In most countries, there is an understanding of the United States’ retaliatory tariffs and a willingness to seek negotiations. However, the Chinese authorities continue to claim total innocence, attributing all mistakes to the US as “unilateralism, protectionism, and economic bullying.” The trade war between the US and China continues to escalate under China’s retaliatory measures, with the consequences still being borne by the Chinese people.
On April 9th, after China once again imposed retaliatory tariffs of 50% on the US, becoming a prime target in the US’s crosshairs, President Trump subsequently announced an increase in tariffs on Chinese goods to 145%. He also declared a 90-day suspension of equivalent tariffs on countries that did not retaliate, with immediate effect.
The Chinese Ministry of Commerce maintained a tough stance, stating, “If dialogue is wanted, the door is wide open,” and “If a fight is what the US wants, China will definitely fight to the end.” Chinese state media encourages people by saying “the sky will not fall,” but netizens express that even if it does, it will be the ordinary people who bear the brunt.
Taiwanese businessman Li Mengju told Epoch Times that with Trump’s tariffs on China now reaching 145%, it spells disaster for many exporters. One can expect that in the coming days, numerous factories in mainland China, especially those heavily reliant on exports to the US, will struggle to stay operational, leading to a significant number of closures.
According to his sources, some factories in Guangdong that had American orders booked until the end of the year have now been urgently halted. Piles of goods are stranded in factories, unable to be processed.
An owner of a flashlight manufacturing company in Yiwu told Epoch Times that many foreign trading companies, who used to place orders frequently, are now nowhere to be seen. The downturn in foreign trade has left many with nothing to do, resulting in extended breaks for workers. The situation is quite severe, with many experiencing financial hardship and unemployment.
An importer involved in US-China trade, under the account name @god77774, stated that while the initial tariffs on Chinese goods were 34%, which importers could manage, the recent increase to 125% has shattered the livelihoods of Chinese workers. Based on his knowledge, almost all US importers have ceased shipments from China.
Li Mengju also mentioned the significant impact on logistics companies apart from factories. He highlighted that a shipping company had already suspended its China route before the new tariff was imposed by Trump. With the new tariffs, other shipping companies might follow suit, leading to a complete restructuring of the global supply chain.
Trump’s first round of trade war tactics has already prompted many businesses in China to relocate their supply chains to Southeast Asia. However, with tariffs exceeding 100%, those primarily reliant on export-oriented businesses in China face an inevitable choice between closure or relocating once more.
Bloomberg reported that fast-fashion giant Shein, unable to withstand the pressure of US tariffs, planned to shift some production out of China but was met with obstacles from local authorities.
A Southeast Asian businessman, Mr. Zhao, expressed that with China’s current high tariffs, domestic sales may not be significantly impacted temporarily. However, for exports targeting the US market, facing a 145% tariff increase means customers may refrain from making purchases due to the inflated prices. Many businesses are grappling with difficulties as they hesitate to import raw materials while also struggling to export finished products. Yet, not engaging in trade is not a viable option, potentially leading to numerous factory closures.
Mr. Zhao believes that Trump’s latest tariff increases may prompt foreign companies, Taiwanese businesses, and Chinese enterprises to further withdraw from mainland China. He foresees a wave of corporate exits, with Taiwanese businesses possibly relocating to Southeast Asian countries like Indonesia, Malaysia, and Singapore, or returning to Taiwan where tariffs are at 32%, far lower than the 100% plus imposed by China. Many US companies may also consider relocating their factories back to the US. Should Foxconn in Shenzhen shut down, 800,000 workers would lose their jobs, transforming the bustling city into a ghost town.
He emphasized that businessmen have no loyalty to a specific country; they will go wherever conditions are optimal and labor is cost-effective. Factories typically operating in one location for over a decade or more will have to relocate sooner or later to save costs, which could then be sold at a higher price. Adapting to changing economic circumstances is inevitable in the business world.
“The tariffs in China keep escalating, labor costs are gradually rising, and the political situation is unstable. People are becoming wary,” added Mr. Zhao.
Prior to the US administration’s introduction of equivalent tariffs, the cancellation of the “de minimis exemption” policy for packages valued under $800 on February 1st, followed by a 90% tariff on Chinese shipments to the US on April 8th, and a subsequent increase to 120% on April 9th, has made life even more challenging for cross-border e-commerce traders.
A cross-border e-commerce trader with five years of experience on Amazon shared with Epoch Times that their product sales had already dropped by a third compared to before the US imposed tariffs. “Some hesitant e-commerce sellers haven’t raised prices, leading consumers to opt for non-hiked products. During Trump’s initial tariff imposition on Chinese goods, I had to adjust the prices of my goods,” the trader revealed.
He further explained that merchants often under-declare the prices of their products to circumvent tariff pressure. This practice is prevalent, and future considerations may involve exporting to the US through Japan or other countries.
He believes that with tariffs surpassing 100%, practically no Chinese goods will be exported to the US anymore, unless Trump suddenly rescinds the tariffs- something he has done before, albeit unpredictably.
Former Chairman of Shanghai Chevron Network Technology Co., Ltd., Yuan Jianbin, informed Epoch Times that amid the internal chaos in Chinese enterprises and the prior round of Trump’s tariffs, businesses sought refuge from tariffs through e-commerce exports and supply chain shifts. Yet with tariffs reaching 145%, in the coming months, export companies, including cross-border e-commerce enterprises, will face a dire situation.
Yuan was involved in customs clearance and warehouse supervision for imports. He elaborated on the former agreement between China and the US in the 786 Protocol, where items below $800 for personal use were exempt from taxes. However, the US has since terminated this agreement, announcing a complete halt to the 786 Protocol by May 2nd.
“All e-commerce goods entering the US from China can only be cleared in two ways: one is through form 701, single-SKU declaration style, beyond which additional tariffs are imposed; the other method is form 711, combining several packages into one declaration. While the US government allows $2500 for other countries, for Chinese e-commerce, it’s only $250,” Yuan explained. Therefore, with added service fees on each package, the likelihood of Chinese e-commerce goods entering the US in the future has been significantly reduced.
“In the future, Chinese export companies will face a bleak prospect. They will essentially be unable to export to the US anymore, leading to closures for these enterprises.”
China’s authorities continue to confront the US disregarding the well-being of its people, making it a unique target globally and fueling discontent among the Chinese population. Li Mengju noted that the party’s nature of the CCP makes it impossible for them to admit fault or yield. Trump’s team fully understands this aspect of the CCP. While most countries are willing to comply with the US policies, China remains in opposition, making this the most severe blow towards ending the CCP regime, aiming to crumble it through economic warfare.
“Because it is two different systems – one based on free-market economy and the other on communist principles – there is no room for negotiation. Taiwan, with its free-market system, quickly understands this and should engage in dialogue with the US promptly, as that is the true solution.”
Li Mengju stressed that the US has always been China’s largest export market, questioning the wisdom of offending the most substantial business partner. While other countries are willing to negotiate with the US, China remains intransigent, which will inevitably escalate public discontent. Over the past 30 years, the CCP obtained legitimacy through economic development, censoring voices but ensuring people’s basic needs were met. However, this model of governance is gradually unraveling, leading to increased passivity, joblessness, and food insecurity. In such circumstances, the Chinese populace will harbor more significant doubts about the government. Internal conflicts have been intensifying in recent years, leaving the CCP’s stability mechanisms vulnerable to collapse sooner rather than later.