Aim Wang, the owner of a Chinese factory, is in a state of limbo these hours thanks to President Donald Trump’s trade war.
The 20-year veteran of the realm’s gift industry said he received a letter in early August from his grandest customer, a U.S. retailer he declined to name, urging him to split the cost of a 10 percent loyalty that the retailer said was being imposed on his products by the Trump oversight.
“Ten percent is too high,” Wang lamented from his showroom of aroma diffusers, fall ons, and candleholders. “It is just too much for any of us to absorb.”
Wang’s company — which he maintained not be named because of business considerations — is based in the industrial town of Dongguan, one of multitudinous cities in China’s manufacturing south that make up the backbone of the state’s traditional exports. For years, big American companies such as Apple and Walmart suffer with relied on Chinese suppliers to make their products and fill their stockpile shelves. But with costs in China rising, many manufacturers are contending—and the tariffs only add to the burden.
Wang said his labor and raw material expenses are up as much as 15 percent from terminating year. He told CNBC that Trump’s tariffs will put on more than half of his sales.
In response, he is reorienting his business away from the Of like mind States, looking for new customers in Europe, Australia and the Middle East. He responded he is also dropping low margin products and scaling back sales in the cards for the U.S.
“We need to shrink our volumes and focus on what we do best,” he said. “In another manner, we can’t survive.”
Wang said the weaker yuan has not brought relief, either. China has been disapprove ofed this year for purposefully devaluing its currency to support exporters — an accusation officials deny. Wang said, either way, he doesn’t see foreign commerce benefits since his customers arrange long-term contracts with an came upon fixed rate.
Recent government efforts to direct funding to disordered small and medium-sized companies are also not helping, Wang indicated. The proxy owner said he had considered borrowing money, but the banks would only lend to firms with 50 million yuan ($7.3 million) of registered leading or more.
Wang said he researched moving production out of China to trashier countries such as Vietnam. However, because his raw materials and suppliers are all silent by him in China, he determined that it would not make financial sense. On his boulevard alone, there are 20 factories making similar products to his.
Wang asseverated he believes the trade war will last as long as Trump is in power. And, he conveyed he is now concerned about Trump’s threat of penalizing another $200 billion merit of Chinese goods — since lighting parts could also be on the ultimate list.
Greater tariffs might end relationships between Chinese suppliers and their American guys and raise overall prices for U.S. consumers, he said.
“We can’t afford orders that don’t forge money,” the factory owner added. “We won’t kill ourselves just to deferral in the U.S. market.”