Jacky Ren, the owner of a kitchen appliance factory in China, reveals the difficult realities faced by exporters in the current market. Many in his industry are now selling at a loss to maintain their U.S. clients, unable to decline requests for lower prices due to the higher tariffs imposed. Ren notes, “If an exporter does not take such orders, you will die immediately.
So, people think it’s better to die slowly.”
On the diplomatic front, U.S. and Chinese officials have recently agreed to strategies aimed at restoring a trade truce and reducing competing export restrictions, particularly in the rare earths sector where China holds significant leverage. However, the impact of U.S. tariffs is intensifying in China, particularly for smaller exporters like Ren’s Gstar Electronics Appliance Co., which opted not to relocate production after tariffs were initially imposed during Donald Trump’s term. As these companies face mounting pressure to sell at a loss or reduce wages and jobs, analysts predict many may not survive if the situation continues beyond a few months.
Current discussions in London are anticipated to reflect on previous talks in Geneva, with hopes of lowering tariffs from their highest levels. Despite a slight increase in China’s overall export growth rate, the competition among manufacturers is evident in declining prices. Industry specialists warn of systemic weaknesses, stating the current level of tariffs is already burdensome for China.
Moreover, labor-intensive industries are feeling the heat, with reports of delayed wages and financial strain. Candice Li, a marketing manager,-described how her employer has struggled with cash flow due to unfavorable payment terms from U.S. clients. While large firms may weather the storm, smaller companies in non-essential sectors are particularly vulnerable.
Despite the resilience seen in China’s industrial profits, the long-term effects of sustained pressure could lead to increased economic instability. As the American government responds to pressure from its industries, analysts caution that China’s reliance on low-end manufacturing could become a significant concern moving forward.