China’s exporters will be forced to downsize, cut jobs, relocate if Trump follows through with tariff threat
- Last week US President Donald Trump issued a threat to impose new 10 per cent tariffs on US$300 billion worth of Chinese goods on September 1
- US-China trade war forcing firms to consider Vietnam, Indonesia and India with 25 per cent tariffs already in place on US$250 billion worth of Chinese imports
Traditional export manufacturers in China’s Pearl and Yangtze River Delta regions already struggling under the weight of existing tariffs levied by the Trump administration expect the new tariffs on US$300 billion of Chinese imports to cause their businesses to shrink, force them to lay off workers, and for some, speed up relocation plans.
Fears run deep that the trade war between China and the United States will last for several years, with tariffs truces like the one agreed between President Xi Jinping and US counterpart Donald Trump in Japan at the end of June only causing uncertainty followed by an abrupt escalation in tensions.
The new tariffs, set to take effect on September 1, will largely target consumer products, including toys, smartphones and other electronic devices after trade talks in Shanghai at the end of last month produced too little in terms of concessions from China, according to Trump.
“Our smart helmets are not yet on a tariff list, but may be tariffed at any time. We finally had to start a relocation plan last month,” said Norman Cheng, owner of Strategic Sports, a leading bike, motorcycle and extreme sports helmet production company backed by Hong Kong investors that has been producing in Dongguan, Guangdong province, since the 1990s.
“Because of the uncertainty, we need a full backup plan to deal with possible tariffs, since many of our American customers are constantly worried and keep asking us what’s our response plan.”