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Times of Oman
4 days ago
- Business
- Times of Oman
Trade war with the US starts taking its toll on China
New Delhi: The trade war with the U.S. has started taking its toll on China. Exports to the lucrative American market have shrunk. At Chinese export hubs in south-eastern China, factories are lying closed and workers have been laid off. Stocks of finished products are accumulating in warehouses. China signed an agreement with the U.S. on May 12 for a temporary reduction in tariff but this did not have the desired effect. Factory activities in China continued to contract in May, with the Purchasing Managers Index at the end of May being 49.5. A PMI value less than 50 indicates contraction in business activities compared to the previous month. Because of a contraction in export, business houses in major export hubs in places like Zhejiang, Guangdong, and Jiangsu are announcing factory holidays; suspending production and reducing work hours and wages of employees. To clear the stockpile of goods at a discount, they are trying the social commerce platforms. Products ranging from yoga pants and footwear to home appliances and blankets which used to sell in the U.S. at fancy prices are now being sold online by Chinese exporting houses at bargain prices. A survey carried out by Radio Free Asia last April at a warehouse at Jiaxing in the Zhejiang province, where export items constitute the main business activity, has revealed heaps of merchandise originally meant to be exported now lying abandoned. Products selling at $100 in the U.S. do not sell in China even at a deeply discounted price of only a few dollars. Rubber clogs of U.S. footwear brand Crocs manufactured in China can sell in the American market for as high as $70 a pair but in the Chinese markets it is difficult to sell them even for a few pennies. The comparative advantage of China lies in its large manufacturing base and thoroughly integrated supply chains; particularly in hi-tech and green industries such as electrical vehicles and their batteries and solar energy. These sectors are heavily dependent on open markets and steady demands. Now the prohibitive tariff imposed by the Donald Trump government in the U.S. coming in the wake of earlier tariff restrictions imposed by the U.S., Europe and Canada on the import of Chinese electrical vehicles has caused demand to drop significantly for Chinese goods. Experts argue that China remains highly reliant on the U.S. as its top export market, to which it had exported goods worth nearly $450 billion in 2024. The crisis in the export market has hit even items that are produced only for the domestic market in China because of the overall economic downswing. The crippling tariff rate imposed by the U.S. has stood in the way of the recovery of the already sagging consumer sentiments in China since the pandemic. Like, the Chinese knife brand Zhang Xiaoquan is sold mostly in the domestic market; with exports accounting for less than one percent of the annual sales. But even that knife is selling at a few cents per knife. One factory is pushing its employees to sell overstocked blankets online. A factory manager had lately managed to sell 60 blankets to his own relatives and friends. Workers in the factory at Suzhou city in Jiangsu were told that their working hours would be reduced and they would be paid only their basic wages. An angry Beijing has threatened countermeasures against countries which are signing trade deals with the U.S. at the expense of China to get tariff exemptions from Washington. This threat has followed recent reports that President Donald Trump is seeking to use the tariff talks to push partners of the U.S. in trade to curb imports from China. In return, these countries could secure reductions in additional tariffs imposed by the U.S. The Trump administration has said it is in negotiations with more than 50 countries; among them Israel, Japan, the U.K., Vietnam, Cambodia, Thailand, South Korea, India, Australia, Argentina, Canada, Mexico, Switzerland, Malaysia, Indonesia and the European Union countries. Beijing has threatened to target all these countries in turn. Following the May 12 agreement with China, Washington had lowered its 145 percent tariff on Chinese goods to 30 percent for 90 days to allow for more negotiations. Donald Trump had all along been accusing China of exploiting the U.S. in external trade, and arguing that his tariffs were necessary to revive domestic manufacturing in the U.S. and return jobs to American workers. China, too, had reduced its taxes on imports from the U.S. to 10 percent from the earlier 125 percent. But this agreement is now in the process of coming unstuck. On May 30, the U.S. President accused China of violating a bilateral deal to roll back tariffs and announced a general increase in the tariff on the import of steel and aluminium to 50 percent. Although China does not export much steel to the United States since the imposition of a 25 percent tariff in 2018 to shut out Chinese steel, it ranks third among aluminium suppliers to the U.S. Washington has indicated that Beijing has been slow on its promise to issue export licences for rare earth minerals. Last December, China announced a ban on exports to the U.S. of critical minerals, including gallium, germanium and antimony. Beijing announced more export controls on rare earth minerals last April after Donald Trump had announced the U.S. tariffs. The May 12 agreement in Geneva called for China to lift measures to restrict its export of critical metals needed for U.S. semiconductor, electronics and defence production. US Treasury Secretary Scott Bessent has said in a recent interview that talks with China had stalled. US Trade Representative Jamieson Greer has said China has not removed non-tariff barriers as agreed. 'We haven't seen the flow of some of those critical minerals as they were supposed to be doing.' The trade war with the U.S. has thus started taking its toll on China and there is little possibility that pressure on the Chinese economy will end soon.
New York Times
12-05-2025
- Business
- New York Times
Tariff Truce With China Demonstrates the Limits of Trump's Aggression
President Trump's decision to impose, and then walk back, triple-digit tariffs on Chinese products over the past month demonstrated the power and global reach of U.S. trade policy. But it was also another illustration of the limitations of Mr. Trump's aggressive approach. The tariffs on Chinese goods, which the United States ratcheted up to a minimum of 145 percent in early April, brought much trade between the countries to a standstill. They caused companies to reroute business globally, importing less from China and more from other countries like Vietnam and Mexico. They forced Chinese factories to shutter, and brought some American importers to the verge of bankruptcy. The tariffs ultimately proved too painful to American businesses for Mr. Trump to sustain. Within weeks, Trump officials were saying that the tariffs the president had chosen to impose on one of America's largest trading partners were unsustainable, and they were angling to reduce them. Trade talks between the world's largest economies in Geneva this weekend concluded with an agreement to reduce stiff levies on each other's products by more than many analysts had anticipated. Chinese imports will face a minimum tax of 30 percent, down from 145 percent. China will lower its import duty on American goods to 10 percent from 125 percent. The two countries also agreed to hold talks to stabilize the relationship. It remains to be seen what agreements can be reached in future negotiations. But the talks this weekend, and the tariff chaos of the past month, did not appear to generate any other immediate concessions from the Chinese other than a commitment to keep talking. That has called into question whether the trade disruptions of the past month — which resulted in many American businesses canceling orders for Chinese imports, freezing expansion plans and warning of higher prices — were worth it. 'The Geneva agreement represents an almost complete U.S. retreat that vindicates Xi's decision to forcefully retaliate,' said Scott Kennedy, a China expert at the Center for Strategic and International Studies, referring to Xi Jinping, the Chinese leader. Want all of The Times? Subscribe.
Reuters
09-05-2025
- Business
- Reuters
China's April exports beat expectations, imports narrow declines
BEIJING, May 9 (Reuters) - China's exports expanded 8.1% year-on-year in April, while imports contracted 0.2%, customs data showed on Friday, both defying expectations for a much sharper slowdown in trade. Economists polled by Reuters had forecast a 1.9% increase in exports and a 5.9% drop in imports. The new data followed a 12.4% year-on-year jump in exports in March, when Chinese factories pushed out shipments before U.S. President Donald Trump's 145% tariffs on Chinese goods took effect on April 9. Imports had fallen 4.3% in March. China has retaliated against U.S. tariffs by ramping up its levies on U.S. imports to 125%. The tit-for-tat trade war is threatening China's exports, which had been a lone bright spot in the country's patchy post-pandemic economic recovery. Officials from the two countries are meeting this weekend in Switzerland to start trade negotiations.
Wall Street Journal
08-05-2025
- Business
- Wall Street Journal
The Bubble Blasters and Other Chinese Goods That Are Paralyzed by Trade Chaos
The Bubble Blasters and Other Chinese Goods That Are Paralyzed by Trade Chaos American importers cancel orders and scramble for alternatives, while Chinese factories cut staff and offload goods
