In the midst of the constantly changing and escalating trade war in April, businesses engaged in trade between the United States and China have been the first to feel the impact. Among California businesses importing goods from China, some are worried, some are adopting a wait-and-see attitude, and others remain more optimistic.
According to data from the Census Bureau, the U.S.-China trade deficit reached $295 billion in 2024, accounting for the largest share of the $1.2 trillion global deficit incurred by the United States; California became the world’s fourth-largest economic entity in 2024 with a trade deficit of $107.6 billion with China.
“With such high tariffs, it’s impossible to continue doing business,” said Mr. Wang, who is involved in importing a single category of Chinese food products. He stated that he will no longer place orders from China. “Right now, it’s about selling off inventory, which can only sustain for a few months. The prices of food have not changed. If you like certain foods, it’s better to stock up on them,” he said.
“People are going through a tough time now,” said Robert, who is involved in trading equipment between China and the U.S. “Importers and exporters are all facing the same challenges.” Another Chinese businessperson expressed deep concerns about the trade war and said, “It’s hard to say when everything will settle down.”
Robert analyzed that importing goods from China now entails paying much higher tariffs. Although tariff rates vary by industry, once tariffs exceed 100%, it becomes economically unfeasible for anyone to continue doing business, leading everyone to adopt a wait-and-see approach.
Robert estimated that most businesses’ inventory could last until June or a bit longer, but new goods will need to be imported thereafter. Therefore, there might not be visible changes in the market yet, and prices have not fluctuated significantly.
“Tariffs have been gradually increasing since February, and prices of inventory vary depending on the import costs,” Robert explained. Many people stocked up on goods at the end of last year upon hearing the news, so the prices would differ from those imported in February and March this year, resulting in slight price variations for the same products.
“The cost of renting warehouses is also high now. After 30 days, prices go up, and after 60 days, they increase again. Unless you have a large storage space of your own, businesses need to balance storage costs,” Robert mentioned. “Moreover, importing goods requires a substantial amount of capital, which cannot be recovered immediately. Plus, unexpected events like natural disasters and accidents are factors that businesses need to consider regarding their inventory limitations.”
Robert noted, “Right now, people are under significant psychological pressure.” Although inventory can last for a few months, if the trade war prolongs, it will lead to a series of subsequent impacts.
Mr. Zhou, a senior executive at a large logistics company with hundreds of employees in China and dozens in the U.S., shared that they have not experienced significant changes yet, still have inventory, and have not raised prices. However, all orders to China have been suspended. If the tariffs become unmanageable, products will inevitably become costlier.
The company sells thousands of products in the U.S., including electronics, household appliances, outdoor grills, and lawnmowers. Mr. Zhou believes that many U.S. companies established manufacturing facilities in China due to low costs, hardworking Chinese laborers, strong skills, and their capacity for innovation and improvement. While some companies are relocating to neighboring countries, the results have not been as promising, given China’s two-decade-long history and experience in manufacturing.
Mr. Zhou suggested that regardless of the final outcome, tariffs will undoubtedly be higher than before, resulting in everyday products being pricier for Americans. “We won’t raise prices first, as that would mean losing customers we’ve had for years,” he stated. He expressed concerns about bringing manufacturing back to the U.S. due to the high labor costs, indicating that higher production costs would inevitably lead to price increases. He worried that the additional expenses would ultimately be passed on to consumers, with businesses and retailers bearing some of the burden.
On February 1, President Trump issued an executive order imposing an additional 10% tariff on imported goods from China, urging China to fulfill its commitment to prevent fentanyl and other drugs from flowing into the U.S. It was pointed out that China failed to take necessary measures to prevent precursor chemicals of drugs from reaching criminal groups, with fentanyl alone causing around 75,000 deaths annually in the United States.
The executive order highlighted that the United States is one of the most open economies globally, with one of the lowest average tariffs worldwide. In 2023, the United States had a goods trade deficit exceeding $1 trillion, ranking first in the world.
On April 2, the presidential order stated that the United States had the lowest “simple average most-favored-nation tariff” globally at 3.3%, whereas major trading partners of the U.S. had much higher rates, including China with 7.5%. From 2001 to 2018, the U.S.-China trade deficit led to the loss of 3.7 million jobs in the U.S. manufacturing output accounted for only 17.4% of global manufacturing output in 2023, down from 28.4% in 2001.
On the same day, the White House announced a 34% retaliatory tariff on China, higher than that imposed on the EU, Japan, South Korea, Taiwan, and India; on April 9, China announced an 84% tariff on goods originating from the U.S.
Subsequently, the U.S. declared a reciprocal tariff of 125% on Chinese products (with an additional 20% tariff for fentanyl), varying tax rates for specific products, with the highest rate potentially reaching 245%; China also announced a 125% tariff on American products, with different rates for certain goods.
Mrs. Zhou, who has lived in the U.S. for many years and has business associates, believes that President Trump, coming from a business background, understands the economy and won’t jeopardize businesses. She remarked that many issues can be negotiated, and China has not fulfilled its promise of opening up markets when joining the World Trade Organization, leading to millions of Americans losing jobs due to the shift of manufacturing to China. The ongoing trade war was deemed inevitable, and people need to be patient.
Robert pointed out that people have varying attitudes and perspectives towards the trade war, with buyers and sellers bearing the greatest impact, while others feel unaffected or detached from the situation. He mentioned, “Both China and the U.S. have buyers and sellers. With excessively high tariffs, nobody will place orders in China, and similarly, American products will struggle to enter the Chinese market.”
From an economic standpoint, there are both short-term and long-term benefits, but those solely focused on immediate gains find it challenging to see the bigger picture, trapped in their current circumstances. Robert emphasized, “Having foresight allows for better strategies.”
Many individuals have experienced previous trade wars and may have coping mechanisms. Ms. Guo, who previously engaged in equipment business between China and the U.S., sees the current situation as an “adjustment period.” She believed that tariffs will not remain as high indefinitely as it would hamper all business activities; there will certainly be solutions found. “Both sides need to calm down and come to the table for negotiations,” she stressed. ◇