US/China Tariff Deal ANNOUNCED – What It Means for FBA Sellers

All right guys, so looks like we have a trade deal in place. We're gonna go over a little bit as far as like what that means for Amazon FBA sellers, because I think that this is a good thing. I also think that this is gonna create a panic with a lot of people and rushing a lot of inventory into Amazon, which is gonna go ahead and have a lot of bottlenecks when it comes to freight forwarding and getting your, you know, shipment on a boat within the next couple weeks. And ultimately, you know, we stayed the right course as far as going ahead and just dripping in enough inventory as possible in order to go ahead and not run out of stock on our inventory. Obviously absorb some of these tariffs, but we saw a lot of damage along the way. And right now it's only a 90-day pause, but let's go ahead and kind of get into the details as far as what is going on. What type of agreement did Trump and President Xi have? And what does it look like going forward? Because right now Amazon FBA is not dead or anything like that. A lot of people went ahead and did drastic decisions as far as running out of stock or allowing themselves to go out of stock, which is gonna be ultimately a bad decision. Some people opted to go ahead and go into different countries to go ahead and manufacture, which again wasn't a great decision. But here, here's why. So let's go ahead and go over exactly what the trade agreement happened, right? So basically what ends up happening here is that you see US and China, uh, as far as like the, the agreements, right, at Geneva. So Trump's tariff on Chinese goods drops to 10% from 125%, and it was actually 145%. But let's go ahead and look at the second point. A separate, uh, 20% tariff, uh, with fentanyl-related, uh, fentanyl-related tariffs stay in place. So what ended up happening was that we did have a baseline of 125%, but we had an additional 20% because of fentanyl, which has been a serious case for the administration as far as going ahead and trying to solve, you know, fentanyl and not allow it into the states. So that's a good thing there. Right. So that stays in place. So now we're actually at 30% tariffs from 145%, which is great, great news. Like people were going bankrupt, going out of business, not being able to afford their actual tariff tax bill when it came to freight. So that's a good thing. Um, one thing here, let's go ahead and see if there's any type of audio issues. I always forget to go ahead and ask you guys, so let me go ahead and see if anybody's going ahead and bringing that up. Um, in the meantime, I think I am good. Okay, so let's go ahead and go back into it, right? So China cuts in retaliation to— retaliation tariffs to 10% from 125%. So we actually got a bigger deal. Um, so any— so tariffs from the United States is actually 10%. Going into China, so the main thing here is that we're at 30%, right? So now instead of going ahead and paying 145% tariffs, we are now at 30% tariff, which is still substantially way more than what we had before this whole Liberation Day happened. But this is absorbable, right? We can go ahead and absorb these tariffs, and these cuts are only temporary, lasting 90 days as talks continue, right? So again, there's no guarantee this happens, and this is the big reason why I think that. Freight is going to go out of control because right now it is 90 days. And trust me, when 90 days are up, they're going to extend this another 90 days and another 90 days until they can go ahead and find out common ground. This has just been a baseline of what we can go ahead and expect for the rest of the year. But what ends up happening when people go ahead and see it's lasting 90 days? Well, people start rushing and saying, okay, well, in 90 days, 145% tariffs are going to go ahead and come back. And let me tell you guys, 145% tariffs or anything above 30% likely is not going to go ahead and come back. Why? Well, because they had, they had to go ahead and go to Geneva, sit down and have a meeting because both economies were suffering, right? Both China and United States economy were suffering. So they had to go ahead and sit down in Geneva and try and go ahead and formulate a plan going forward as far as how they're going to go ahead and absorb, um, some of this impact. Right? So don't think that in 90 days it's going to go back to 145% tariffs, because if that does happen, that means that we made no traction. We actually reverted backwards and we have way bigger problems than these tariffs, right? Like we can go ahead and see a bunch of businesses go ahead and close down, but that is the worst case scenario. So why do I think that lasting 90 days as talks continue is a really bad thing? For Amazon FBA sellers? Well, the thing is that like people are going to see this and think, okay, well, this only— this is going to last for 90 days. Now it's going to go back to 145% tariffs. So let me order as much inventory as possible. So what ends up happening when people go ahead and order as much inventory as possible? Well, we're going to go ahead and see what ended up happening in 2021, right? Where freight costs went through the roof, where people went ahead and got so much inventory, Because they had so much demand that like freight prices went crazy. And this is going to be artificially propped up. Like there's no end customer right now, right? Like that's going to go ahead and paying so much money for your actual inventory. The only reason why people are going ahead and going to have 6 months to 12 months worth of inventory is because they're scared that another tariff bill is going to go ahead and happen. Right. So that is bad news for a lot of us Amazon FBA sellers, especially if we're going to go ahead and ship in June or July, because I think freight prices are going to go crazy within June and July. So if you do have inventory, which again, if you've, you've been following this channel and kind of following our strategies here, you should have inventory still in China, just waiting for something to happen and you were just dripping in inventory. So if you do have a lot of inventory in China, ship it out this week, like if not next week latest, um, and try and go ahead and rush any type of delivery. There was a holiday in China last week. So just go ahead and make sure that you're going ahead and shipping out as much inventory as possible, because I can guarantee you in the next couple of months, freight prices are going to be 3, 4, 5x what they are right now, just because so many ships are just waiting in China to go ahead and get shipped off. And they finally got the green light here. Right. And again, 30%, the crazy thing is that like 30% tariffs is still crazy, right? Like we're not used to paying 30% tariffs on our actual inventory. But it's actually good news and actually quote unquote cheaper because of the fact that that you know we're coming from 145 and just basically market impacts. Obviously, S&P 500 poised to recover all the losses since you know Liberation Day. Nasdaq's up. Amazon, Apple, Tesla rose in pre-market trading. Like these these companies obviously benefit the most, especially Amazon. Like Apple got a pass, right? Like them. Nvidia were able to bypass these tariffs because why? They're huge companies. They're the biggest companies in the world. So as mom-and-pop people, we went ahead and had to pay these tariffs. Amazon didn't. So dollar and bond yields still climb. So obviously this is not an economy channel, but this is kind of concerning that, you know, the yields are still going ahead and going up. The 10-year note is still going up, but it is what it is, right? We've stalled and hurt businesses. This deal raises hope to avoid the worst economic fallout, right? So there is no type of, you know, announcement that people that have already paid these tariffs— like, I know a lot of people like on Twitter and stuff like that, that are— X, I'm sorry— that have stated their actual bills, right? Like what ended up happening, um, with these tariffs and like their actual tax bill and how much they can't go ahead and afford it. There's nothing in the stipulation that says that they're going to be retroactively credited based on those tariffs. So if you paid those tariffs, you had to eat that cost. And unfortunately, it's like it's like war, right? Like people get caught in the crossfire. There's front line of defenses and stuff like that. And a lot of businesses did you know end up going bankrupt because they couldn't afford this tax bill. There is going to be still a lot of small businesses that won't recover from this because of the tax bill. There's still a lot of employees that you know got fired because of this. But at the same time, right? Like this is why you listen to some people that. Um, have been in the space for a very long time, have seen other situations like 2020 happen, have seen situations like 2021 with freight costs, with, you know, um, um, aggregators coming to the space and, you know, propping up valuations of Amazon FBA and everybody trying to jump in the space. And all of a sudden no one is doing Amazon FBA anymore, right? So, um, that's— this is why you go ahead and listen to these people because you don't want to be caught in those types of crossfires. Um, and one good, really good news, right? Like this, this I hope sticks. Right? Is that let me go ahead and zoom out just a little bit here so you guys can go ahead and see it. These trade talks here does not cover de minimis, and I always keep on saying it wrong. I have no idea what the hell this is, right? How to pronounce this DM whatever exceptions for e-commerce firms says sources briefed on the talks. This means there is no loophole for Chinese sellers, right? This is the big one, and if you guys follow this YouTube channel, I always speak on this that like this was a loophole that. Basically dropshippers use and mostly every direct-to-consumer in China used. So just a brief overview, this means that if your goods are valued at $800 or less, you don't have to do paperwork, you don't have to pay import fees, you don't have to pay tariff fees, you don't have to go ahead and do a lot of different types of things because it's under $800. And what a lot of Chinese sellers used to go ahead and do is they, instead of going ahead and shipping in a freight, right, in a container, they would go ahead and ship every single Basically day. So they would go ahead and ship out enough inventory that would meet this threshold of under $800 and basically ship out inventory every single day. And the benefits is that it's cheaper shipping for them. They don't have to pay any import fees. They don't have to go ahead and pay any type of duty fees. And they'll be able to go ahead and bypass this and compete at a relatively low price. That's why you can see items on Amazon go for like $3, $4. And you're like, how the hell do these people make money? Well, it's this loophole right over here, right? So I'm glad to see that this loophole is finally closed. Um, but that's kind of the news here. I want to go ahead and see if there's any comments. Um, cause this is really big news, right? Like I'm hoping that this sticks and, um, this basically going forward, we kind of can expect only a 30% tariff, um, for all of our goods, but it'll be interesting to go ahead and see. Obviously we'll go ahead and be, um, you know, getting any news that actually drops. I'm just looking to see if you guys have any comments, concerns on this, because this is big news, um, and I want to go ahead and give the floor here before I move on to any other topics that I wanted to go ahead and discuss today. Um, but let's see here. I have nobody on Discord, um, nobody on YouTube. So let me go ahead and actually go to what I wanted to discuss, which was So I mentioned a little bit about aggregators and what aggregators are, um, are people that used to— were private equity firms, um, or hedge funds as well that used to buy up Amazon FBA businesses in, um, during COVID right? Like this was hot topics. Like if you were to buy an Amazon FBA business back in 2021, good luck. Like I remember that businesses up on Empire Flippers or any other site for that matter would get basically bought within 24 hours. Like, if you weren't the first one to wire the money, if you were interested in the business, like, good luck, right? So basically what's going on right now is that Amazon FBA businesses that are trying to sell are basically worthless. And what do I mean by that? Well, this is what I'm trying to go ahead and pull up for you guys. Perfect. So here it is. So I saw this ex, uh, posts fully 50% of e-commerce businesses are truly worth $0. And that's according to this guy right here that looks over all these P&L statements, right? He looked over 300 direct-to-consumer P&L statements last year. If you want to hear my, my whatever, go ahead, opinion, go ahead and look at his actual podcast. But basically what he's trying to say is that any business that he thinks is for sale or like going to sell their business in the marketplace, 50% of them are worthless because of the P&L. And I'm not surprised by this. I think that overall 99% of all e-commerce, you know, direct-to-consumer type of brands are worthless. And that's because a lot of people focus on top line. And what is top line? Obviously that's revenue figures. And when, if you're a tech startup, if you're a SaaS company, focus on top line all you want, right? Because eventually you want to go ahead and get to a place where Now you focus on collecting as much profit as possible. Some of the biggest companies in the world only focus on top line, right? Like the Apples of the world, the Amazons of the world, the Ubers of the world, right? Their main focus when they were starting off was top line, being able to grow market share as quick as possible because they know down the line profit is going to go ahead and come. Well, that was kind of the same type of structure that a lot of Amazon FBA businesses or direct-to-consumer businesses had during COVID And this is why a bunch of, you know, different aggregators got into this space, started raising raising a bunch of money. And I'm talking about billions of billions of dollars being raised in order to go ahead and acquire Amazon FBA businesses. We saw multiples that were unheard of. We're talking about like right now, like we focus on SDE, which is just a fancy word to say net profit that you actually get month to month. And I started seeing like yearly profit all the way up to 6x, right? So like if you only made $100,000, and I wouldn't say only just because Just lack of better words that I have, word choice that I have right now. But let's say you made $100,000 in net profit on your actual business. That's close to, you know, close to $9,000 per month. Well, or a little bit less, close to $8,000 per month. Well, you can go ahead and sell your actual business for $600,000. What does that look like today? Well, if you're making $100,000, you'll be looking to go ahead and get $300,000, maybe $250,000. So you can see that what drastic difference that makes in just a few years, right? So I do believe this, like a lot of people don't even look at their actual per profit that they make on Amazon FBA. They just focus on that top line revenue because everybody is trained to go ahead and see, you know, opening up their Seller Central app or the Shopify app and seeing that big revenue number, right? Obviously they do this psychologically, right? Like they go ahead and want you to focus on top line where everybody should focus on a bottom line. What are you actually taking home? And trust me, I've been in that position where all I wanted to do is open up my Seller Central app, see that green arrow going up, and see how much, you know, growth I've had in my actual business. I get lost in this too sometimes, but it's always good to go ahead and focus on that bottom line. That's the 100% will make you the most sane person, um, is going ahead and focusing on actual profit that you're taking home and making only decisions based on that actual net profit and not whatsoever on that actual revenue figure. So let's go ahead and see if there's any other comments. If not, then, you know, this is, this was big news already in the place of Amazon FBA sellers. So I just want to go ahead and give a few more minutes that if anybody went ahead and got any questions that they want to go ahead and get answered, but if not, I'm going to go ahead and hop off, guys. So I'll give it 30 more seconds. If you guys want to see any other commentary as well, Make sure to go ahead and ask your questions because this is what I'm here for. All right, on Discord got a DM saying that's crazy. Are businesses really worth zero? Yeah, man, like businesses are really worth zero if you don't track your profitability. Right? And even with that, like, even wholesale— and, uh, you gotta think about every single type of business model there is, like wholesale, retail arbitrage, online arbitrage— like, those companies, they're, they're basically worthless in my eyes, right? Like, obviously you can build a wholesale business that kind of, you know, you're not really in there and you build out a team. Um, but with retail arbitrage and online arbitrage, like, those companies, those are worth zero. Like, those are only good companies as far as you trying to make month-to-month money and trying to make more money, but trying to scale that type of business, like people aren't interested in that. Like big money doesn't want to purchase a job. Right. And that's what online arbitrage, retail arbitrage, even wholesale, right? Like the greatest thing about private label and what we go ahead and do and what we preach as far as Amazon FBA private label is like, we don't need a big warehouse, right? Like we can go ahead and use warehouses. In China, we can go ahead and use them here in the United States, but we don't physically have to go out there and get a warehouse. Like the same can be said about people going ahead and doing wholesale, but that's going to eat up into their margins even further, right? And like once you know we've established our actual private label product and brand, all we go all we have to go ahead and do is just kind of look for search terms that are getting searched about Amazon FBA, right? And as long as we resonate to our customer avatar. We have a segmentation, a targeting, a positioning of our customer avatar. Then we're going to take out market share. And again, we don't really have to go ahead and work, right? Like we work really minimum hours when it comes to Amazon FBA. All right. Will the ports be back to normal in 30 days? No, this is going to be crazier. Like these ports, Rafael, is going to be, it's going to be insane, man. Like I'm telling you right now, I'm trying to go ahead and add this right there. Perfect. I'm just figuring out how to add different cool things and Tricks to this livestream, right? So Raphael says, "Will the ports be back to normal in 30 days?" No, it's gonna be crazy. It's gonna be crazy. Like we're gonna we're gonna see in the next couple of months that we're gonna get back to 2021 levels where like you can't get a container to come out of China because again this 90-day pause is gonna force a lot of sellers and not just small sellers like even big sellers, right? Like they don't want to go through this ever again. So what they're what they're gonna do now is they're gonna they're gonna purchase enough inventory to last them until the end of the year. Right? And what does that mean, right? We're in May right now. So that means they're gonna purchase more than 6 months worth of inventory. So if they purchase up to 6 months worth of inventory, can you imagine how many containers they need? So we're not talking about just small mom-and-pop Amazon FBA seller. We're talking about the big, gigantic, gigantic, you know, stock-traded company that needs to get inventory in. And they don't want to go ahead and take this risk, right? So this is why I said that wording as far as 90 days, a 90-day pause on this, It didn't just keep on getting extended if they don't come up with an agreement, right? So, and I think this is the agreement. Like Wall Street, I know that they, they anticipated that for China, we're gonna have 60% tariffs on China before Trump got elected, right? Like I'll go ahead and pull up these figures, but that was basically the estimate and now it's at 30%. So, and one thing like these tariffs were never about bringing jobs back to America. Right? So you guys can go ahead and see this. Like, if it was really about bringing jobs to America and getting you know Americans to have factory jobs and manufacturing jobs, we wouldn't be sitting at the table with with China whatsoever. So by us going ahead and agreeing to this, it was never about bringing jobs back to America. That's why I stated before, right? Like the whole purpose of of this ninety-day pause, like I I just I know why they have to go ahead and do that. It's just going to create so much hectic. Next, like it's gonna be a frenzy as far as trying to get your product into a boat. But all right, guys, just wanted to go ahead and go over that. This is big news. I'll be on the live stream on Friday. I'm going to the Long Beach and LA port actually sometime this week. So I'll go ahead and see what I see there as far as like boots on the ground. But don't forget to like, subscribe, comment on this. What are your thoughts? I would love to hear them. But until next time, guys. Peace.