The "Short-term Shockwave" of Higher U.S. Tariffs on Chinese Companies

Release Date:2025-04-10

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Hello friends, today let's talk about the impact of U.S. tariff hikes on Chinese businesses.

First, the most direct effect is the surge in export costs.

After the U.S. imposed tariffs, the price advantage of Chinese goods in the American market vanished. Companies either had to absorb the costs or raise prices—but raising prices risks losing customers. Industries like home appliances and furniture, which already have low profit margins, saw their profits "slashed" by tariffs, with some even operating at a loss.

Second, market share is being "eroded."

To save money, U.S. buyers turned to suppliers in Vietnam, India, and other countries, leading to a noticeable drop in orders for Chinese businesses. Labor-intensive industries like apparel and toys were hit hardest, with many small and medium-sized enterprises forced to close or pivot to emerging markets. However, demand in these new markets pales in comparison to the U.S., making it hard to offset losses in the short term.

Next, let's discuss the "major adjustments" in supply chains.

To bypass tariff barriers, Chinese companies began setting up factories in Mexico, Southeast Asia, and elsewhere, moving assembly lines overseas while keeping high-value-added R&D and design at home. This "two ends abroad" model reduces costs but increases management complexity and risks.

Moreover, business risks are rising.

Tariff policies caused RMB exchange rate fluctuations, increasing forex risks. Export barriers also tightened cash flow, raising financing costs. Worse still, U.S.-China trade tensions may escalate further, complicating the international trade environment for businesses.

In the next article, we'll explore how Chinese companies can break through this "tariff storm." Remember to follow me.

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