US tariffs on China goods are yesterday’s problem for exporters – it made some even stronger – but now they face a bigger threat

As Biden maintains Trump-era tariffs on Chinese goods, industry experts say the punitive taxes don’t matter like before, calling them ‘entirely political, not economic’

But a broader drop in demand from the West, spurred by soaring prices and a lack of further stimulus payouts by governments, could have broad economic implications

Reading Time:7 minutes

The US is still playing the tariff card by maintaining extra import taxes on various Chinese goods, but industry insiders say these have become purely political, with little economic significance. Illustration: Henry Wong

Published: 5:30am, 26 Aug 2022Updated: 6:09am, 26 Aug 2022

Vacuum cleaners – seemingly innocuous, yet capable of bringing a company to its knees when subjected to politically motivated trade tariffs.

That happened to Shanghai-listed Ningbo Fujia Industrial in 2018, when the vacuum maker – then a major supplier to US firm JS Global Lifestyle – was slapped with punishing tariffs of up to 25 per cent on its exports to the United States.

And for them – along with nearly every other Chinese exporter and manufacturer affected by Washington’s tariffs – it did not necessarily matter why the US-China trade war was suddenly making it harder for them to do business, but it did serve to reinforce the importance of cultivating new revenue streams with buyers in other countries.

And that they did. Ningbo Fujia even went as far as to build a factory in Vietnam in case tensions with the US further escalated.

So, by the time American tariffs against it were lifted in 2020, after just two years – and the vacuum maker was once again allowed to ship to the US without the extra tariff costs – it had already diversified a chunk of business away from the US, making the market less critical for some Chinese exporters than it was before the tariffs.

But now, even with the US this week maintaining a number of Trump-era tariffs on Chinese imports, they have largely become a secondary concern for Chinese firms that have had years to adapt to them.