The U.S.–China Tariff Dispute Creates Unexpected Opportunities for Overseas Chinese Entrepreneurs

Rising tariff pressures have significantly eroded margins for Chinese cross-border e-commerce sellers, yet some overseas Chinese entrepreneurs have leveraged this challenge into a profitable niche. As major platforms like Amazon and Shein transitioned toward semi-managed fulfillment in 2024, most marketplaces still lack proprietary overseas warehouses, forcing smaller merchants to bear high third-party logistics fees and deterring many from making the shift.

By 2025, the combination of tighter tariff enforcement and the end of small-parcel tax exemptions pushed sellers to find more agile solutions. Entrepreneurs across North America recognized the surge in demand and began converting personal garages, storage rooms, and spare closets into informal fulfillment centers. Branded as “family warehouses,” these home-based operations offer warehousing, single-item drop-shipping, and relabeling services at rates well below those of commercial facilities, making them particularly appealing to sellers handling compact inventories and modest shipment volumes.

One example is Lulu, an East Coast resident who converted two attached garages into storage space in January. Initially processing only a few orders daily and personally delivering packages to the post office, she saw business accelerate after tariffs were reinstated in April. When Temu removed fully managed listings in April and suspended direct shipping of Chinese goods in May, many sellers urgently sought her flexible, cost-effective solution.

By mid-June, Lulu’s makeshift facility reached capacity for the first time. A subsequent downturn in orders from her largest client reflected Temu’s reduced advertising spend and waning consumer enthusiasm. However, when the U.S. revoked the under-USD 800 parcel exemption and increased customs inspections at the end of August, Lulu’s business rebounded. Shipments inundated her home’s drive, garage, basement, and spare rooms, prompting her to rent a 2,000-square-foot commercial warehouse and formally register her company.

Industry observers attribute the rise of family warehouses to shifting trade policies and the unique needs of Chinese exporters. Unlike established global brands that benefit from supportive regulations and large-scale supply chains, Chinese factories serving international retail channels rely on cost-effective, drop-ship–centric logistics models. Home warehouses excel in this niche by providing tailored, rapid service levels that larger providers often cannot match.

Yet the window of opportunity for these operations is narrowing. Increased competition makes client acquisition via social media costly and aggressive pricing erodes margins. Operators who differentiate through premium services, such as “Momo” in Memphis leveraging proximity to FedEx headquarters for same-day processing, remain exceptions. Furthermore, residential warehousing can conflict with local zoning laws and customs regulations, risking package seizures or legal penalties.

Major platforms are formalizing logistics partnerships to mitigate such risks. Temu has aligned with certified third-party warehouses, redirecting traffic to facilities that offer last-mile delivery discounts, further disadvantaging unregistered home operators. With U.S. demand for overseas warehousing up 300 percent year-on-year in 2025 and a new wave of price competition, small warehouses lacking advanced management systems face an attrition rate projected at 30 percent.

The emergence of family-run overseas warehouses underscores how evolving trade regulations and market conditions can create entrepreneurial pathways. However, as compliance costs rise and platforms consolidate logistics networks, the competitive advantage of small-scale operators is likely to diminish. As one industry veteran observes, by the time a business model saturates social-media feeds, its growth phase is already behind it.