China trade fair: US market ‘frozen’ amid tariff hikes

Candice Li, attending the China trade fair in Canton, says that US orders for her firm’s medical devices have dried up after Washington increased tariffs on Chinese goods by 145%.

Speaking to Reuters, Candice Li, marketing manager at Conmo Electronic Co., said, “This is a matter of life and death because 60%-70% of our business is with American clients.” She added, “Goods cannot be exported, and money cannot be collected. This is a very serious situation.”

Li was at her firm’s booth at the Canton Fair in the southern city of Guangzhou, China’s largest trade fair, held twice a year, where more than 30,000 participants display their products in an area larger than 200 soccer fields.

This fair is the first China has held since US President Donald Trump introduced tariffs earlier this month, exceeding 100% for China and at least 10% for the rest of the world.

Most of the exporters Reuters spoke with said that US orders, vital for firms like Li’s, were either delayed or not arriving—a bad sign for the world’s second-largest economy, whose growth last year relied heavily on its trillion-dollar trade surplus.

No other country comes close to China’s sales of over $400 billion in goods to the US annually.

Even though the tariffs Trump will impose on the rest of the world are much lower, they are likely to reduce global demand in the coming months and, indirectly, the appetite for Chinese goods in other countries.

Kobe Huang, a sales representative for Shenzhen Landun Environmental Technology, which produces water filters and smart toilets, said at the China trade fair in Canton that European sales are up for now, but the US market is “frozen.”

“US clients and distributors haven’t canceled orders, but they’ve asked us to wait. So, we’re holding on,” he stated.

Levy Spence, a US importer and president of Air Esscentials, said, “Prices will go up.” He added, “Even for products we source in the United States, many of the raw materials come from all over the world. It’s not just about China tariffs.”

Organizers noted that approximately 170,000 overseas buyers had registered for this month’s fair as of April 8, compared to a record attendance of 253,000 at the previous fair, which ended in November. About 10% of these attendees come from the US and Europe, whereas the previous rate was about 20%.

The fair will take place from April 15 to May 5. Local media reported that a total of $25 billion in deals were made at the previous fair.

Many exporters said they were either moving production bases outside of China or shifting the markets where they sell away from the US.

Henry Han, sales manager at Apexto Electronics Co., which produces SSD and micro SD flash drives, says that the US market, which accounted for 30% before the pandemic, now accounts for only 10% of direct sales. Many of his clients receive shipments of components for final assembly in a third country to avoid tariffs.

Apexto conducted a study last year to see if it could move production to Vietnam or the Philippines to avoid being directly affected by US tariffs, but Han said these plans are currently on hold as these countries may also face high tariffs.

After Trump imposed a 46% tariff on Vietnam and 17% on the Philippines on April 2, he reduced these rates to 10% for the next three months while beginning bilateral negotiations on trade with approximately 75 different countries.

David Du, sales manager for speaker manufacturer Zealot, said that an order for 30,000 speakers to be distributed to Skechers stores in the US was suspended after Trump’s tariffs. However, he said they could rely on other markets.

Zealot had a major and unexpected breakthrough in Nigeria in 2015, where its all-in-one speaker, power bank, and emergency flashlight became a hit, accounting for 40% of total sales and taking 45 containers a month—a market now twice as large as the US.

Du said they are “as big as JBL” in Nigeria, referring to the California-based audio equipment brand.

Medical device maker Li said her firm cannot find new markets overnight. She fears Conmo will soon have to reduce working hours and, eventually, staffing levels.

Li said, “I worry that if the situation remains deadlocked and neither side gives in, it will be ordinary people who ultimately suffer. How will salaries be paid? There will be unemployment.”