In brief
Many small businesses in China are facing an existential crisis due to high tariffs imposed by the US, which have left inventories of products languishing in warehouses. This trade war has raised fears among companies reliant on American sales.
Around half of Sorbo Technology's production is destined for US markets, but with tariffs soaring to 145%, products sit idle in warehouses, leaving Lionel Xu, the company's owner, alarmed about the future. "This is so hard for us," Xu lamented, as he highlighted the dire implications of stalled sales and production for his 400 workers based in Zhejiang province. The sentiment is echoed across the bustling Canton Fair in Guangzhou, an annual showcase for thousands of traders, where many businesses are also unable to sell to their primary US-based clients, including Walmart.Despite a temporary pause on some tariffs by President Trump following market turmoil, the heavy levies on Chinese exports remain intact, leading to frustration among traders. "What if Trump doesn't change his mind?" asked Xu. With trade routes threatened, fears mount over the sustainability of many small and medium-sized enterprises, which are vital for the Chinese economy.While China maintains a domestic market with a population of 1.4 billion, efforts to boost consumer spending have proven ineffective, as many middle-class Chinese families prioritize saving in uncertain economic times. Workers in various industries are witnessing a stark decline in wages and job security, and the overall sentiment is one of fear and confusion, especially among those in export-driven sectors.Some exhibitors at the fair are pivoting towards alternative markets in Europe, Russia, or the Middle East in search of new revenue streams; however, the long-term outlook remains challenging. The standoff between the US and China continues, with neither side showing willingness to negotiate, leading to increasing uncertainty about the future as economic ripple effects impact not only Chinese manufacturers but also American consumers facing higher prices.
