Taichung, Taiwan – When Li Wei took over running his father’s glass manufacturing business in Changzhou, northern China, in 2020, he immediately set about optimizing the company’s operations.
Li relocated Hebei Yiyue Glass Products’ only factory from an urban location to the outskirts of Cangzhou, providing better access to the important road network and more space for facility expansion.
At the same time, Li changed the company’s main focus from selling glass components to Chinese customers to exporting finished glass products to overseas customers.
He now oversees a successful export business selling cups, pots and jars around the world, and employs twice as many staff as he had at the time of the acquisition.
Much of Li’s success is due to demand for his products in the United States, the destination of 80% of his company’s exports in recent years.
But now Lee and his colleagues worry that all their success could be ruined if former US President Donald Trump is re-elected to the White House on November 5.
Trump, who is locked in a tight race with Vice President Kamala Harris, has announced a plan to impose tariffs of more than 60% on all goods heading to the United States from China.
Economists called President Trump’s plan ‘Tariff War 2.0.’ This comes after the Republican Party imposed tariffs of up to 25% on various Chinese products during its first term, and China announced its own tariffs accordingly.
“The U.S. tariff increase will definitely have a big impact on me and my business,” Prime Minister Li said in an interview with Al Jazeera.
“This will make our products less competitive and our sales, at least in the United States, will decline dramatically.”
Since Trump’s announcement, Lee has been working 12-hour days to find other export destinations that could offset the downturn in U.S. business.
So far, he hasn’t found a replacement for the world’s largest market.
“I am very busy trying to find solutions, but sometimes the situation feels dire,” he said. “Often I don’t want to think about it.”
Gary Ng, chief economist at Hong Kong investment bank Natixis, said Chinese exporters would have serious concerns if Trump re-enters the White House and implements his plans.
“If tariffs reach 60%, many Chinese manufacturers will no longer be competitive or be able to make a profit exporting to the US market,” Ng told Al Jazeera.
“This could be particularly problematic for Chinese companies that are exposed to the U.S. market and could face a lot of pressure.”
Among exporters already under pressure is Sotech, a Shanghai-based producer of high-end electronic components, according to Dong Sion, the company’s sales manager.
“I was shocked,” Dong said in an interview with Al Jazeera, referring to when he first heard of Trump’s proposal.
More than 90% of Sotech products, including smart glasses, are exported overseas, about 30% of which are exported to the United States.
“If a 60% tariff is imposed, U.S. business could be disrupted or even completely terminated,” the researcher said.
“And we will have to cut staff.”
Allan Von Mehren, senior analyst and China economist at Danske Bank, said additional tariffs could be a fatal blow for some Chinese companies given the already difficult circumstances in the world’s second-largest economy.
“This will have a huge impact on China,” Von Mehren told Al Jazeera.
The United States is China’s largest export destination, importing more than $400 billion worth of Chinese goods every year.
With so much trade at risk, UBS estimates that imposing tariffs of 60% on top of existing tariffs would lower China’s gross domestic product (GDP) growth by 2.5 percentage points over the next 12 months.
Such a blow would come at an inopportune time for the world’s second-largest economy.
A weak real estate sector, low consumer confidence and household spending well below the global average are all hampering growth, while Vietnam’s traditional investment-focused, export-led development model is struggling to make up for the slump.
Faced with these headwinds, Chinese authorities are widely believed to be unlikely to achieve the government’s growth target of around 5%. This will become more difficult if Chinese exporters lose access to U.S. markets due to new tariffs.
Lily Wang, a recent college graduate who works at a glass manufacturing company in Li Wei outside Cangzhou, said she fears the new tariffs, combined with the poor state of China’s economy, will lead to a surge in unemployment and worsening working conditions for workers. I am employed.
“Chinese employers are already cutting a lot, and I’m worried that the situation will get worse if trade with the U.S. decreases,” Wang told Al Jazeera.
Ng said the actual damage to China’s economy from tariffs will depend on companies’ ability to adapt.
“Some companies may want to diversify their export structure or move production to other countries and export from there to the U.S.,” he said.
Some Chinese companies have already taken such steps.
Executives at Hebei Cangzhou New Century International Trade, a Hebei provincial building materials company that sends about 40% of its exports to the United States, are considering collaborating with Indonesian manufacturers.
“A 60% tariff cannot be covered by our export revenues,” Vice President Lucy Zhang told Al Jazeera.
So instead, we are exploring ways to indirectly export to the United States,” he said.
At the same time, the Chinese government has been working to foster new markets for Chinese exporters.
Last September, Beijing hosted 50 African countries for the China-Africa Cooperation Forum, which aims to increase African imports of Chinese products, especially solar panels and electric vehicles.
China is Africa’s largest trading partner and the main trading partner of most South American countries.
“Beijing has known for some time that relations with the United States will not improve significantly any time soon, and has been trying to secure better access for its companies in countries where relations between the two countries are friendlier,” Von Mehren said.
Even as China expands trade with friendly countries, it is unclear whether substitutes exist to replace the vast amounts of Chinese goods destined for the United States.
In some cases, U.S. restrictions on Chinese imports were quickly copied by other jurisdictions.
Last May, U.S. President Joe Biden’s administration announced that it would increase tariffs on Chinese electric vehicles to 100%, effectively blocking their entry into the U.S. market.
The European Union (EU) announced that it would impose tariffs of up to 38.1% on Chinese electric vehicles next month.
Türkiye and Canada have since taken similar steps.
“As some countries take action against Chinese exports, concerns could quickly spread in other countries that Chinese surpluses will be dumped on their markets and they will take action too,” Von Mehren said.
President Trump also proposed imposing high tariffs on Mexico, where Chinese electric car companies are considering building new production facilities to avoid the tariffs.
“All I do is say, ‘I don’t care if it’s 200 or 500.’ In an interview with Fox News earlier this month, President Trump said, “I’m going to put in a number that won’t even sell a single car.”
China has responded in kind to a variety of trade measures, including launching anti-dumping investigations into pork from Europe and canola from Canada and imposing export controls on rare elements used to produce semiconductors.
President Trump’s tariff increase is aimed at China and is likely to be felt sensitively in the United States as well.
In an analysis published last September, the Peterson Institute for International Economics estimated that this measure would increase inflation by 0.4% in 2025 and reduce GDP by 0.23% by 2027.
If China retaliates, the increase in inflation and GDP losses will double, the think tank said.
Liu Fengyu, spokesman for the Chinese Embassy in Washington DC, said there would be no winners in the new trade war.
“Artificial restrictions or protectionism will only disrupt normal trade flows and the stability of production and supply chains, which does not benefit anyone,” Liu told Al Jazeera.
Back in Hebei, Li Wei is struggling to see whether Trump’s plan can have a positive impact on consumers or workers.
“But I don’t know. People in power do what they want,” he said.
“And the rest of us pay the price.”
