Small businesses across China are struggling to maintain themselves as Trump-era tariffs take an ever-deepening toll on exports, leaving factory owners and entrepreneurs caught in an ongoing trade conflict between the U.S. and China.
“This is so hard,” noted Li Jun, owner of a textile factory in Zhejiang province. “Our orders used to go predominantly to America; now they have dropped by 70% requiring us to cut staff, reduce production, and incur debt just to stay open.”
Former President Donald Trump’s tariffs imposed during a trade war with Beijing targeted hundreds of billions’ worth of Chinese products, from machinery and clothing to electronics and more. American businesses also experienced some adverse repercussions of Trump’s tariffs; however, most Chinese exporters who lack state support suffered greatly due to these tariffs.
China’s small and medium enterprises (SMEs) differ significantly from multinational corporations in that their margins and flexibility tend to be thin. While they have attempted to adapt by diversifying into Southeast Asian markets or moving part of their operations offshore, often times these adaptation efforts prove costly or logistically intractable for most SMEs.
“We tried exporting to other countries, but their demand and infrastructure are different from our own,” explained Chen Rong of Shenzhen’s Small Electronic Parts Supplier Association. Their products were tailored specifically for U.S. clients – they now sit unsold due to inventory that cannot be sold.
Though there has been hope that trade relations may improve under President Joe Biden, many of the Trump-era tariffs remain. Furthermore, as political rhetoric in the U.S. shifts toward tougher China policies ahead of 2024 election campaigns, Chinese businesses fear their situation could worsen further.
Economists warn that pressure exerted on Chinese SMEs could result in long-term structural damage to China’s export economy, one of its cornerstones for global influence. At present, thousands of Chinese entrepreneurs face an uncertain future, often forcing them to make painful choices regarding jobs, wages and survival.
Li Jun summed it up best: “We don’t intend to close, yet every month seems closer.”