Tariff Truce Sparks Hope in China’s Factories, But Uncertainty Keeps Business Cautious

The recent reduction in tariffs between the U.S. and China has sparked cautious optimism among businesses, particularly in China’s manufacturing sector. President Donald Trump hailed the weekend agreement as a victory, with the U.S. lowering tariffs from 145% to 30% and China responding by cutting its tariffs from 125% to 10%. This significant reduction, which came into effect on Wednesday, is being viewed by some as a breakthrough in the ongoing trade war. However, while financial markets responded positively, business leaders remain wary about the sustainability of the deal.

Tariff Pause Brings Temporary Relief, But Businesses Remain Wary of Future Disruptions

Some Chinese businesses, especially in southern manufacturing hubs like Guangdong, have resumed operations in response to the tariff pause. Factories such as those producing kitchen utensils have reactivated pending orders from American clients. Sales staff like Margaret Zhuang expressed surprise at the steep tariff reductions, while others like Kahlee Yu began reaching out to U.S. clients with cautious optimism. However, many acknowledge that the situation remains fluid, and sudden policy changes could again disrupt operations.

Despite the current easing of tensions, damage from the initial round of tariffs in April has already impacted many companies. Sales pipelines have shrunk, with orders now only booked until June instead of extending into August, as was the case before the tariffs. This unpredictability has led to declining customer confidence, making it harder for companies to rely on consistent demand from American buyers.

Cautious Expansion and Strategic Shifts Amid Ongoing U.S.-China Trade Policy Uncertainty

The broader uncertainty has caused businesses to delay expansion plans. For instance, Kelvin Liao of Action Composites in Dongguan abandoned plans to purchase land for a new factory, opting instead to rent. This cautious approach reflects a larger skepticism toward the stability of U.S. trade policy under President Trump. Liao voiced doubts about the long-term intentions of the U.S., suggesting that the deal might be a strategic pause rather than a genuine resolution.

Not all industries have benefited from the new tariff terms. Entrepreneurs like Danny Lau, whose aluminum-coating business still faces a 75% tariff, remain hopeful but have yet to see any direct relief. In response, some companies are shifting strategies by exploring alternative markets and relocating parts of their production. For instance, Liao’s company has already set up operations in Vietnam to reduce exposure to trade-related risks. Despite ongoing challenges, many Chinese businesses are maintaining their presence in the U.S. market, but with caution, as they remain alert to the possibility of future policy shifts and renewed trade tensions.