storm to subside.

This move has an element of gambling involved: they bet that the White House will ultimately cancel the 145% tariff on China. Before this, Canada, with its tax-free warehouses, tax breaks, and refund policies, has become one of the options for "saving the situation indirectly."

Some insiders also said that several manufacturers and dealers of Amazon and Walmart's own brand products, as well as suppliers for companies like Disney, are also adopting the same strategy.

Snapshot from the "2024 Amazon Seller Status Report," Jungle Scout.

According to The Financial Times, Amazon and Walmart not only sell products directly but also provide platforms for third-party retailers. Over 60% of Amazon's sales, headquartered in Seattle, come from third-party sellers, while Walmart's proportion is much lower. Many of these sellers either import from China or are Chinese sellers themselves.

At present, sellers and suppliers are struggling with how to handle orders already in transit and how to prepare for the sales peak before Christmas. The report stated that retailers have been looking for ways to reduce tariffs under the high tariffs imposed by the United States on China.

Some retailers continue to collaborate with suppliers and brands to transfer the production of popular items to countries like India and Vietnam, which have lower tariff burdens.

However, the effect of shifting capacity remains limited. Many manufacturers warned that although the process of shifting capacity was initiated years ago under pressure from successive U.S. administrations, it still requires several years to complete.

Another option is to use U.S. bonded warehouses. There, inventory can be stored tax-free for up to five years. However, such warehouses are currently in short supply.

Another option is warehousing in Canada. According to British media reports, Canada allows warehouse operators to apply for tariff exemptions in so-called foreign trade zones (including bonded warehouses). If sellers export the goods within four years, they can also apply for a reduction or refund of Canadian tariffs.

Kara Babb, a supplier consultant who used to be an Amazon supplier manager, added that if the U.S. eventually lowers the tariffs on China, warehousing goods in Canada can help retailers avoid paying high freight costs.

This "delaying tactic" is gaining increasing favor among sellers. Data from Flexport, an American logistics group, showed that last week, the number of shipments from China to Canada increased by 50%, indicating the initial signs of cargo diversion to Canada.

In doing so, the cost for each container will increase by $500 to $600. Nathan Strang, the ocean transport director at Flexport, reminded that if the U.S. ultimately does not cancel the tariffs on China, this "bet" may make sellers not only pay the tariffs but also incur an additional cost.

However, Dean Wood, CEO of BorderWorx Logistics, which specializes in logistics and warehousing between the U.S. and Canada, said that some retailers are willing to bear this extra cost because it is still much cheaper than paying the current U.S. tariff rate.

"This indeed poses a challenge to cash flow," he added, "but for enterprises trying to hedge risks, this strategy remains highly valuable."

The chaos caused by Trump's tariff policies is severely impacting American retail giants like Amazon and Walmart, which rely heavily on Chinese imports. Tariff policies have become a new threat in an already severe economic situation.

On April 10th local time, when discussing that most of the sources came from China, Andy Jassy, CEO of Amazon, issued a warning in an interview with American media, stating that high tariffs imposed on China by the U.S. could lead third-party sellers to pass the costs entirely onto American consumers. He indicated that he had preliminarily observed buyers hoarding behavior.

Fortune magazine expressed greater concern, fearing that American sellers on Amazon relying on Chinese sources might go bankrupt due to tariff impacts.

According to CNBC, on the 21st local time, the CEOs of America's three major retail giants—Walmart, Target, and Home Depot, the home improvement giant—gathered at the White House to meet with Trump to discuss the potential impact of U.S. tariff policies on their import-oriented business models.

After the meeting, the three companies released statements with almost identical wording, claiming they had conducted "productive and constructive talks" with the president. Trump also mentioned in his subsequent statement that the meeting went "very well," but did not disclose specific content or results.

Barron's pointed out on the 22nd that Amazon, Walmart, and other American retail giants' stocks have become "victims" of Trump's tariff policies. Some media outlets believe that the market turmoil, including the retail sector, is forcing the Trump administration to release "cooling" signals regarding China-related tariffs.

According to AOL, Treasury Secretary Beston admitted in a closed-door meeting with investors that the current deadlock over tariffs between China and the U.S. is unsustainable and predicted a "short-term" easing trend. It was also revealed that Trump plans to pressure India to fully open its e-commerce market to American retail giants like Amazon and Walmart as part of the U.S.-India trade agreement. Following this, the stocks of major American retailers and e-commerce companies rebounded.

By the afternoon of April 22 Eastern Time, Amazon's stock price rose about 3.3%, Walmart's stock price increased nearly 2%, and Home Depot's stock price rose about 1.3%.

However, American media pointed out that the frequent changes in Trump's policies still leave the market facing great uncertainty. "As we have seen in the past month," AOL said, "the market can reverse overnight due to a single headline." In the short term, all three stocks may suffer more losses due to bad tariff news or weak U.S. consumer spending.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7496352531690422795/

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