Against the backdrop of renewed talks in London to revive the U.S.–China trade truce, investors and small-to-medium-sized factories are facing intense pressure. At the London meeting, the two sides agreed to roll back contentious tariffs—bringing some duties down from three different levels—and to ease restrictions on rare earth exports, formally signaling a step toward restoring the truce. Yet many smaller Chinese exporters have yet to reap any benefits.
Investigations reveal that most small exporters are operating at a loss under the weight of U.S. tariffs but continue shipping goods in an attempt to retain their market share. Jackie Ren, owner of Goster Electronics, a kitchen-appliance manufacturer, says, “If you refuse to accept these terms, your business will shut down entirely; so even at a ninety-percent loss, you cling to survival.” Meanwhile, many firms are delaying wage payments, workers are quitting, and hiring freezes and layoffs are looming.
Official data show that following the tariff hikes, the number of loss-making factories rose by 32 percent year-on-year in April, reaching approximately 164,467, while industrial capacity utilization fell to 74.1 percent. Although China’s overall exports grew by 4.8 percent in May—offering a glimmer of resilience—selling prices continue to fall, reflecting fierce competition among Chinese manufacturers.
Analysts believe the United States is wielding tariffs as a bargaining chip, knowing that China’s small-and-medium enterprises cannot survive more than three to four months under such pressure. In response, Beijing has introduced stimulus measures—including interest-rate cuts and advance-order incentives for importers—but these are widely viewed as temporary relief. Overall, the tug-of-war between U.S. pressure and Chinese tolerance now sets the stage for the next phase of trade negotiations.