Three young boys eating lollipops joined me on the elevator inside the five-story\u00a0Yiwu “International Trade Market,” which ships\u00a0the majority of the world’s Christmas<\/a>\u00a0decorations.<\/p>\n The kids ran out before I got off. There were more children than buyers when I visited\u00a0what is one of the world’s largest wholesale markets\u00a0in late August, just days before the end of summer vacation in China. Lego pieces lay scattered at store entrances, while escalators were halted \u2014 signs said it was “for the safety of children.”<\/p>\n Whether on a weekday morning or afternoon, the legendary Yiwu marketplace\u00a0\u2014 which has the reputation of being the “world’s supermarket” \u2014\u00a0was unexpectedly quiet.<\/p>\n Was the U.S.-China trade war to blame?<\/p>\n A general view of Yiwu Wholesale Market in Yiwu, China, on April 16, 2025.<\/p>\n Nurphoto | Nurphoto | Getty Images<\/p>\n Li, a seller of sponges and cleaning supplies, claimed it wasn’t the peak season for foreign buyers, and that his customers were from the Middle East and Southeast Asia \u2014 not the U.S.<\/p>\n The impact of tariffs isn’t large, said Li, who declined to share his full name. But he hinted that factories in his home province\u00a0of Guangdong\u00a0were harder hit.<\/p>\n It echoed the silence I encountered during my Yiwu visit. None of the dozen or so other businesses I spoke to agreed to be interviewed.<\/p>\n But it was clear that their customer base had shifted. I spotted more signs in Arabic, and sometimes Korean or Russian, instead of the usual English and Chinese. Large swaths of one floor selling scarves were focused on headscarves, or hijabs.<\/p>\n Exports to the U.S. from Yiwu have slipped from about 20% eight years ago to 15% last year, and is now even lower, said Ashish Monga, founder and CEO of trading firm IMEX Sourcing Services.<\/p>\n The decline of Yiwu’s exports to the U.S. mirrors a national drop. China’s exports to the U.S. have dropped by 12% for the year through July, while exports to the 10 largest economies<\/a> in the Middle East are up by 13% during that same period, according to a CNBC analysis of official data accessed through the Wind Information database.<\/p>\n Since many of Yiwu’s products don’t meet EU compliance standards, that limits how much businesses can sell to Europe, Monga said. On the other hand, demand from Latin America, for example, has grown so much that Yiwu officials have supported Spanish classes for local merchants.<\/p>\n But it’s not just a matter of replacing U.S. orders.<\/p>\n “If you lose one big customer in the U.S., you need about five in emerging markets to make the same margin,” Monga said. “It’s more work for less money.”<\/p>\n Foreign merchants browse goods at Yiwu International Trade City on May 8, 2025 in Jinhua, Zhejiang Province of China.<\/p>\n Vcg | Visual China Group | Getty Images<\/p>\n While the total value of China’s exports to the U.S, as of July this year, stands at $251.4 billion \u2014 far larger compared to the $116.5 billion to the Middle East \u2014 Beijing has also ramped up its shipments to Europe and Southeast Asia, which is now China’s largest regional trading partner according to official data. Chinese exports to Africa for the year through July have surged by 24% from a year ago.<\/p>\n “Some of [the shift in Yiwu customers] is the hangover from the first [U.S.-China] trade war. People don’t want to be beholden to the States,” said Cameron Johnson, Shanghai-based senior partner at consulting firm Tidalwave Solutions.<\/p>\n “This year it’s definitely very clear that suppliers are turning to new, non-U.S. markets,<\/strong> particularly at scale, because they’re more stable, even though they’re at slower growth rates,” he said.<\/p>\n Pivoting away from the US<\/p>\n There’s little sign that Yiwu merchants will find it attractive to sell to the U.S. again soon.<\/p>\n Negotiators from the U.S. and China met in Madrid this week for the latest round of trade talks. But instead of announcing progress on tariffs, both sides only highlighted a “framework” agreement<\/a> on the drawn-out divestiture of TikTok from Beijing-based parent ByteDance. U.S. President Donald Trump<\/a> said he’s set to speak<\/a> with Chinese President Xi Jinping<\/a> on Friday to finalize details.<\/p>\n For businesses, the roughly 55%<\/a> U.S. tariffs on most Chinese goods are still well above the 25% rate they faced during Trump’s first term. Ahead of his second inauguration in January, many U.S. companies ramped up orders to get ahead of the increased tariffs.<\/p>\n This frontloading helped support China’s exports \u2014 and stave off a Christmas crunch.<\/p>\n A Costco retail store in the U.S. was already selling the holiday decorations when Tidalwave Solutions’s Johnson visited over the weekend. “The only reason they would have done that is if they had gotten it in a few months before,” he said.<\/p>\n But planning can only go so far. He expects U.S. businesses will have to start raising prices significantly in a few months.<\/p>\n In addition, new fees affecting China-made cargo ships arriving in the U.S., even if they are not Chinese-owned, will start to kick in on Oct. 14<\/a> \u2014 with estimated charges potentially in the millions of U.S. dollars<\/a>.<\/p>\n For the Chinese supplier faced with growing uncertainties, tapping a different market may simply be the safer bet.<\/p>\n Top TV picks on CNBC Treasury Secretary Scott Bessent joined “Squawk Box” to discuss details of the U.S.-China framework deal on TikTok, the search for the next Fed chair, President Trump’s tariff agenda, and more.<\/p>\n David Li, the CEO of China’s Hesai, the world’s leading LiDAR supplier for cars, said U.S. tariffs are a cost of doing business \u2013 and that the burden of that additional cost is a ‘negotiation’ as information and regulations change.<\/p>\n The CEO of alternative investment firm Templewater, Cliff Zhang, explained why Chinese companies are looking to expand to the Gulf Cooperation Council countries.<\/p>\n Need to know<\/p>\n Nvidia probe drags on. <\/strong>Amid high-level U.S.-China talks in Madrid, Beijing said Monday that the U.S. chipmaker violated the Chinese anti-monopoly law, and that an investigation would continue<\/a>. \u00a0<\/p>\n China’s economic slowdown steepens. <\/strong>Retail sales grew by just 3.4% in August, missing forecasts<\/a>, while fixed asset investment for the first eight months of the year barely grew as the real estate drag worsened.<\/p>\n Uproar over processed food. <\/strong>Fast-casual chain Xibei is in hot water after an internet celebrity last week criticized the restaurant for selling expensive, pre-made dishes. The company’s initial response irked many consumers<\/a> further, as it revealed that industry standards for processed food are looser than many consumers believed.<\/p>\n Quote of the week<\/p>\n “What is on the table [in trade negotiations between the U.S. and China] would be purchase agreements, things like, like, airplanes, soybeans and the like, possibly a purchase target.”<\/p>\n \u2014 Kurt Tong, Managing Partner at Asia Group<\/p>\n In the markets<\/p>\n Chinese and Hong Kong markets rose Wednesday.<\/p>\n Mainland China’s CSI 300 was up 0.47%, while Hong Kong’s Hang Seng Index<\/a> rose 1.16% as of 11:15 a.m. local time. The Hang Seng Tech<\/a> index jumped 2.89%.<\/p>\n Hong Kong-listed shares of Baidu<\/a> surged as much as 14% as the company ramps up its artificial intelligence plans and partnerships. Shares in the Beijing-based firm, which holds a dominant position in China’s search engine market, had gained 9% overnight in U.S. trading.<\/p>\n Stock Chart IconStock chart icon The performance of the Shanghai Composite over the past year.<\/p>\n![\"Treasury](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/09\/108199220-17580226531758022650-41672682294-1080pnbcnews.jpg\")
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