The annual global trade fair in Hong Kong has commenced with much excitement, showcasing an array of robots and innovative products, while drawing large crowds to the convention halls. However, the ongoing US-China tariff war has cast a shadow over the event, which is usually a positive occasion for exhibitors, many of whom are Chinese manufacturers presenting their goods. In a rapidly escalating trade conflict, US President Donald Trump has increased tariffs on Chinese imports to 145%, prompting China to retaliate with a 125% levy on American products. This economic clash between the world’s two largest economies is beginning to threaten the global economy.
The situation is particularly challenging for companies like Gaoxd Precision Industry, which is based in Dongguan, a manufacturing center in southern China. Specializing in keyboards and computer mice, Gaoxd has traditionally benefited from trade links between the US and China. However, the intensifying trade war has severely impacted the company. Recent exemptions announced by US Customs and Border Protection for certain electronic products, like smartphones and semiconductors, did not extend to Gaoxd’s products. Consequently, the company has experienced a 20% decline in sales this year attributed to the economic uncertainty.
Gaoxd’s sales manager, Liu Tongyong, noted that with the US market contributing to 30% of their sales, the tariffs have increased pressure to reduce costs, yet there is minimal flexibility in pricing. Liu expressed concern over moving production overseas, as the absence of a supply chain and ecosystem elsewhere could further inflate costs. Meanwhile, the company remains hopeful about weathering the current challenges, although the broader business community is closely watching for any signs of resolution.
As President Trump continues to escalate tariffs, he has expressed a willingness to engage in talks with Chinese leader Xi Jinping. Beijing has maintained a strong stance against US actions, promising to retaliate while keeping open to discussions. The timing and outcome of potential trade talks remain uncertain.
Other exhibitors at the trade fair, like Sky Wing Communication Electronics, echo similar concerns. The company, which manufactures acoustic products for American and European customers, has been affected by the tariffs, with American clients, who constitute at least 30% of sales, negotiating price cuts and halting orders. Plans for expansion to Cambodia are on hold due to uncertainty surrounding Trump’s tariffs. To mitigate the impact, the company is exploring new markets, particularly in the Middle East, while hoping for tariff reductions to benefit both their business and US customers.
Bill King, president of Atron Electro Industries, a Canadian company that imports lights and electronic products from China, highlighted the global adjustments businesses must make. Companies dependent on China’s manufacturing capabilities must navigate these turbulent times, as the trade landscape continues to evolve.
The Evolving Landscape
The ongoing tariff disputes between the US and China serve as a crucial reminder of the interconnectedness of global economies. As the two largest economic powers engage in a tit-for-tat trade war, businesses worldwide are feeling the repercussions. For manufacturers and exporters heavily reliant on trade with these nations, the increased tariffs translate into higher costs, reduced profit margins, and uncertain future production plans.
Communities dependent on manufacturing jobs, especially in regions like Dongguan, face heightened economic uncertainty. Businesses are compelled to explore alternative markets and re-evaluate supply chains, which may lead to increased costs and potential displacement of jobs. Consumers in both the US and China might experience higher prices on goods as companies seek to offset the imposed tariffs. As negotiations continue, the global community remains watchful, hopeful for a resolution that stabilizes trade relationships and supports economic growth.
