As the US tariffs on Chinese goods surged to 145%--compounded by a 125% retaliation from Beijing--Chinese exporters to the US are pausing on shipments.
With each tariff escalation, anxiety is rising among Chinese businesses caught in the crossfire. Many are questioning whether their companies can endure if trade tensions persist. Economists warn that decades of economic integration between the US and China are now under serious threat.
Economists worry that if the tariffs remain in place for another half year or more, economic separation between the two powers could become reality. The tariffs are akin to an embargo and could sever the flow of lower-cost Chinese goods into the American market. China’s central tariff office says bluntly that US exports are effectively unviable under current rates.
In a partial reversal, the Trump administration has decided to spare electronics such as smartphones and laptops from the tariffs — a sign of acknowledgement that these industries are unlikely to relocate manufacturing to the US in the near term.
This tariff confrontation has erupted more than two decades after China entered the WTO, with US support, unlocking a period of economic transformation powered by global trade.
Under the Biden administration, the US avoided sweeping tariffs, opting instead for a selective decoupling — or “de-risking” — in sensitive technology areas. Trump, on the other hand, has gone all-in, but remains open to dialogue. The contours of any future negotiation, however, are still unclear. The Chinese Foreign Ministry has insisted that talks can’t begin until the U.S. steps back from what it sees as erratic and punitive tactics.
In the absence of top-level talks, exporters are reassessing their strategies. While the US market isn't off the table yet, firms are already looking to Europe and Australia for growth. Others are less hopeful.
The impact is already visible at Shanghai’s port, where shipments to the US have dropped off sharply. Major shipping companies have begun scaling back services across the Pacific.
In the long run, the upheaval is likely to push Chinese companies to relocate parts of their production chains — in some cases, even to the US. Some firms are looking to establish operations overseas to hedge against such uncertainty.
