Chinese importers of American goods brace themselves for further tariffs
Entrepreneur Su Nengwu started his business in 2018, the same year that Donald Trump’s first administration imposed tariffs on Chinese exports. He sells water treatment equipment for cooling systems, mainly from the United States to Chinese factories and data centers.
“When Trump imposed extra tariffs on Chinese exports, China fought back by levying an extra 10% tariffs on American exports. So, the total tariff rate for us became 23%,” Su said.
He said he absorbed the additional costs that totaled 2 million yuan — or about $290,000 — between 2018 and 2019.
“Today, the counter-tariffs remain, but the Chinese government also has a policy to exempt some firms. We applied and we were exempted from the extra 10% duties,” Su said. But that exemption might not last.
Last month, President-elect Trump made headlines when he said he will impose an additional 10% tariff on all Chinese exports once he gets into office. China is expected to retaliate with countertariffs. Chinese importers like Su, who pay the extra duties, are bracing themselves.
China’s foreign ministry reacted to Trump’s latest announcement by saying that no one wins in a trade war. Then, Hua Chunying, Chinese vice minister of foreign affairs posted a video on social media platform X.
China, it said, would be ready for whatever happens: “What cannot kill you will only make you stronger.” There followed a list of China’s great modern achievements, from its first supercomputer in 1983 to its own satellite system, BeiDou, today.
In 2018, one of then-President Trump’s goals in imposing tariffs was to punish China for unfair trade practices, like stealing American intellectual property through forced technology transfers. At the same time, he wanted to incentivize U.S. firms to shift production out of China.
“There is really no reshoring whatsoever to the U.S.,” said Cameron Johnson, a Shanghai-based supply chain expert and senior partner at the consultancy Tidalwave Solutions. “We haven’t really seen any large-scale factory movement out of [China].”
China remains the place to manufacture high-quality products in large quantities, Johnson said.
Some Chinese manufacturers have also opened a factory site outside the country, though. “Often it’s in Southeast Asia — perhaps Vietnam, Thailand, Malaysia,” Johnson said.
Meanwhile, Chinese countertariffs have hurt firms selling American products in China by making them more expensive. “European and other Asian companies took market share from them,” Johnson said.
Su said he started selling U.S. equipment because it was higher quality than Chinese goods.
“Many Chinese people also believed that American products were the best and wanted them,” he said over a meal of prawns and lotus root soup.
However, he said his Chinese clients would not tolerate prices going up because of tariffs or anything else. Already Su’s American suppliers have increased prices twice because of inflation in the U.S.
“I absorb the extra costs because my Chinese clients won’t. All I can do is take a cut in profits. So I’ve been importing less from the U.S. and looking for substitutes from the domestic market,” Su said.
Are some of those Chinese substitutes possibly copying American designs?
“Possibly,” he said coyly.
Additional research by Charles Zhang