In China’s ‘Christmas Town,’ Trump’s tariffs are dimming the lights

It’s a familiar, beloved scene for millions across America: snow drifting outside and Christmas music playing while families decorate their homes with string lights, stockings and a star atop the tree. But few know exactly where those iconic holiday items come from. Most of the time, they hail from just one city in China’s Zhejiang province: Yiwu, nicknamed “Christmas Town,” which supplies nearly 90% of all decorative Christmas goods used in the United States, according to state media. And many of those products can be traced back to Yiwu’s wholesale market — the biggest in the world. It’s a labyrinthine complex measuring nearly 1,000 acres, the equivalent of roughly 750 football fields. Inside, foreign buyers browse narrow corridors overflowing with merchandise, ranging from piano-playing musical Santa dolls to artificial Christmas trees — as well as countless other items destined for American homes, including “Make America Great Again” hats, massage guns and foldable camping chairs. But these days, there’s an undercurrent of anxiety. These vendors are on the front lines of global trade — and are now grappling with triple-digit tariffs imposed by President Donald Trump, which have sent shockwaves across the world and upended relationships forged over decades between the US and China, two superpower economies. America’s overall tariffs on China now exceed a staggering 145%, the highest trade penalties imposed by the US in nearly a century, with Trump’s most recent “reciprocal” tariffs on Chinese imports coming after earlier rounds related to fentanyl. For many vendors, the measures have already cost them customers, slashed their profits and forced them to pivot to other markets. When CNN visited the market earlier this week, many voiced both concern and bewilderment at Trump’s actions, but also desire for a peaceful resolution as they pick up the pieces of their disrupted businesses. “Some of our long-term clients have stopped dealing with us and we are all very sad,” said Ran Hongyan, 43, who has been selling Christmas decorations for 15 years. After the tariffs hit, she tried offering her American customers a discount to save the relationship, but it didn’t work. Eight out of ten canceled their contracts this year, representing a loss of more than $135,000, she said. Ran said the US exports made up only a portion of her total clientele, but they’re not just numbers on a screen or an accounting ledger. Many were longtime partners. She had met one American customer at a trade fair in China years ago, and they had worked together for nearly a decade; he even traveled to visit her factory where the products were made. “Because of the tariff issue, he said he had no choice but to cancel it this year and see what happens later,” she told CNN, standing amid rows of reindeer plushies and festive teddy bears in her small store. “We have been working together for a long time.” Countries are spending less. That’s bad for Yiwu Much of President Trump’s tariff rhetoric has been about restoring US factory jobs that he says had been destroyed by bad trade deals. But it’s difficult to see a future where the kind of products on display at Yiwu could be made by American hands — unless consumers are willing to pay much more for something as ubiquitous and currently inexpensive as plastic Christmas ornaments. The second-biggest exporter of Christmas decorations to the US is Cambodia, where factory wages are even lower than China, but Trump also imposed 49% tariffs on the small Southeast Asian nation, before the recent 90-day pause. The city of Yiwu is relatively small by Chinese standards, home to fewer than two million people, but it has an outsized footprint in global trade. Last year, it sent $81 billion of goods overseas, of which about $11.5 billion went to the US, according to local customs data. This massive impact is clear from the moment you land in the city. As you step off the plane, the boarding bridge connected to the airport is plastered with English ads that read: “China goods! Do global business in Yiwu!” When CNN visited the wholesale market, it was still bursting with activity. After all, the US is currently alone in slapping universal tariffs on the world’s second-largest economy. The multi-story, multi-block complex boasts different types of goods on each floor, with coffee shops and snack stalls scattered throughout. Everywhere you turn, there is an explosion of color and sound, with an estimated 70,000 stalls crammed inside, according to local authorities. But the escalating trade war is already making a mark. CNN saw buyers from various countries perusing the booths and negotiating contracts with sellers, but there wasn’t a single American in sight. Shopkeepers were on edge, too — with many declining to speak and cautious of local Chinese officials wandering the market. Even vendors who don’t sell to the US are nervous. Trump may have delayed his so-called reciprocal tariffs on other nations besides China, prompting many to suspend their own counter-measures, but talks are still ongoing, and there’s no telling if the announced tariffs might be reinstated. Many economists, even Trump allies, are warning a global recession could still take place if the trade war continues. The back-and-forth means that the world’s economies remain in flux, with consumers potentially tightening their purse strings and reassessing where they’re spending their money. That could spell deep trouble for the people of Yiwu, whose livelihoods depend on overseas customers, particularly in the run-up to Christmas. Li Xinyao has been working at her family’s imitation flower business at Yiwu market since it was established in 1993, selling plastic bouquets of roses, sunflowers, daisies and more. Though they don’t currently have any American customers, their revenue has still taken a hit since the trade war kicked off. “Even though we think China will be better (and recover), but the United States is still the best country in the world, the richest,” she said. “The Americans always impact the world. When they start the trade war, all the people will worry about that, and our customers will maybe hold on (orders).” The turbulent global economy could also hurt her sales, since decorations, like plastic flowers, could be first on the chopping block for clients needing to cut expenditures, she said. “If we cannot lead a happy life, who will care about decorations?” she asked. Pivoting from the US For many other vendors, whose customer base is concentrated in the US, Trump’s trade war means they will now need to look for other opportunities. In some ways, this pivot has been happening for years on a national level. The idea of decoupling, a scenario where two countries have virtually no trade or investment, has been bandied about in US-China circles for years, though such a historic rupture would cause enormous pain for both of the deeply intertwined economies. Tensions have been rising since the US-China trade war during Trump’s first term, and China has been quietly bracing for a showdown in the years since. Since 2018, Beijing has diversified its supply chains and expanded trade relations with the rest of the world, thereby reducing the share of US exports. China’s exports to the US made up 19.2% of its total overseas shipments in 2018 – but dropped to 14.7% in 2024, according to official figures. This means China now relies less on US businesses than it did before, an attitude the Yiwu sellers are adopting too. “I am now taking all goods that are halted by my US customers to the EU route. I will push all these goods to our EU customers,” said 39-year-old Nie Ziqin, who sells Halloween decorations. Up to half of her exports used to go to the US. Like Ran, she had cultivated trade relationships with “old customers for many years,” she said. But now, many of those orders have been suspended, even though they were negotiated before the tariffs were announced. Although her sales have dropped “significantly,” she voiced optimism about her other options. “I still have the domestic market, and the EU market. I am also doing cross-border e-commerce online,” she said, gesturing to the walls of ghostly masks, pumpkin lanterns, dancing ghouls and giant eyeballs around her. “Last year, we had already started to design products that (we) could sell to the Chinese domestic market.” Some of the vendors praised China’s response to the trade war, echoing sentiments expressed on China’s tightly controlled social media, where online users vented anger toward the US and supported Beijing’s firm stance against Trump’s tariffs. Last week Beijing raised tariffs on US goods to 125%, with Chinese leader Xi Jinping saying his nation was “not afraid.” Officials indicated Beijing would not raise rates further since it would be meaningless to continue escalating. “Our government is doing good in these things,” said Li, the imitation flower seller. But that doesn’t lessen their fear, as they brace for impact and worry about what the trade war could mean for Yiwu and the families who live there. Li, the plastic flower seller, worries about how the state of the world will affect her six-year-old daughter “every day,” she said, adding that Chinese people “always worry about the next generation.” And even as a history buff, she remains confused about why Trump would launch such a trade war in the first place. “We want world peace. From my perspective, I really don’t understand why they would do this,” she said. She and the other vendors all voiced hope that the two countries’ leaders can reach an agreement and end the tit-for-tat tariffs that have plunged their lives and businesses into uncertainty. But as the trade war drags on, it’s not clear whether that relationship can be repaired — or whether it will ever look the same again, even if vendors eventually resume selling to their long-time customers. For some, the damage has already been done. “When we do daily shopping, if we want to buy a bag or buy some daily necessities, we will now start considering whether these products are imported from the United States,” said Ran, the Christmas decorations seller. And if those goods are American-made: “I will definitely choose not to buy them.”