BY CASEY HALL AND ELLEN ZHANG
SHANGHAI/BEIJING — Jacky Ren, who owns a kitchen appliance factory in China, says exporters in his industry are now selling at a loss to keep their US clients, with little power to say “no” to requests for lower prices on products facing higher tariffs.
If an exporter does not take such orders, Ren said, “you will die immediately. So, people think it’s better to die slowly.”
US and Chinese officials agreed on Tuesday on ways to restore a trade truce and roll back duelling export restrictions, including on rare earths, where China has a near-monopoly in production and major leverage in the negotiations.
But in the meantime, the pain from US tariffs is deepening in China, especially among smaller exporters such as Ren’s Gstar Electronics Appliance Co., which did not move part of their production abroad after US President Donald Trump imposed tariffs in his first termin office.
The growing pressure on companies to sell at a loss or to cut wages and jobs to stay afloat gives Washington a pain point to press Beijing in coming weeks and months as talks continue between the two sides to rebalance their trade relationship.
“If it lasts more than three or four months, I think many of these small and medium-sized enterprises will not be able to bear it,” said Zhiwu Chen, chair professor of finance at the University of Hong Kong.
“This is definitely a bargaining chip for the United States.”
This week’s talks in London are expected to bring the two sides back to where they were after an initial discussion in Geneva last month, when they agreed to cut back tariffs from triple-digits to levels that are still damaging for both sides, but at least allow trade flows to resume.
US levies on Chinese goods remain 30 percentage points higher than last year.
In April, when tariffs were at their highest, the number of loss-making Chinese industrial firms rose 3.6 percent year-on-year to 164,467 – a whopping 32 percent of the total, official statistics show.
Industrial capacity utilisation dropped to 74.1 percent in the first quarter of this year – when Washington began raising tariffs – from 76.2 percent in the last quarter of 2024, according to Chinese government data. It remains near record lows.
And while China’s overall export growth rate of 4.8 percent in May might be interpreted as a sign of resilience – even as US exports shrank by more than 30 percent – the intense competition among Chinese manufacturers looking for a slice of the subdued external demand is evident in falling prices.
“People forget, but the current tariff level is already quite painful,” says Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis.
“This is a weakness” for Beijing, she said, but cautioned “it’s not a big card” for Washington, which has its own worries over high inflation and product scarcity.
