Trump's 145% Tariff Spurs Chinese Export Shift; Canton Fair Draws 148,000 Buyers, India Emerges as Alternative

Chinese exporters are facing significant challenges as the United States, under President Donald Trump, has imposed tariffs as high as 145% on Chinese goods, with some products facing tariffs up to 245%. In response, China has implemented a 125% retaliatory tariff on American goods. These measures have effectively cut off many Chinese exporters from the U.S. market, prompting a rapid shift in trade strategies. Exporters are diversifying by targeting emerging markets, increasing domestic sales, and expanding into regions such as Europe, Southeast Asia, and Latin America.

At the 137th China Import and Export Fair (Canton Fair) in Guangzhou, over 148,000 buyers from 216 countries and regions attended, a 20% increase from the previous year. Organizers have discouraged exhibitors from leaving early to maximize sales opportunities amid the escalating trade conflict. Chinese companies are showcasing advanced manufacturing, with intelligent products and robots drawing significant attention from global buyers.

Chinese authorities have launched initiatives such as the 'Shop in China' campaign and local government support measures to help exporters pivot to the domestic market. Pilot programs in Shanghai are integrating domestic and foreign trade, with the first phase scheduled to conclude in 2025. In Yiwu, foreign trade value with Belt and Road Initiative (BRI) countries grew over 18% to CNY343.8 billion, accounting for more than 61% of the city's total import and export value.

Despite these efforts, Chinese factories, particularly in export-oriented regions, have reported a sharp decline in U.S. orders, leading to reduced production, layoffs, and in some cases, business closures. The cancellation of the de minimis exemption for packages under $800, effective May 2, is expected to raise prices for online retailers like Shein and Temu. Some companies have shifted production to the domestic market or other regions to mitigate the impact.

The tariffs are also affecting U.S. small businesses, which are experiencing sudden price hikes, supply delays, and uncertainty. For example, Busy Baby, a Minnesota-based company, faced a $229,100 tariff on a $158,000 order, threatening its ability to fulfill contracts with major retailers. Economists warn that small businesses, which employ nearly half of the U.S. workforce, are at heightened risk due to limited capacity to absorb additional costs.

India is emerging as a potential beneficiary of the trade realignment, as American firms seek alternatives to Chinese manufacturing. Apple has ramped up iPhone production in India to $22 billion, and companies like Walmart and Amazon are considering sourcing shifts. However, challenges remain for India in terms of industrial capacity and logistical readiness. The U.S. share of Chinese exports has fallen from 19.2% in 2018 to 14.7% in 2024, while China's GDP grew 5.4% year-on-year in Q1 and exports rose 6.9%.