While U.S. President Donald Trump celebrated a weekend deal with China aimed at reducing the tariffs both countries have imposed on each other’s goods, businesses in China are responding to the temporary agreement with caution.
In April, both the U.S. and China lowered the tariffs on each other’s goods, with the U.S. reducing the 145% tariff imposed by Trump to 30%, and China cutting its tariff rate on U.S. products from 125% to 10%. These changes took effect on Wednesday. U.S. Treasury Secretary Scott Bessent had expressed hope for improved trade, and markets reacted positively to the announcement, recovering to levels seen before the tariffs were implemented. However, business owners in China remain cautious.
For instance, a kitchen utensil factory in Guangdong province resumed production of at least four orders from American clients following the tariff reduction. Margaret Zhuang, a salesperson at the factory, said they were surprised by the extent of the tariff cuts, though they remain cautious as the future of the tariffs remains uncertain. The factory had seen fewer orders since the initial tariffs were imposed earlier this year, with orders now only extending until June, compared to previous months when orders stretched to August.
Despite the optimism from some businesses, many are still wary of potential changes to the tariffs. Kahlee Yu, the sales manager of another kitchen utensil manufacturer, said that while there’s optimism about the trade deal, there’s still concern that tariffs could change again, leading to the cancellation of orders.
The uncertainty is also affecting companies’ willingness to invest. Kelvin Liao, a sales director at Action Composites, a manufacturer of carbon fiber auto parts, had planned to purchase land for a new factory but opted to rent instead due to the uncertainty surrounding the tariffs. Liao expressed doubts about Trump’s intentions, believing the deal was only a temporary pause and that the U.S. ultimately aims to limit China’s growth.
Tariffs still apply to some industries that are not included in the general deal. Hong Kong businessman Danny Lau, who owns an aluminum-coating factory, faces a 75% tariff from tariffs imposed since 2018. While this industry is not part of the deal, Lau remains hopeful that further talks will lead to better outcomes.
Many Chinese businesses, especially those affected by high U.S. tariffs, have already begun to focus on other markets. Analysts have noted that tariffs could lead Chinese companies to diversify their supply chains and shift some manufacturing capacity abroad. Liao’s company, for example, already operates a factory in Vietnam that exports products to the U.S.
While some businesses in China see potential benefits in the U.S. market, they are taking a cautious wait-and-see approach due to the ongoing uncertainty around the tariffs.
