Transcription
I finished cleaning. My shift is over, and now I'm unemployed. Where can I find a job? There are no orders, and I don't even have money to live on right now.
With the tariff war going on, many people in China are losing their jobs. Even business owners aren't spared. Recently, everyone's talking about the increase in US tariffs for us in the textile industry. This is really a huge blow. A lot of our clients have either stopped placing orders or canceled them altogether. Things were already bad before, and now it's even more uncertain with the intense competition going on everywhere. Where can small and medium-sized businesses like us go? We have so much production capacity, but we can't sell overseas. If we try to sell in the domestic market, we're crushed by competition. It's like having too many eggs; they go bad before anyone eats them.
On April 10th, the US raised tariffs on Chinese goods to 145%. The new rate took effect immediately. One day earlier, on April 9th, President Trump announced an additional 125% reciprocal tariff on Chinese imports. This came on top of the existing 20% tariffs, which were originally imposed because the Chinese government failed to stop illegal immigration and fentanyl from entering the United States.
So, which industries in China are being affected? According to the Peterson Institute for International Economics, the biggest impact will be on China's major exports to the US. This includes electronics, machinery, textiles, and garments. An article by a top Wall Street analyst says that Chinese companies exporting medical supplies are also taking a hit. One syringe manufacturer said that 40% of its existing US orders are now under pressure to renegotiate prices. Traditional industries, especially manufacturing, are under serious strain. For example, the iPhone production line at Foxcon's Zhengzhou factory is only operating at 70%, meanwhile, the factory in Vietnam is running at 92%.
Reuters reported that the manager of a Christmas tree factory in Jinhua, Zhang, said, "So far this year, we haven't received any orders from American customers. It's clearly because of the tariffs. Normally, by mid-April, all the orders would be confirmed, but now maybe they won't buy anything at all this year." Ms. Gu, who also runs a Christmas tree factory in Jinhua, said that a major American client had just asked her to pause a 3 million order. She had already spent 400,000 yen on materials and now fears the order might be canceled, which could deal another serious blow to her business. Ms. Gu said, "People like me and my peers depend on US orders to survive. These steep tariffs from the US are going to affect a lot of people, and no one can escape it. Losing the US market will definitely cost a lot of people their jobs."
According to a Taishin report on April 10th, nearly half the cargo ships docked at the Yangshan and Waigaoqiao ports in Shanghai on April 7th and 8th were headed to the US. Many of them had rushed over from the US hoping to load up and head back before the new tariffs kicked in. But after Trump's announcement on April 9th, raising the tariffs to 125%, there were almost no ships heading to the US at Shanghai's port on the next day. The containers that didn't make it out in time are now stuck at the port. They're just sitting in the container yards waiting for the owners to either pick them up or figure out what to do with them. A worker from Costco shipping at Yangshan, at the container yard outside Yangshan Island, is already piling up with these stranded shipments. Many owners are now going through the process of withdrawing their goods from customs. Air freight is also facing serious challenges. A shipping agent admitted that no one is even asking about regular air cargo anymore, and this is just what we're seeing right now.
On April 9th, Sunwu Chung, director of the Center for International Relations and National Chengchi University in Taiwan, said that Trump's tariffs are turning into a head-to-head trade battle between the US and China. "It's not just a tariff issue anymore," he said. "It's a direct economic showdown. The US is fully prepared to cut ties with the Chinese Communist Party." The tariff rate has been steadily rising and could even reach 200%, according to him. "There's no limit to how high Trump could raise tariffs on China," he said. "If things reach that point, the US might just block all Chinese products altogether." He even gave it a name: the tariff to eliminate the CCP. The trade war has turned into hand-to-hand combat, or what some people call a Trump tsunami. If Trump really takes action, he estimates that in 2025, China's GDP growth could fall by 1.5 to 2 percentage points. In that case, there's no chance for an economic recovery; China's economy would keep shrinking, and there doesn't seem to be any room left for trade negotiations. That's why the Chinese government is saying it's like mutual destruction; if one goes down, both will fall together.
What Sun described is a full and hard decoupling between China and the US. But what would that mean for China? Without access to the US market, China has no economy to rely on, Song said. The global economy is being split in two. The US wants to build a supply chain without China. That leaves China with no choice but to try and build a supply chain without the US. But China has always depended on markets of Western democratic countries to drive its economic growth, even while confronting them politically. Now China faces a big problem: all the goods it used to ship to the US, along with all the excess capacity sitting inside the country, now have to find a new market. But no country in the world has the buying power the US does. So Trump has moved to block what's called country of origin laundering through third-world countries. That means countries like Vietnam and Indonesia, which used to help China re-label exports, may now turn away from China and start negotiating directly with the US.
Goldman Sachs said the impact of US tariffs isn't always straightforward. In some cases, China is the main or only supplier of certain products, so it's hard for the US to find replacements. China has set a target of about 5% GDP growth this year, but the latest US tariff could knock that down by around 2.4 percentage points. Goldman Sachs now expects China's growth to hit 4.5% and says there's still a risk it could fall lower. The BBC Chinese service quoted Oxford Economics chief economist Luojing Hua, who warned that in the worst-case scenario, China could lose up to three percentage points of GDP if all trade between the US and China disappears. Capital Economics also analyzed the situation: if these tariffs continue, China's exports to the US could shrink by more than half over the next few years. That alone could cut China's GDP growth by 1 to 1.5 percentage points. An economist from Societe Generale said that Trump's latest tariffs could cause most of China's exports to the US to vanish. The scale of these tariffs is so massive that neither exporters nor consumers can handle them, and currency devaluation won't be enough to offset the impact.
Some experts believe that if the US and China go through with a full decoupling, China could face eight major crises. First, China could lose 500 billion US dollars in exports to the United States. According to customs data from Beijing, Chinese goods sold to the US last year totaled over 500 billion US, which made up 16.4% of China's total exports. Second, many Chinese companies might use this opportunity to completely move their operations overseas, but Trump's new global tariffs are aimed specifically at stopping Chinese companies from using third countries to disguise the origin of their products. Future trade talks with other countries will likely include even more restrictions on Chinese goods for Chinese businesses. This could be devastating and leave no way out. Third, China has had serious overcapacity issues. Now, with the US setting up trade barriers, all that excess production will have to be redirected to other countries. But many countries are already complaining about China dumping cheap goods into their markets, and they're likely to respond with their own countermeasures. This will only make China's economic situation worse. The Wall Street Journal previously reported that economists believe Trump's massive tariffs on China could trigger new problems for the global economy. Around 400 billion US worth of Chinese goods would need to find new markets, but it will be hard for other countries to absorb the volume of products that once went to the US. This could intensify what economists call the China shock in those countries. The report noted that in 2023, 1/5 of the imported steel products in the US came from China, more than 1/4 of the imported electronics came from China, 1/3 of all shoes and 3/4s of all toys the US imported were from China, and 91% of umbrellas the US bought came from China. China's surging exports in recent years have already raised tensions between China and other major economies. If Chinese exporters start redirecting goods meant for the US to other countries, those tensions could grow even worse. Since Trump began the trade war in 2018, countries around the world have launched nearly 500 anti-dumping investigations and rulings against Chinese products. Economists are warning that this is creating a domino effect where trade wars escalate quickly as countries launch retaliatory measures and set up more trade barriers. Even more nations may get dragged in. Michael Pettis, a finance professor at Peking University who studies global trade, said the real explosion hasn't even started yet.
The fourth major crisis is that Chinese goods originally meant for export to the US may now flood the domestic market. This will only worsen the situation inside China. The country is already facing deflation, and if these goods can't be sold at home, businesses will go bankrupt. Eventually, no one will want to spend money; people will tighten their belts, and it will spiral into a vicious economic cycle. Fifth, global supply chains could completely move out of China. If that happens, China would no longer be the world's manufacturing powerhouse, and they would lose the title of the world's factory. Sixth, the worst-case scenario is that American and other foreign companies would completely pull out of China. That would trigger a massive wave of unemployment. Victor Shih, director of the 21st Century China Center at the University of California, San Diego, warned that the impact of tariffs could lead to millions of job losses. He also said that China could face a wave of bankruptcies, and US exports to China might also completely stop.
The Chinese Communist Party has proposed six so-called countermeasures, but in reality, all of them would end up hurting China itself. The CCP-backed WeChat account Neilotin posted on April 8th that China is ready to hit back at the US with at least six countermeasures. First, China may sharply raise tariffs on US agricultural goods like soybeans and sorghum. Second, it could ban US poultry imports. Third, it might suspend cooperation with the US on fentanyl. Fourth, it could take action in the services trade sector, like restricting US firms from taking part in government procurement or working in legal consulting. Fifth, it may block American movies from entering the Chinese market. Sixth, it plans to investigate how much US companies earn from intellectual property in China. But Trump already had responses to the first and second moves. During his first term, he gave subsidies to American farmers and businesses that were affected. In the end, these measures didn't hurt the US; they actually ended up hurting Chinese consumers more. As for suspending fentanyl cooperation, that might just anger the American public and push them to support Trump even more. This could lead to even tougher US policies against the CCP. And the idea of retaliating against American companies in China or investigating them is also seen as a bad move because it would only speed up the departure of foreign companies from China. These countermeasures would likely push up prices inside China and hurt everyday consumers. At the same time, they would make decoupling between the US and China even worse.
The eighth risk is that beyond tariffs, the US might launch a financial war against China. The US still has a lot of tools it hasn't used yet. The United States holds a major advantage when it comes to advanced technology, so it could block China from accessing key tech, turning the conflict into a tech war. The US also has the US dollar, a globally accepted currency, which gives strength in a financial war. Plus, the US has powerful allies. When combined with democracies like those in Europe, Japan, Australia, and South Korea, these economies make up over half of the global economy. Taiwanese media reported that Fubon Securities Chairman Chen Yi Guang said it's likely the trade war will turn into a tech war first. The report also said that the US-China tariff war won't just affect these two countries; the impact on global trade will be widespread, and it won't end anytime soon. On April 9th, the Director-General of the World Trade Organization warned that the US-China tariff war could slash trade between the two countries by 80%. A Nigerian economist and Director-General of the World Trade Organization said that since trade between the US and China makes up about 3% of global trade, this conflict could seriously damage the world's economic outlook.
A person posting under the name Laantan TV commented that China is basically challenging the entire world and might end up being the last country to switch off the lights. Foreign trade is collapsing. Can real estate prices even stay stable? Are we still worth anything? If every country has to follow the US just to survive and raise tariffs on China, it would be like 1952 when writer Eileen Chang was at least able to escape to Hong Kong, but now we don't even have anywhere to run. Whether it's property or meat, everything is just rotting in the pot. One state media commentary warned that giving up too quickly without resistance means having no leverage at the negotiation table. If there's no pushback, the US can take whatever it wants. But once any reaction is labeled as surrender, then fighting to the end becomes the only option. Another commenter, named A Newcomer, said that with tariffs raised so high, there's not much room left to go further. The US might put down the stick and pick up a brick, meaning they might start delisting Chinese companies from US stock markets. Tariffs were just the first move; the US still has many more cards to play. Delisting would be far more damaging than even a 1,000% tariff. Tariffs hurt regular people, but delisting directly hits China's elite.
So, does the Chinese Communist Party still have any breathing room? Writer Yang Chun O wrote on social media that in this round of high-tariff warfare, the only one with no chance of survival is the CCP. If the US pressures other countries to stop China from using third countries to hide the origin of its goods and if it demands high tariffs on both finished and semi-finished Chinese products, then China would have to fight a separate tariff war with every country. It could be completely wiped out, what he described as losing everything in one bet, at a time when the domestic economy is already suffering from multiple problems and after 10 years of aggressive wolf warrior diplomacy that has offended countries all over the world. If the US pushes China into a corner, no country is likely to come to its defense. If the US asks others to impose high tariffs on Chinese goods, most will comply. If the whole world starts isolating the CCP, China's exports would vanish, and its foreign trade exchange reserves would dry up. Then how would the country even survive day-to-day? Without Trump, the CCP might still collapse, but with Trump, it will happen faster.
In another article, he wrote that all of the economic pain will eventually fall on ordinary people in China. The political elite might not enjoy the same level of wealth and power as before, but their fortunes are already enough for their families to live comfortably for generations. If they make less money, it's just numbers on a balance sheet. But China's economy is already in poor shape; the whole country feels cold and lifeless. Every part of the system is shutting down. Now, on top of that, external shocks and internal imbalances are making the situation even worse. The country is already weak, and now it's being hit by multiple crises at once. As exports grind to a halt, unemployment will get worse, household income will drop sharply, and consumer spending will plunge. That will cause the entire economy to collapse even faster. And when the economy collapses, it becomes a catalyst for social unrest. Protests are already breaking out in cities and rural areas. Government crackdowns are only making the conflict between the authorities and the people more intense. Eventually, it will become a direct showdown between the CCP's stability forces and waves of public protests. The outcome will depend on which side gains the upper hand. No one can predict who will win. He warned that China's internal situation could worsen dramatically over the next few years. 2025 could become the first year of a full-scale collapse. He urged everyone to prepare mentally; big changes are coming, and no one knows just how bad it might get.