Trump's tariffs hurt China before, but this time, China is more prepared

 Trump's tariffs hurt China before, but this time, China is more prepared

In a factory on China’s eastern coast, the sound of air, sewing, stitching, and cutting fills the air as workers create American cowboy boots.

Mr. Peng, a 45-year-old sales manager, says they used to sell about a million pairs of boots every year. That changed when Donald Trump became president. During his first term, he imposed tariffs that led to a trade war between China and the U.S. Now, with Trump back in office, Chinese businesses are worried about what will happen next. Mr. Peng is unsure of the future and what it will mean for him and his colleagues.

As Western countries grow more cautious about China’s goals, trade has become a key tool for negotiating, especially since China's economy is struggling and relies more on exports. Donald Trump returned to office with a promise to impose heavy tariffs on Chinese goods and has now threatened a 10% tariff starting on February 1.

Trump has also called for a review of US-China trade, giving both sides time to negotiate. Right now, he seems to be targeting countries like Canada and Mexico with tougher language and higher tariffs.

While Trump may have paused the trade conflict with China, many believe it’s still coming. Big companies like Nike, Adidas, and Puma have already moved their operations to Vietnam. Even Chinese businesses are shifting their supply chains, but China is still an important player.

Mr. Peng says his boss, who owns the factory, has thought about moving production to Southeast Asia, as many competitors are doing. While this could save money, they would lose their workers, most of whom are from the nearby city of Nantong and have been at the factory for over 20As Western countries grow more cautious about China’s goals, trade has become a key tool for negotiating, especially since China's economy is struggling and relies more on exports. Donald Trump returned to office with a promise to impose heavy tariffs on Chinese goods and has now threatened a 10% tariff starting on February 1.

Trump has also called for a review of US-China trade, giving both sides time to negotiate. Right now, he seems to be targeting countries like Canada and Mexico with tougher language and higher tariffs.

While Trump may have paused the trade conflict with China, many believe it’s still coming. Big companies like Nike, Adidas, and Puma have already moved their operations to Vietnam. Even Chinese businesses are shifting their supply chains, but China is still an important player.

Mr. Peng says his boss, who owns the factory, has thought about moving production to Southeast Asia, as many competitors are doing. While this could save money, they would lose their workers, most of whom are from the nearby city of Nantong and have been at the factory for over 20 years.

Mr. Peng, whose wife passed away when their son was young, says the factory has become like family to him. He adds, "Our boss is determined not to abandon these employees." years.

Mr. Peng, whose wife passed away when their son was young, says the factory has become like family to him. He adds, "Our boss is determined not to abandon these employees."

He understands the global politics, but he says he and his workers are just trying to earn a living. They're still struggling from the impact of the 2019 tariffs, when a 15% tax was placed on Chinese-made goods like clothes and shoes.

Since then, orders have dropped, and the number of workers has fallen from over 500 to just over 200. You can see the effect in the empty workstations, which Mr. Peng shows as he walks through the factory.

Workers are carefully cutting leather to the right size to give to the machinists. Precision is important because mistakes can ruin the expensive leather, much of which comes from the US.

The factory is trying to keep costs down because some American buyers are considering moving their business away from China due to the tariffs.

However, moving would mean losing skilled workers. It takes up to a week to make one pair of boots, from flattening the leather to polishing and packing the final product.

This is what made China the world's top manufacturer – labor-intensive work that is cheap when scaled up and supported by a strong supply chain. This success has been built over many years.