China's government is calling for a united global front against recent US tariffs instituted by President Trump, which have escalated to 104%. This move comes as Chinese exporters, like the fast-fashion brand Shein, face severe economic pressure. Despite weak domestic consumption, China's reliance on exports remains critical. Analysts warn that these high tariffs could cripple profit margins and disrupt global supply chains, with potential retaliatory measures from Beijing, including bans on US films.
China Urges Global Coalition Against Trump's Trade Measures
China Urges Global Coalition Against Trump's Trade Measures
Beijing seeks international support to counteract significant US tariffs that threaten China's economy and trade relations.
China is rallying for a global alliance in opposition to President Trump's recent tariffs, which have soared to an unprecedented 104%, crippling major exporters like Shein. In an editorial by the state-controlled China Daily, officials expressed hopes that "global unity can triumph over trade tyranny," as they look to strengthen collaboration with neighboring Asian nations and urge the European Union to advocate for free trade principles.
The escalating tariffs are particularly detrimental to China's faltering economy. With domestic consumption weak, exports remain a significant growth driver. The impact of Trump's blanket tariffs has forced Chinese companies to scramble in adjusting their supply chains, heightening the uncertainty in their operations.
"Our profit margins are already razor-thin, and with these tariffs, they will diminish even further," lamented a logistics firm owner focused on cross-border e-commerce. Experts warn that tariffs exceeding 35% will obliterate any profit margins for companies exporting to the US or Southeast Asia. Dan Wang from Eurasia Group emphasized that, given the reliance on exports for 20% to 50% of growth since the pandemic, the economic outlook appears grim.
While retaliatory measures from Beijing have not yet been officially announced, speculation suggests potential bans on Hollywood films and suspending cooperation on fentanyl production with the US, as indicated by Chinese media sources. Firms like Fuling, which supplies disposable tableware to US fast-food chains, acknowledge the profound adverse impact of these tariffs on their revenue, citing significant dependence on the US market.
To counter the effects, Fuling has recently opened a factory in Indonesia, only to find that new tariffs on exports from there also present challenges. Tariffs imposed globally by Trump, which he argues will strengthen the US economy, have also raised alarm bells about a possible recession in the US and beyond. Criticism has come from multiple quarters, including from leading business figures like Elon Musk.
Trump's tariffs encompass a baseline 10% tax on most foreign imports along with higher levies for countries deemed significant "offenders," which include developing nations like Cambodia and Vietnam. The situation has led to fears that the tariffs may necessitate a considerable restructuring of China's economy if domestic consumption cannot sustain itself under these pressures.
Despite open offers for dialogue from China, Trump's administration has not engaged with Chinese leader Xi Jinping since his return to power, fostering further uncertainty. The American Chamber of Commerce in China has echoed concerns about the unpredictability associated with these tariffs, expressing that they could result in significant disruption without clear benefits for either country's consumers.
Several analysts contend that a continued heavy tariff regime would culminate in having China pivot more towards its domestic market, a transition that has already proven problematic for the economy. The hefty tariffs are perceived as a tactic to undermine China's economic position, creating additional hurdles for Southeast Asian nations that have witnessed a similar imposition of tariffs.
As companies grapple with the fallout, negotiations with American clients to share tariff burdens indicate the severity of their impact. Wu Changchun, a Chinese freight executive, remarked that tariffs at 10% or 20% could be manageable through optimistic supply chain strategies, but at 104%, the ramifications exceed what can be balanced by traditional trade adjustments, leading to a potential standstill in trade.
