On October 19, 2025, as President Trump threatened to impose 100% tariffs on Chinese goods and the trade war between the US and China escalated, the Canton Fair, China’s Import and Export Fair, opened. Official data showed that the scale of this exhibition was huge, but exporters from Guangdong, Zhejiang, and other regions reflected that they are facing the dual challenges of external order risks, internal market turmoil, and a sharp increase in exhibition thresholds.
Last week, the CCP implemented broader rare earth export controls, prompting Trump to threaten to impose 100% tariffs on Chinese goods starting on November 1.
The 138th Canton Fair opened in Guangzhou on October 15. The three-week fair is widely seen as a barometer of China’s vast export industry. According to Securities Times, this edition of the Canton Fair had a total of 74,600 booths and over 32,000 participating companies. More than 240,000 buyers pre-registered for this edition.
However, under the shadow of triple-digit tariffs, South China Morning Post reported that attending exporters and buyers at the fair were generally filled with anxiety. Many Chinese exporters across various industries are shifting towards markets outside the US but are facing the dilemma of reduced profits and increased credit risks.
Huang Luyi, a lighting exporter from Zhejiang Province, mentioned that despite sending out numerous invitations to European and American clients, many American buyers stated they would not attend. He admitted that US orders have shifted to Southeast Asia, putting pressure on the company not to lose the European market.
Mr. Wu, an electronics exporter from Zhejiang, said, “Buyers may come to see new products, but the order volume is expected to decline, and before November, no one is willing to take risks.” To survive, companies are increasing investment in emerging markets but are facing heavier cash flow pressures than before.
Zou Wei, a sales representative from Flypower, a manufacturer of smart home cleaning equipment, revealed that their company is establishing factories in Vietnam and Malaysia to diversify tariff risks. The company plans to increase annual shipments to 1.8 million units through expanding in Europe and emerging markets, but most products are forced to be sold at discounted prices.
Mr. Wu from Guangzhou told Dajiyuan, “I have a friend who exports industrial basic products, and he said the US market is basically gone.”
Chinese customs data shows that in September, China’s exports to the US fell by 27% year-on-year, continuing the downward trend of the previous months.
Ms. Lu, a trade industry professional, mentioned that she has trading companies in Nanjing and Shanghai and delegates orders to suppliers to be executed. She attends the Canton Fair every year. Exhibitors in her exhibition hall this year mostly came from Europe, Russia, and Belt and Road countries, with very few American clients. “The American client group is relatively singular, and large companies should have started to shift earlier — two to three years ago they had already moved to Southeast Asia.”
Ms. Lu believes that imposing 100% tariffs will have a significant impact on some major traders.
When facing the potential extreme tariffs, businesses’ reactions have shown a clear differentiation based on their reliance on the US market.
Lin, a foreign trade officer at a trading company in Guangzhou, stated that their company deals in automotive paint products, performed well with a global product reach, with only 2-3% of their market share in the US. Because they have a low reliance on the US market, they are not as panicked, although they are concerned about the impact of tariffs on their US agents.
Li Tong, a footwear and roller skate foreign trade exporter from Zhejiang, said his products have a relatively larger market share in the US, and orders were already declining. He pessimistically mentioned that if the US were to impose 100% tariffs, it would be a “devastating blow” for him. Since the European and Southeast Asian markets are smaller in size, he is not very optimistic about the future and revealed that many around him are currently struggling.
Despite the immense external pressures on businesses, the Canton Fair itself has raised higher exhibition and entry barriers, exacerbating internal turmoil.
Multiple individuals interviewed by Dajiyuan confirmed that under the new policy, assistant exhibitors are no longer allowed to enter the fair independently and must be tied to foreign customers.
A cross-border e-commerce participant from Shenzhen stated, “One foreigner can only be tied to one assistant, one translator.” This greatly limits the ability of companies to serve multiple customers simultaneously. The requirements for translators are even more stringent. “Translators must have a translation certificate or an English professional certificate.”
With high documentation costs, a registration fee of 300 yuan, plus a processing fee of 50 yuan, the daily cost of business reception has soared. A participant from Shenzhen complained, “Spending 350 yuan a day, and still can’t get in.”
Besides the restrictions on personnel, the difficulty of applying for exhibition booths itself has discouraged many small and medium-sized enterprises.
An owner of a furniture company in Shenzhen mentioned, “This year, the Canton Fair requires companies to submit social security, and the ‘header’ of the application must match the ‘header’ of the employee’s social security.” Another foreign trade professional also noted that it has become difficult for small enterprises to participate in the fair this year.
An owner of a shoe factory in Wenzhou, Zhejiang, revealed that the application process was extremely complicated and difficult to succeed in. Therefore, they opted to find agents to purchase booths. However, even with agents, booth prices are exorbitant. “A booth costs around 80,000 yuan, and then you have to pay an additional 5,000.”
This shoe factory owner stated that agents often obtain unwanted booths through “relationships,” indirectly highlighting the congestion and difficulty in the official application channels.
Even after overcoming the entry barriers, exhibitors at the event still face the harsh market tests.
A foreign trade professional from Shenzhen confessed that the current Canton Fair is “very inward-looking, with prices pushed very low due to intense competition and few customers.” To compete for limited orders, companies are forced into price wars, significantly squeezing profit margins.
Although a beach motorcycle manufacturer from Guangzhou mentioned that there is a presence of people at the fair, the likelihood of successful deals remains uncertain, and they observed that there are “very few” European and American manufacturers. This suggests that the traditional high-value order customer base is diminishing or becoming more cautious in procurement.
As mentioned before, Ms. Lu stated that the current situation in China’s economy is poor, with both foreign trade and domestic trade not doing well, essentially cannibalizing itself. She revealed that suppliers are forced to use slightly lower-quality materials to reduce costs to cope with the continuous price pressure brought on by downgrading consumerism. Consumers are downgrading due to not being able to afford products, resulting in price pressure. The rise of e-commerce has increased malicious competition, making prices more transparent, and thus, the domestic market is more inward-facing.
David Huang, an economic scholar in the US, conducted a comprehensive and pessimistic analysis of the potential “cliff-like” impact of imposing 100% extreme tariffs on China and the limitations of Chinese companies turning to new markets.
1. “Cliff-like” Impact on Small and Medium Enterprises:
Huang believes that 100% tariffs signify that businesses cannot operate, leading to a direct and fatal “cliff-like” blow to Chinese export business.
Impact on Subjects: A large number of highly reliant small and medium enterprises with low profit margins and high leverage will dramatically exit the market or face closure.
Erosion of Profits: Even if some products can still be exported, they must be significantly reduced in price to offset tariff costs, further eroding profits.
2. Structural Consequences: Private Economy Under Pressure and Social Unrest
Losing the US market will bring profound domestic structural impacts and social problems: Private economy will be under pressure – only companies with strong capital, large scale, or government subsidies can survive, leading to increased industry concentration, further pressure on the private economy.
Social instability – export-intensive regions will face massive unemployment, significant weakening of economic vitality, and negative effects on social stability.
Debt crisis worsens – The government is forced to intervene again to increase fiscal expenditure to stabilize the situation, leading to a further deterioration of debt crises at both local and central levels.
3. Limitations of Hedging Strategies:
Huang pointed out that companies turning towards Europe and emerging markets as a survival strategy against the impact of 100% tariffs is necessary but cannot fundamentally solve the structural production crisis. Reasons include: the purchasing power and credit risks in new markets are lower than the US and conducting business in emerging markets involves complex political and economic factors.
Huang also mentioned potential retaliatory measures by the CCP in an attempt to pressure the Trump administration. However, while the CCP has countermeasures, Huang believes that although China and the US have not reached a full-blown conflict, some industries are already facing existential tests.
Chinese customs data showing a 27% year-on-year decrease in China’s exports to the US in September confirms the continued downward trend in the market.