Imagine waking up to find the imported cat food you carefully selected has doubled in price overnight, or that your dog's favorite toy has become unaffordable. This scenario may soon become reality for American pet owners as former President Donald Trump's proposed tariff policy threatens to disrupt cross-border e-commerce in the pet industry.
On November 25, 2024, the president-elect announced via Truth Social his plan to impose an additional 10% tariff on Chinese goods effective January 20, 2025—his prospective inauguration date. This potential policy shift has sent shockwaves through global trade markets, particularly for China's export-dependent pet industry, which faces what analysts describe as an "existential earthquake."
The Tariff Sword of Damocles: China's Pet Industry at a Crossroads
China's pet industry has achieved remarkable global success in recent years, leveraging competitive pricing to capture significant market share. However, Trump's tariff proposal would substantially increase export costs for Chinese pet products, potentially eroding their price advantage in the U.S. market—the world's largest consumer of pet goods.
Liu Pengyu, spokesperson for the Chinese Embassy in Washington, emphasized the mutual risks: "China-U.S. economic and trade cooperation is mutually beneficial in nature. No one will emerge victorious from a trade or tariff war."
Behind the Export Boom: A House of Cards?
Customs data from January-August 2024 reveals impressive growth in China's pet product exports:
- Pet food: 217,000 metric tons exported (28.8% year-over-year growth), valued at $974 million (22.5% increase)
- Pet supplies: 283,200 metric tons exported (22.1% growth), valued at $1.18 billion (2.4% increase)
Yet this apparent success masks vulnerability. With the U.S. accounting for approximately 30% of China's pet product exports, the proposed tariffs could abruptly reverse this growth trajectory, particularly for companies heavily reliant on American consumers.
Strategic Evasion: How Pet Giants Are Going Global
Forward-thinking Chinese pet companies have anticipated such trade barriers. Publicly traded Yuanfeng Pet Products began establishing overseas factories after previous U.S. tariffs, selecting Cambodia and Bangladesh for new production bases. The company now operates four factories—two in China (serving Europe and Japan) and two in Cambodia (serving the U.S.)—with additional facilities under construction.
Industry leaders like Chongqing Zoetis Petcare, Petty Group, and Tianyuan Pet Products have adopted similar globalization strategies, insulating themselves from unilateral tariff impacts.
The SME Dilemma: Survival of the Fittest
Small and medium enterprises (SMEs) relying on original design/manufacturing (ODM/OEM) models face existential threats. Companies like Yiyi Co.—which produces disposable pet hygiene products for major U.S. retailers—lack the resources to establish overseas operations or absorb tariff costs. Many may be forced to exit the American market entirely.
These SMEs typically have limited bargaining power and risk tolerance, unable to pass increased costs to consumers without losing competitiveness. Their potential collapse raises questions about the broader industry's resilience.
Navigating the New Normal: Challenges and Opportunities
The proposed tariffs may accelerate several structural shifts in China's pet industry:
- Value over volume: Increased R&D investment to move beyond price competition
- Market diversification: Reduced dependence on the U.S. through expansion in Europe, Japan, and Southeast Asia
- Brand building: Developing consumer trust and loyalty through marketing
- Digital transformation: Leveraging AI and big data to optimize operations
As trade dynamics continue evolving, adaptability will separate industry survivors from casualties. For China's pet sector, the coming years may prove Darwinian—only the most innovative and agile will thrive in this new era of global commerce.