The impact has been immediate and widespread, particularly visible at the Canton Fair in Guangzhou, one of the world’s largest trade expos.
In response, China imposed 125 per cent tariffs on US goods last Friday, following Trump’s earlier 145 per cent duty hike. While the US temporarily paused additional tariffs on other nations for 90 days to allow trade talks, China remains the sole exception amid heightened hostilities.
Factories Fall Silent Across China
“We have stopped production already. All the products are in the warehouse.”
Tariff War Triggered by Rare Earth Tensions
The White House accused Beijing of economic coercion by restricting critical minerals such as gallium, germanium, antimony, and recently suspending exports of six heavy rare earth metals and rare earth magnets. These materials are essential to sectors including defence, aerospace, semiconductors, and electric vehicles.
“China suspended exports … in order to choke off supplies of components central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world,” the White House said.
This sharp escalation, some analysts suggest, could cripple global production and raise prices for consumers worldwide, especially in the United States, where many of these products are critical to advanced manufacturing.
Workers Face Economic Uncertainty
Beyond the showrooms of the Canton Fair, the effects are being felt in Guangdong’s sprawling manufacturing districts. Workers in small-scale factories producing shoes, clothes, and household goods are seeing wages shrink and jobs vanish.
“I used to be paid 300-400 yuan a day, now I’ll be lucky to get 100,” one shoe factory worker told the BBC, under anonymity due to political sensitivity.
With China still recovering from Covid-19-related economic shocks, domestic consumption has not rebounded. Property prices have dropped, and consumers are saving instead of spending. Despite a population of 1.4 billion, China remains heavily reliant on exports, which accounted for nearly half of its economic growth last year.
New Markets or No Markets?
“The Americans are too tricky,” Mei said, highlighting a growing distrust among Chinese entrepreneurs.
Geopolitical Brinkmanship
While Beijing has vowed not to escalate tariffs further, it has not ruled out other forms of retaliation. Both nations are entrenched, with little sign of returning to negotiations. Meanwhile, the White House has launched a national security investigation into dependence on foreign industrial inputs.
“On Day One, President Trump initiated his America First Trade Policy to make America’s economy great again,” the White House reiterated.
Yet, analysts warn the cost will be mutual. With goods stuck in limbo and markets in flux, American consumers face higher prices, and Chinese manufacturers risk losing access to a market worth over $400 billion annually.
The global economic fallout may just be beginning.
