A head-on clash looms between the U.S. and China over the tariff war (CG) (Image provided by Yonhap News TV)
SEOUL, April 21 (Korea Bizwire) — As the U.S.-China trade war escalates in 2025, South Korea’s retail and small manufacturing sectors are bracing for a potential flood of low-cost Chinese goods that could destabilize domestic markets.
Industry concerns have mounted following a series of aggressive tariff measures by former U.S. President Donald Trump. On April 9, Trump imposed a sweeping 104% retaliatory tariff on Chinese imports.
More recently, he scrapped the longstanding de minimis exemption, which previously allowed duty-free entry for imports valued under $800 (about 1.14 million won). Beginning May 2, even low-cost parcels headed to the U.S. will face tariffs of up to 120%.
The policy shift is expected to severely impact Chinese e-commerce giants Temu and Shein, which have leveraged ultra-low pricing to gain a dominant foothold in the American market. Together, these platforms accounted for 60% of the 1.4 billion tariff-exempt Chinese parcels processed by U.S. customs last year.
In response, both Temu and Shein have begun notifying American customers of imminent price hikes and reduced advertising spending, but analysts warn that a steep drop in sales is inevitable.
South Korean industry leaders are closely watching where China’s diverted surplus will land next—and fear that Korea’s open, price-sensitive, and digitally mature consumer market could become the next target.
The indiscriminate ultra-low price offensive by China’s “Al-Te-Shi” e-commerce trio is intensifying (CG) (Image provided by Yonhap News TV)
With the world’s fifth-largest e-commerce market and close geographic proximity, Korea offers an attractive alternative for Chinese manufacturers looking to offload inventory. Analysts expect platforms like AliExpress, Temu, and Shein—collectively referred to as “Al-Te-Shi” in Korea—to serve as conduits for any incoming wave of discounted goods.
Data from WiseApp-Retail shows that as of March 2025, AliExpress had 9.13 million monthly active users in Korea, second only to local giant Coupang. Temu ranked fourth with 8.31 million.
“There’s a strong possibility that China will push clearance inventory through aggressive discount campaigns via Al-Te-Shi,” said one retail industry official.
The groundwork for such an influx is already visible. In Q1 2025, South Korean direct purchases from China surged 11.5% year-over-year to $786 million (approximately 1.12 trillion won), even as the country’s total cross-border e-commerce volume shrank 4.4%. Chinese products now account for 57.9% of Korea’s direct purchase market—a record-high quarterly share.
Ahead of Black Friday, officials inspect direct purchase parcels at the Express Cargo Logistics Center of Incheon Airport Customs Headquarters in Jung District, Incheon, on November 20, 2024. (Yonhap)
The prospect of a broader price war worries domestic e-commerce firms and small manufacturers, many of whom are still recovering from sluggish consumer spending. Industry experts warn that sustained dumping of cheap imports could erode local competitiveness and push long-term costs back onto consumers.
There is also growing concern over illegal origin labeling. Industry insiders warn that some Chinese exporters may reroute products through South Korea and falsely label them as “Made in Korea” to circumvent U.S. tariffs—an illegal practice known locally as taekgari (tag-switching).
In response, South Korea’s customs authorities are preparing to tighten origin inspections on incoming Chinese goods to prevent trade circumvention and protect local industry.
“If Chinese goods flood the market unchecked, it will weaken Korea’s domestic manufacturing and retail ecosystem,” one retail executive said. “We need preemptive measures from both government and industry to prevent a market disruption that ultimately burdens consumers.”
Ashley Song (ashley@koreabizwire.com)
