Chinese small businesses are feeling the pinch of President Trump's tariffs, which are paralyzing their exports to the U.S. Companies like Sorbo Technology in Zhejiang province are forced to halt production as their goods pile up in warehouses, pending potential tariff reductions from Washington. Amid fears for their futures, entrepreneurs express serious concerns over their reliance on the American market. The Canton Fair, a global trading hub in Guangzhou, showcases the dire impact of these tariffs, with many businesses exploring alternative markets to mitigate losses. While some remain optimistic about potential shifts, the longer-term outlook remains grim, highlighting the complex interplay of global trade dynamics and domestic economic pressures.
Tariffs Tighten Grip on Chinese Small Businesses Amid Trade War
Tariffs Tighten Grip on Chinese Small Businesses Amid Trade War
The ongoing U.S.-China trade war causes significant strain on China's small businesses, stalling production and leading to uncertainty.
The article text:
"This is so hard": The Chinese small businesses brought to a standstill by Trump's tariffs
Laura Bicker, China correspondent Reporting from Guangzhou
The BBC's Laura Bicker: "A number of businesses in limbo" in China, after US tariffs on imports. "Trump is a crazy man," says Lionel Xu, who is surrounded by his company's mosquito repellent kits – many were once best sellers in Walmart stores in the United States. Now those products are sitting in boxes in a warehouse in China and will remain there unless President Donald Trump lifts his 145% tariffs on all Chinese goods bound for the US. "This is so hard for us," he adds.
Around half of all products made by his company Sorbo Technology are sold to the US. It is a small company by Chinese standards and has around 400 workers in Zhejiang province. But they are not alone in feeling the pain of this economic war. "We are worried. What if Trump doesn't change his mind? That will be a dangerous thing for our factory," says Mr. Xu.
Nearby, Amy is helping to sell ice cream makers at her booth for the Guangdong Sailing Trade Company. Her key buyers, including Walmart, are also in the US. "We have stopped production already," she says. "All the products are in the warehouse." It was the same story at nearly every booth in the sprawling Canton Fair in the trading hub of Guangzhou.
When the BBC speaks to Mr. Xu, he is getting ready to take some Australian buyers to lunch. They have come looking for a bargain and hope to drive down the price. "We will see," he says about the tariffs. He believes Trump will back down. "Maybe it will get better in one or two months. Maybe, maybe," Mr. Xu adds with his fingers crossed.
The US and China have both slapped high tariffs on each other. Last week, President Trump temporarily paused the vast majority of tariffs after global stock markets tumbled, and a sell-off in the US bond market. But he kept the import levies targeted at Chinese goods being shipped to the US. Beijing responded by imposing its own 125% levies on American imports.
This has bewildered traders from more than 30,000 businesses who have come to the annual fair to show off their goods in several exhibition halls the size of 200 football pitches. In the homeware section, firms displayed everything from washing machines to tumble dryers, electric toothbrushes to juicers and waffle makers. Buyers come from all over the world to see the products for themselves and make a deal. But the cost of a food mixer or a vacuum cleaner from China with the added tariffs are now too high for most American firms to pass on the cost to their customers.
The world's two largest economies have hit an impasse and Chinese goods meant for US households are piling up on factory floors. The effects of this trade war will likely be felt in kitchens and living rooms across America, who will now have to buy these goods at higher prices.
China has maintained its defiant stance and has vowed to fight this trade war "until the end." It is a tone also used by some at the fair. Hy Vian, who was looking to buy some electric ovens for his firm, waved off the effects of tariffs. "If they don't want us to export – then let them wait. We already have a domestic market in China; we will give the best products to the Chinese first."
China does have a large population of 1.4 billion people, and in theory this is a strong domestic market. Chinese policymakers have also been trying to stimulate more growth in a sluggish economy by encouraging consumers to spend. But it is not working. Many of the country's middle classes have invested their savings in buying the family home, only to watch their house prices slump in the last four years. Now they want to save money – not spend it.
While China may be better placed to weather the storm than other countries, the reality is that it is still an export-driven economy. Last year, exports accounted for around half of the country's economic growth. China also remains the world's factory – with Goldman Sachs estimating that around 10 to 20 million people in China may be working on US-bound exports alone.
Some of its workers are already feeling the pain. Not far from the Canton Fair, there are warrens of workshops in Guangdong making clothes, shoes, and bags. This is the manufacturing hub for companies such as Shein and Temu. Each building houses several factories on several floors where workers will labour for 14 hours a day. On a pavement near some shoe factories, a few workers were squatting down to chat and smoke.
"Things are not going well," says one, who was unwilling to give his name. His friend urges him to stop talking. Discussing economic difficulties can be sensitive in China. "We've had problems since the Covid pandemic, and now there's this trade war. I used to be paid 300-400 yuan ($40-54) a day, and now I will be lucky if I get 100 yuan a day."
The BBC visited a workshop in a Guangzhou village, which has changed from being export-oriented to focussing on domestic markets. The worker says it is difficult to find work these days. Others making shoes on the street also told us they only earned enough to live a basic life. While some in China feel pride in their product, others feel the pain of increasing tariffs and wonder how this crisis will end.
China is facing the prospect of losing a trading partner that buys more than $400bn (£302bn) worth of goods each year, but the pain will also be felt on the other side, with economists warning that the US could be heading for a recession.
Adding to the uncertainty is President Trump, who is known for his brinkmanship. He has continued to push Beijing and China has refused to back down. However, it has said it will not add any more to the current 125% tariff rate on US goods. They could retaliate in other ways – but it offers the two sides some breathing room from a week that sparked an economic war.
There is reportedly little contact between Washington and Beijing, and neither side appears willing to head to the negotiating table any time soon. In the meantime, some companies at the Canton Fair are using the event to try to find new markets. Amy hopes her ice cream makers will head in a new direction. "We hope to open the new European market. Maybe Saudi Arabia - and of course Russia," she adds.
Others believe there is still money to be made in China. Among them is Mei Kunyan, 40, who says he is earning around 10,000 yuan a month at his shoe firm which sells to Chinese customers. Many major shoe manufacturers have moved to Vietnam where labour costs are cheaper. Mr. Mei has also realised something that businesses around him are now discovering: "The Americas are too tricky."
"This is so hard": The Chinese small businesses brought to a standstill by Trump's tariffs
Laura Bicker, China correspondent Reporting from Guangzhou
The BBC's Laura Bicker: "A number of businesses in limbo" in China, after US tariffs on imports. "Trump is a crazy man," says Lionel Xu, who is surrounded by his company's mosquito repellent kits – many were once best sellers in Walmart stores in the United States. Now those products are sitting in boxes in a warehouse in China and will remain there unless President Donald Trump lifts his 145% tariffs on all Chinese goods bound for the US. "This is so hard for us," he adds.
Around half of all products made by his company Sorbo Technology are sold to the US. It is a small company by Chinese standards and has around 400 workers in Zhejiang province. But they are not alone in feeling the pain of this economic war. "We are worried. What if Trump doesn't change his mind? That will be a dangerous thing for our factory," says Mr. Xu.
Nearby, Amy is helping to sell ice cream makers at her booth for the Guangdong Sailing Trade Company. Her key buyers, including Walmart, are also in the US. "We have stopped production already," she says. "All the products are in the warehouse." It was the same story at nearly every booth in the sprawling Canton Fair in the trading hub of Guangzhou.
When the BBC speaks to Mr. Xu, he is getting ready to take some Australian buyers to lunch. They have come looking for a bargain and hope to drive down the price. "We will see," he says about the tariffs. He believes Trump will back down. "Maybe it will get better in one or two months. Maybe, maybe," Mr. Xu adds with his fingers crossed.
The US and China have both slapped high tariffs on each other. Last week, President Trump temporarily paused the vast majority of tariffs after global stock markets tumbled, and a sell-off in the US bond market. But he kept the import levies targeted at Chinese goods being shipped to the US. Beijing responded by imposing its own 125% levies on American imports.
This has bewildered traders from more than 30,000 businesses who have come to the annual fair to show off their goods in several exhibition halls the size of 200 football pitches. In the homeware section, firms displayed everything from washing machines to tumble dryers, electric toothbrushes to juicers and waffle makers. Buyers come from all over the world to see the products for themselves and make a deal. But the cost of a food mixer or a vacuum cleaner from China with the added tariffs are now too high for most American firms to pass on the cost to their customers.
The world's two largest economies have hit an impasse and Chinese goods meant for US households are piling up on factory floors. The effects of this trade war will likely be felt in kitchens and living rooms across America, who will now have to buy these goods at higher prices.
China has maintained its defiant stance and has vowed to fight this trade war "until the end." It is a tone also used by some at the fair. Hy Vian, who was looking to buy some electric ovens for his firm, waved off the effects of tariffs. "If they don't want us to export – then let them wait. We already have a domestic market in China; we will give the best products to the Chinese first."
China does have a large population of 1.4 billion people, and in theory this is a strong domestic market. Chinese policymakers have also been trying to stimulate more growth in a sluggish economy by encouraging consumers to spend. But it is not working. Many of the country's middle classes have invested their savings in buying the family home, only to watch their house prices slump in the last four years. Now they want to save money – not spend it.
While China may be better placed to weather the storm than other countries, the reality is that it is still an export-driven economy. Last year, exports accounted for around half of the country's economic growth. China also remains the world's factory – with Goldman Sachs estimating that around 10 to 20 million people in China may be working on US-bound exports alone.
Some of its workers are already feeling the pain. Not far from the Canton Fair, there are warrens of workshops in Guangdong making clothes, shoes, and bags. This is the manufacturing hub for companies such as Shein and Temu. Each building houses several factories on several floors where workers will labour for 14 hours a day. On a pavement near some shoe factories, a few workers were squatting down to chat and smoke.
"Things are not going well," says one, who was unwilling to give his name. His friend urges him to stop talking. Discussing economic difficulties can be sensitive in China. "We've had problems since the Covid pandemic, and now there's this trade war. I used to be paid 300-400 yuan ($40-54) a day, and now I will be lucky if I get 100 yuan a day."
The BBC visited a workshop in a Guangzhou village, which has changed from being export-oriented to focussing on domestic markets. The worker says it is difficult to find work these days. Others making shoes on the street also told us they only earned enough to live a basic life. While some in China feel pride in their product, others feel the pain of increasing tariffs and wonder how this crisis will end.
China is facing the prospect of losing a trading partner that buys more than $400bn (£302bn) worth of goods each year, but the pain will also be felt on the other side, with economists warning that the US could be heading for a recession.
Adding to the uncertainty is President Trump, who is known for his brinkmanship. He has continued to push Beijing and China has refused to back down. However, it has said it will not add any more to the current 125% tariff rate on US goods. They could retaliate in other ways – but it offers the two sides some breathing room from a week that sparked an economic war.
There is reportedly little contact between Washington and Beijing, and neither side appears willing to head to the negotiating table any time soon. In the meantime, some companies at the Canton Fair are using the event to try to find new markets. Amy hopes her ice cream makers will head in a new direction. "We hope to open the new European market. Maybe Saudi Arabia - and of course Russia," she adds.
Others believe there is still money to be made in China. Among them is Mei Kunyan, 40, who says he is earning around 10,000 yuan a month at his shoe firm which sells to Chinese customers. Many major shoe manufacturers have moved to Vietnam where labour costs are cheaper. Mr. Mei has also realised something that businesses around him are now discovering: "The Americas are too tricky."
