When President Trump’s new tariffs on Chinese goods this week raised to 125%, the mood of dusty streets and small factories in southeast China is a mixture of anger, worry and resolution.
Thousands of export-oriented small factories in or near Guangzhou, a commercial hub in southeast China, have played a central role in the country's rapid economic development over the past half century. They quickly provide nearly all the products they manufacture at low cost, and they employ millions of immigrant workers from all over China.
Nowadays, many small factories, the cornerstone of China's economy, are facing difficult times. The managers of the apparel factory will worry about a series of orders from last-minute cancellations from American customers, causing them to suffer. The factory managers who manufacture machinery don’t know if its low cost will help them survive. Workers hope they will still have jobs in the coming weeks and months.
Some clothing factories that mainly offer the U.S. market have been temporarily closed as their owners await more explicit tariffs. Now, more factory managers are rushing to find buyers in other countries or chase customers in China.
But even before Mr. Trump began closing many U.S. imports from China this year, China was already facing a large amount of assets in factory capacity. Other places ask for deeper discounts.
In China's domestic market, manufacturers' prices are particularly low. Many Chinese consumers are now very frugal after wasting their lives amid the collapse of the country's real estate market.
“The trade war has had a huge impact because if you can't export, there will be fewer orders for clothing and there will be nothing to do,” said Ling Meilan, co-owner of the first-floor shirt factory on the second floor of the huge Warren building on the low-slung industrial building. Workers bent over a sewing machine on a long table under fluorescent lights.
Ms. Lin focuses on the domestic market in China. But some neighboring factories that are mainly sold to the United States have temporarily suspended their operations.
Yao, a factory manager on the street, named her last name only, she mainly offers Amazon and has seen slowing orders. “If the U.S. tariffs are too high, we won't be able to do it, and I will definitely turn to other markets,” she said.
Recently, it has been particularly difficult to cancel orders for clothing orders recently in small factories in Guangzhou. U.S. importers usually pay half of the clothing fee in advance, while the rest is later.
The factory manager said the last-minute cancellation was the last minute of no compensation, and importers who didn’t want to pay Mr. Trump’s tariffs have put some factories in a considerable amount of inventory, from clothing to handbags. The 50% drop payment they receive is not enough to cover their fees.
Machinery manufacturers may be better at enduring tariffs. China is so dominant that other countries have few competitors.
Elon Li, who owns a small Guangzhou factory, produces low-priced cooking equipment for restaurants and backyard barbecue restaurants, said he doesn't have to worry about the latest U.S. tariffs, as all of his competitors are located in or near Guangzhou.
Manufacturers in Japan, South Korea and Europe have made equipment for the same task, but the materials they use are much more expensive and charge 10 times the price. He said factories in Southeast Asia and Africa cannot compete because only China makes low-cost electrical components, he made waterproof switches in the form of factory benches in the form of waterproof switches.
Mr. Li said that steel is his biggest cost in China much cheaper. The collapse of China's real estate market has ruined China's construction and left behind steel.
Mr. Li said that in the United States, the retail price of cooking equipment is eight times that of manufacturing in China. Tariffs are mainly calculated based on very low manufacturing costs, before the United States is steeply marked in the United States. So even Mr. Trump has increased the tariffs of 125% in less than three months – as manufacturing costs are a small part of the final price, there may not be much increase in retail prices.
One expense that has not fallen is labor. Managers of five Guangzhou factories said they have seen no signs of workers accepting lower wages in recent weeks. In China's birth rate, decades of slides have shortage of factory workers nationwide, especially among young people.
China's almost continuous economic growth has kept many manufacturers confident that they will overcome the latest difficulties in some way.
“Our country is indeed becoming stronger and stronger,” Ms. Lin said. “Personally, I am very satisfied with China and am full of confidence in China.”
Li, you Contributed to the research.
