Analysis: Economic War not Easy to End as Canton-Suzhou Foreign Trade Factory Shuts Down and Lays Off Workers

The escalating trade war between China and the United States is impacting the mainland’s foreign trade industry, leading to a sudden decrease in orders. Foreign trade companies in Guangdong and Jiangsu provinces have stated that they have stopped placing orders with factories, resulting in employee lay-offs. Chinese scholars believe that the economic war between the US and China will not end easily.

A technology company in Suzhou, Jiangsu Province, issued an internal notice to suppliers on April 11, citing “the impact of US tariffs leading to damaged shipments,” and announcing a temporary suspension of production. A screenshot circulating in a WeChat group showed that XX Technology Company in Suzhou decided to “formally adjust the rest for all employees in the workshop,” “terminate all labor dispatch workers,” and requested relevant employment units to complete all handovers and resignation procedures by April 12, 2025.

According to a report by Radio Free Asia, Mr. Wang, who works in foreign trade in Guangdong, mentioned, “The goods trapped in Yantian Port in Shenzhen are facing a halt in supply as many customers request delays. Storage costs will incur there unless these goods are redirected for domestic sales. If the trade war continues, even the company bosses do not know how to handle it. Factories will have to shut down if their products have no demand.”

A staff member surnamed Pan from an export company in Guangdong mentioned that many foreign trade companies have shifted their export markets to Southeast Asia and Europe. Due to the sharp decline in exports, many factories have shut down, and employees have been laid off. Pan stated, “The increased tariffs have affected many industries, including many automobile parts. Many foreign companies in our Chinese factories are facing mass unemployment in the export industry. For example, with the introduction of tariffs on automotive parts, the cost of parts immediately rises, resulting in layoffs in various factories.”

Pan further expressed that the ongoing tariff war has put foreign trade companies and related factories in a severe survival crisis, affecting the livelihoods of millions of employees: “Many people will lose their jobs because of this, and their families will be affected. It is like the millions of construction workers in China who lost job opportunities due to the collapse of the real estate industry.”

Ms. Li, a foreign trade merchant from Zhejiang, mentioned that some companies’ goods had already been shipped before the US announced a 145% tariff increase, rendering adjustments impossible during transit. The new tariffs will lead to losses. She added, “If the goods have already left the port, during transit, however, if they are low-value small goods, it is better to abandon them altogether because adding tariffs to the cost is costly, so it’s better not to take the goods.”

Chinese scholar Peng Hongwen stated that the tariff war between China and the US may last for a longer period. Firstly, US President Trump has stated that he “temporarily does not consider discussing tariff issues with Xi Jinping,” followed by the Chinese side indicating that “the US does not lower tariffs, and negotiations with the US will not occur.”

Peng Hongwen remarked, “The tariff war could still persist for a long time and escalate into a full-scale economic war, including financial warfare. It will not easily end through compromise in the future. Perhaps there will be some technical local agreements in the future, but that does not mean the economic war between China and the US will cease.”

On April 2, President Trump signed an executive order, formally initiating a global “equal tariff” policy. This policy aims to adjust trade behavior through equal tariffs to correct the long-standing significant trade deficit with the US. For China, considered the “most serious violator,” the US plans to levy a 34% equal tariff, effective from April 9.

Subsequently, China announced a retaliatory tariff increase of 34% on US imported goods from April 10 onwards. The trade war between China and the US has continued to escalate, deteriorating their trade relations significantly.

On April 12, the US classified smartphones, semiconductor manufacturing equipment, integrated circuits, and 20 other electronic products as temporarily exempt from high tariffs.

Reuters analysis has pointed out that China is a major supplier of smartphones and laptops to the US, surpassing $70 billion in imports in 2024.

In response, China deemed it “far from sufficient,” urging the US to “completely withdraw equal tariffs.”

However, on the 13th, Trump stated, “We have not announced exemptions yet; we are considering imposing another type of tariff.” Bloomberg later revealed that the US may initiate a national security investigation on imported semiconductor products in the coming weeks, potentially re-imposing tariffs on related key technological products.