When the first two laps of 10% prices hit, Zou Guoqing, a Chinese exporter, groaned but did not find the insurmountable barriers. He abandoned some of his profits and offered his client, a snow bicycle factory in Nebraska, price reductions ranging from 5% to 10%. It seemed to work: the factory accepted a new order of molds and parts.
But when President Donald Trump announced An additional additional universal rate On Chinese products on April 2, Zou, who has been exporting to the United States for more than a decade, has been incredulous.
“There is no feasibility wire,” said Zou, who does business in the eastern Chinese city of Ningbo. “It seems that I would not have the choice to give up negotiations with the United States”
Then came 50% of more Trump, followed by another increase which pushed the universal price on Chinese products to 145%And Zou said he could no longer hope that Trump and Chinese chief Xi Jinping can communicate. “We stop expeditions,” he said, “until leaders speak.”
That we price and The reprisal rate at 125% of China put companies that are negotiated between the United States and China on the edge. They are worried not only of their next orders, but also their viability if there is no quick relief. Experts fear that the business links that lasted decades that have supported the relationship between the two biggest economies in the world will be around.
Trade links are tested
If the high price is supported for the next six months or more, “it would actually lead to a really effective decoupling between American and Chinese economies,” said Chen Zhiwu, finance professor at Hong Kong University Business School.
Josh Lipsky, senior director of the Geoeconomics Center of the Atlantic Council, said that the price, if he was kept in place, is equivalent to “almost a commercial embargo”, which makes it impossible for China to export low-value items such as clothing to the United States, it would also force businesses in the United States to get elsewhere, far from China, if there were alternatives, he said.
The Trump administration Friday late Friday, said it would exclude electronics such as smartphones and laptops from the reciprocalThis means that they will not be subject to the 145% prices taken from China. The exemption seemed to reflect Trump’s awareness that it is unlikely that his prices in China will change more manufacturing of smartphones, computers and other gadgets in the United States.
In China, the Central Tariff Office said that there was “no possibility of market acceptance” of American goods exported to China at the current price level.
“Everyone is quite worried,” said Hu Jianlong, founder of Brands Factory, a council that works with Chinese companies trying to enter foreign markets. “At this point, there is no good way to follow. This situation has not resolved … There is no final number. And so everyone is still waiting to see how it will develop.”
The tariff war has occurred more than 20 years after China, with the help of the United States, joined the World Trade Organization and began to see its economy hovering over foreign investments and export to the United States and other Western markets. Last year, Chinese-American trade was $ 582 billion, but tensions broke out on the expansion of China’s commercial imbalance with the United States that led to the first price skirmish during the first term Trump.
The trade deficit has since shrunk but has remained stubbornly, at a time when the United States and other Western markets were also concerned with another Chinese products such as electric vehicles.
Divide or “de-liking”?
During his mandate, Democratic President Joe Biden stressed that the United States did not try to decline China but of “desire”. He adopted the approach of the “small courtyard and at high fence”, under which his administration has set up obstacles in targeted sectors such as advanced chips, artificial intelligence and quantum computing which have implications on national security.
Now Trump declares universal prices on Chinese products, but said he was also ready to speak with Beijing. We still do not know what could be the objectives of the Republican President.
“What are they looking for in these negotiations? To what extent is it possible to reduce these prices? What are the other requests outside of China by removing its reprisals rates that the United States wants to present. We do not know what it would be,” said Greta Peisch, who was the Advocate General for the Representation of US Trade in 2021-2024.
The message of the management of China is noisy and clear. He will only speak when the United States will cease “maximum pressure and capricious and destructive behavior,” said Lin Jian, spokesperson for the Chinese Ministry of Foreign Affairs.
Li Cheng, professor of political science at the University of Hong Kong, said that Chinese management was upset by having been distinguished by Trump when the American president interrupted reciprocal rates for 90 days for all other countries. Beijing wants to make sure that “Donald Trump does not say one thing in the morning and say other things in the evening,” said Li, and that Trump’s policies on China are not diverted by his anti-china and bellicose advisers.
Without negotiations in terms of leadership in the immediate future, companies explore their options.
Lisa Li, who works in the sales of a sportswear manufacturer in the northern province of Hebei, said that his business was negotiating with customers to find out if they could divide the increased costs. It is too early to say if his business has to abandon the American market, she said, but that “will definitively expand other avenues for sales”, such as in Australia or Europe.
Different views, but optimism sags
In the eastern Chinese city of Wenzhou, a manufacturing center, a vacation light manufacturer was less optimistic. BO, who only shared his last name for reprisal, said he could only “abandon” if pricing hikes were there to stay because other markets may not work.
“In recent years, the European market has been in crisis,” said BO. “So we wanted to try to develop our business in the United States.”
In Hong Kong, Danny Lau, who runs an aluminum coating plant in the neighboring city of Dongguan, southern Dongguan, said that one of his American customers would continue to buy it for a current project but was not sure of the next project. Another customer told Lau that the chances were slim to conclude an agreement when the prices are so high. Lau has explored other markets, but it says that it is not easy because some can find its high quality products that are too expensive.
In a port of the Chinese city of Shanghai, ships heading towards the United States had almost disappeared Thursday, the day after Trump’s price on China, according to a report of the New Caixin financial site. The main maritime companies considerably reduced the trans-Pacific routes, according to the report.
In the longer term, the tariff war should encourage Chinese companies to diversify their supply chains and to be part of their manufacturing capacity outside of China, and even in the United States, the consultant said.
Some could follow in the footsteps of Tianjin Steelmaking’s business, which abandoned trade with the United States after Trump and Biden have raised prices on Chinese steel. “The best plan is not to come into contact,” said David Yu, who works in the company’s foreign sales service.
However, not everyone is ready to abandon the American market. Zou, the exporter of Ningbo, describes the American market as “reliable and without capricious requirements”.
“It’s the best market in the world,” he said. “I’m waiting for the rainbow after the storm.”
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Wu reported Bangkok and Washington Tang. The researcher of Associated Press Shuhan Chen in Beijing and the writer Kanis Leung in Hong Kong contributed to this report.