Trump's Successive Blows: China's Economy in Crisis, Companies Struggle to Survive

The head of a super large cargo forwarding company, which ranks among the world's top five in cargo volume on the Asia-US route, pointed out tonight, third, that the reciprocal tariffs announced by Trump are much higher than expected. As a result, the company has received notifications from foreign stations that many Chinese shipments, which have already been loaded, are requesting to cancel exports. Several companies in Vietnam also reported today that they have cancelled shipments. It is estimated that a large number of exports to the U.S. will be cancelled in the coming days. The container shipping market has been severely impacted. Now, everything depends on whether Trump's visit to the mainland at the end of April can bring a breakthrough. The company noted that Vietnam initially estimated the tariffs to be between 25 to 30 percent, but they unexpectedly reached as high as 46 percent. At this point, the only option is to suspend shipments. The company has instructed its Asian stations to investigate how the top 15 local customers plan to respond to the tariffs. Current estimates suggest that cargo volume will decline by 30 percent to 40 percent, and market freight rates will inevitably drop significantly. However, shipping companies have also aggressively cut flights. On the U.S. East Coast route, two weekly flights have been reduced to one, and another two weekly flights have been cut to one every other week. The chairman of another non-listed OTC cargo collection company with annual revenue in the tens of billions stated that the impact of reciprocal tariffs is expected to be significant. The company's internal discussions indicate that, although Trump has announced tariff rates for various countries, specific implementation details remain unclear. The current situation is chaotic, and customers cannot respond in time. Some shipments may need to be temporarily adjusted as a coping measure. For goods already at sea, U.S. importers are expected to suffer heavy losses. A period of significantly reduced shipments on the U.S. route is anticipated until the new trade rules take shape. The chairman believes that supply chain adjustments are no longer the main concern, as so many countries are now subject to tariffs that manufacturers have nowhere to relocate. Thailand's tariff rate is 37 percent, Taiwan and Indonesia's are 32 percent, India's is 27 percent, South Korea's is 26 percent, Japan's is 24 percent, and Mexico's is relatively low at 20 percent. However, the U.S. has required Mexico to impose a 25 percent tariff on mainland goods and enforce strict penalties against origin laundering, making it difficult to circumvent the tariffs. The new annual long-term contract for the U.S. route is set to begin in May, coinciding with the implementation of reciprocal tariffs. Super-large cargo companies estimate that for up to seven months this year, spot market freight rates may fall below the fixed contract rates, leading to a significant decline in container shipping companies' profits. Sinopac Investment Consulting estimates that revenue from the North American routes accounts for 42 percent, 38 percent, and 29 percent of Evergreen, Yang Ming, and Wanhai's earnings, respectively. Trump's series of heavy blows have brought disaster to China's economy, forcing companies into a life-and-death test. On April 2nd, U.S. President Donald Trump announced at the White House that he would impose reciprocal tariffs on trading partners, applying different tariff rates to all of them. White House Press Secretary Caroline Leavitt confirmed that the tariff on China has been raised from 20 percent to 34 percent. This means that once these tariffs take effect, the total tariff on Chinese goods will reach 54 percent. Bloomberg reported that this move could deal a severe blow to China's exports to the United States. Most of the $525 billion worth of goods exported by Chinese companies to the U.S. in 2024 will be affected. For years, other countries have grown rich and powerful, mostly at our expense. While hard-working American citizens have been forced to sit on the sidelines, Trump said at an event in the White House Rose Garden, but now it's our turn to prosper. He cited China as an example, saying he respected the country but insisted that it had taken great advantage of the U.S. I said, hey, if you can get away with it, then we'll see, Trump remarked, implying that high tariffs on Chinese goods would be difficult to circumvent. Institutional forecasts, China's exports to the U.S. could drop by 90 percent, economic growth cut in half. According to previous estimates by Bloomberg Economics, a 54 percent tariff on Chinese goods could cause China's exports to the U.S. to decline by 90 percent by 2030. Macquarie Group has stated that if the tariff rate reaches 60 percent, China's gross domestic product GDP growth could shrink by two percentage points. UBS predicts that such a tariff level could cut China's annual economic growth rate in half. These forecasts were all published last year. The White House clarified that the reciprocal tariffs announced on Wednesday are additional tariffs and do not replace any existing tariffs, fees or taxes, except for specific exemptions. The administration emphasized that previous tariff policies on China will remain in effect. The executive order stated that the president had issued a new order on Chinese goods on April 2nd, 2025, and that all prior tariff rates on the affected goods would still apply. Additionally, the White House announced that to prevent transshipment and tax evasion, all tariffs imposed on goods from mainland China under this executive order or any future orders will also apply to goods from Hong Kong and Macau. Furthermore, on April 2nd, President Trump signed an executive order eliminating the small package tax exemption for goods from mainland China and Hong Kong valued below $800, effective 12.01 a.m. Eastern Time on May 2nd, 2025. According to the order, all relevant mail items, including goods sent through the International Postal Network, that are valued at $800 or less and meet minimum duty-free conditions will be subject to a tariff of 30 percent of their value or $25 per item. This tariff will increase to $50 per item starting June 1st, 2025. Onshore RMB Falls. Below 7.3, mainland media outlet Kaixin reported that in the early morning of April 3rd, Beijing Time, Trump announced that tariffs would be imposed on global trading partners to varying degrees. So far, his policy has raised tariffs on China to 54 percent. As a result, the RMB exchange rate plunged at market open, depreciating by nearly 0.4 percent. The onshore RMB, CNY, fell to 7.3060 and closed at 7.3043, marking its lowest closing price since February 12th. Meanwhile, the offshore RMB, CNH, dropped to 7.3476, its weakest level since early February. The central parity rate was set at 7.1889, down 96 points, hitting its lowest level in more than two and a half months. The deviation from Reuters' forecast narrowed to around 650 points. Market participants noted that moving forward, attention should be given to whether the central parity rate will drop below the key 7.2 CNY threshold. Regarding Trump's newly announced tariff measures, Chinese authorities on Thursday urged the U.S. to cancel them immediately. The Chinese Ministry of Commerce stated that it would take retaliatory actions to defend the country's rights and interests. Late Thursday, the Chinese Communist Party condemned the U.S.'s 25 percent tariff on the auto industry as intimidation. However, Beijing stated that it would maintain communication with Washington on trade and economic issues. Amid the sharp tariff hike on China, rating agency Fitch downgraded China's sovereign credit rating. In a report released on April 3rd, Fitch announced its decision to lower China's sovereign credit rating from A-plus to A. Officials from China's Ministry of Finance expressed deep regret and strong disapproval of the decision. Chinese exporters face a life-or-death test. On April 2nd, that Trump has imposed tariffs on Chinese goods one after another, and a new round of tariffs will be introduced this week. A toy factory in Dongguan, Guangdong Province, China, has received fewer orders this year. Many of its customers are based in the United States. Regarding the hesitation of American customers, Ms. Liao, 33, who runs the factory with her brother, said, There is nothing we can do, and it may be even more hopeless. I don't know what the next quarter will bring. Currently, exports are the only engine of growth for China's economy. In 2024, China's foreign trade surplus is expected to exceed 7 trillion CNY. An American customer of Ms. Liao, who sells toy dolls based on characters from books, recently asked her to reduce prices by 20 percent, a request Ms. Liao said she could not meet. She produces goods with a profit margin of 30 percent, which provides her with a buffer against fluctuations in production materials and labor Ms. Liao explained that a 20 percent price cut would eliminate most of her profits, making it difficult for the factory to remain operational. Nevertheless, refusing the customer is not easy. The customer ordered 25,000 dolls last year, one of the largest single orders Ms. Liao has ever received. She mentioned that the total number of orders this year has decreased by nearly 30 percent. According to a report by Taiwan media New Head Shell on April 1, the Xinjiang incident in Chinese society has resurfaced, with incidents of revenge against society occurring in Henan and Beijing. The resurgence of the Xinjiang incident is closely tied to the CCP's disregard for people's livelihoods. Today, China's economy is struggling, and real estate continues to decline. The Wall Street Journal quoted data released by CRIC on April 1, reporting that the T.O.P.