Chinese Brands Target U.S. Market Despite Tariff Challenges

Luckin Coffee has made its debut in the United States, opening its first two stores in New York City in June 2023. This marks a significant milestone for the Chinese coffee chain, which was founded in Beijing in 2017 and has rapidly expanded to over 26,000 locations worldwide, including markets in Singapore and Malaysia. Recognized for its innovative app-based ordering system and popular offerings like the coconut latte, Luckin Coffee has surpassed Starbucks as China’s leading coffee chain.

The entry of Luckin Coffee is part of a broader trend as several Chinese brands seek to establish a foothold in the American market, despite the ongoing trade tensions. Analysts indicate that the current economic landscape presents a favorable environment for these companies, although concerns about tariffs imposed by the Trump administration could hinder their success.

Emerging Success Stories in the U.S.

In addition to Luckin Coffee, fellow Chinese beverage chain Heytea launched its first U.S. store in late 2023, joining the ranks of other successful newcomers. The Beijing-based toy retailer Pop Mart, known for its coveted Labubu dolls, also opened its first permanent store in the U.S. following a successful pop-up venture. Heytea has quickly expanded to 30 locations across the country, earning recognition as the fastest-growing tea brand in the U.S. Meanwhile, Pop Mart has reported a staggering increase in revenue, with a growth rate exceeding 500 percent between 2023 and 2024. The company experienced a remarkable 900 percent surge in sales during the first quarter of 2024 compared to the same period in the previous year, and it now operates 22 stores in the U.S.

Several factors are driving these brands to venture into the American market. The slowing economy in China has prompted many companies to explore opportunities abroad. Arthur Dong, a professor at Georgetown University’s McDonough School of Business, explains that heightened competition within China’s domestic market is pushing consumer-driven firms to seek expansion in larger markets, such as the U.S. He emphasized that the American market is particularly receptive to new concepts and ideas.

Marketing expert Larry Chiagouris, from Pace University, noted that these brands are targeting younger consumers who are often more open to trying new products. The appeal of affordability plays a crucial role, as demonstrated by Luckin Coffee’s promotional strategy, which offered first drinks for just US$1.99. The chain’s lowest-priced item, drip coffee, is available for US$3.45. Chiagouris stated that younger consumers, with less disposable income than previous generations, are likely to gravitate towards lower-priced offerings. He remarked, “Younger consumers often tend to establish trends, so it’s a perfect marriage.”

Tariff Implications for Chinese Brands

Despite the promising prospects, significant challenges remain, particularly regarding tariffs. A record number of Chinese companies are pursuing listings on U.S. stock exchanges, with 36 companies having gone public in the first half of 2025. However, experts caution that ongoing tariff disputes could impact these businesses’ ability to thrive in the U.S.

Dong highlighted that companies dealing in goods, like Pop Mart, will face varying tariff challenges based on the origin of their merchandise. “All of them are going to be subject to blanket tariffs,” he stated. Conversely, service-oriented companies such as Heytea and Luckin Coffee are less susceptible to these tariffs unless they import products from their home country.

A week prior, Trump extended a trade truce with China by an additional 90 days, averting a potential increase in tariffs on Chinese goods, which could have risen to as high as 145 percent. Currently, a 30 percent tariff is in effect on Chinese imports, while duties on U.S. goods are set at 10 percent.

As these Chinese brands strive to establish their presence in the U.S. market, they face a dual challenge of navigating consumer preferences while contending with the complexities of international trade policies. The success of companies like Luckin Coffee, Heytea, and Pop Mart may well depend on their ability to adapt to these evolving market conditions.