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China’s Exports to be Hit Hard by US Tariffs: Businesses

Exporters will struggle to make a profit as costs rise and some have shifted output to Vietnam and Thailand.

Duoduofa logistics and warehousing center (Photo: thepaper)

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By Qian Lang

March 15, 2025
4:23 pm
Los Angeles, CA

Chinese exports look set to take a battering from an escalating tariff war with the United States, business executives and economists say. The United States has imposed tariffs of 20% on Chinese goods since President Donald Trump took office –- 10% last month and a further 10% coming into effect on March 4. “Export volume has shrunk, and business has been snatched away by competitors from other countries,” according to the head of an electronics trading company in Shenzhen, just north of Hong Kong, who gave only the surname Ge for fear of reprisals. China’s exports grew 2.3% year-on-year in January and February, lower than the expected 5% rate, according to the latest government figures. That’s down from the 5.4% growth rate for all of last year. Previous tariffs

Chinese exports look set to take a battering from an escalating tariff war with the United States, business executives and economists say.

The United States has imposed tariffs of 20% on Chinese goods since President Donald Trump took office –- 10% last month and a further 10% coming into effect on March 4.

“Export volume has shrunk, and business has been snatched away by competitors from other countries,” according to the head of an electronics trading company in Shenzhen, just north of Hong Kong, who gave only the surname Ge for fear of reprisals.

China’s exports grew 2.3% year-on-year in January and February, lower than the expected 5% rate, according to the latest government figures. That’s down from the 5.4% growth rate for all of last year.

Previous tariffs imposed during the first Trump administration from 2017-2021 have already prompted many businesses to move production to other countries such as Vietnam.

‘Workshop of the world’ is quieter

Once the “workshop of the world,” Guangdong province in the south has become quieter and is now home to fewer factories and more trading companies, which handle orders but don’t actually make anything, Ge said.

“There are no factories in Guangdong hiring workers right now, and many factories have moved to Vietnam, Thailand and other places,” she said.

IE expo Guangzhou 2019 (Photo: messe-muenchen)

“Trading companies mainly receive orders and place them with factories, which then fulfill them, so the operating costs aren’t too high, but the factories are in the most trouble,” she said.

“It’s hard for them to keep going with no orders, because they have so many fixed costs like their premises, equipment, wages and materials.”

The United States is still the biggest market. “There are orders from Europe, but demand isn’t as high as from the United States,” Ge said.

Zhu Zhiqiang, an exporter based in the eastern city of Jiangsu, said China’s manufacturing industry relies on exports, particularly from the United States, he said. “If we don’t resolve this problem, we are doomed.”

Guizhou-based economist Wang Ting said manufacturers are still reeling from the tariffs imposed on Chinese goods during the first Trump administration.

“The increase in tariffs in his second term has made things worse, accelerating the relocation of manufacturing outside of China,” Wang said.

“China’s economy is now in recession, the unemployment rate remains high, and all sectors are in a state of internal competition,” he said.

Meanwhile, business confidence remains at a low ebb.

“Most Chinese people are waiting and watching,” Wang said.

The impact of tariffs is two-fold, according to Wang, with manufacturers of furniture, electronics and clothing likely to raise prices to cover the cost of tariffs, reducing their appeal for consumers in the United States.

E-commerce companies could also seek to reduce their reliance on the American market and expand into Europe, Southeast Asia and Latin America via platforms like Lazada and Shopee.

“This trend could accelerate in future,” Wang said.

A container truck near Hong Kong’s Kwai Chung Container Terminal, March 6, 2025. (Photo: Tyrone Siu/Reuters)

Even in e-commerce, former business owners are staying on the sidelines in the hope that things improve.

“This year, a friend of mine stopped doing [e-commerce] and is now just staying home,” Zhu said. “Some e-commerce operators can no longer sell their products overseas because of the increase in tariffs.”

He said part of the problems is that Chinese exporters have typically competed on price rather than quality.

“Increasing tariffs eliminates that advantage, making us unable to compete,” he said.

Financial commentator Cai Shenkun said the tariffs come amid a boom in cross-border e-commerce from China.

“Once a trade war breaks out, including the cancellation of the tax-free quota for small packages in the future, this will have a huge impact, and mid- and low-end manufacturing will be affected,” Cai said.

He said e-commerce businesses typically run on profit margins of less than 10%.

“If tariffs rise to 25%, e-commerce will no longer be profitable,” he said.

Translated by Luisetta Mudie. Edited by Malcolm Foster.

Source: Radio Free Asia