How a US-owned factory in China fights to survive Trump's tariffs

For a US-owned toy factory in China, tariffs are an existential threat, and its CEO says any import duty over 50% would make survival difficult, writes Nicholas P. Brown from New York

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The emails started pouring in on April 9, the day US President Donald Trump's 145% tariff on Chinese imports took effect.

Clients were cancelling orders for toys from Huntar Company's factory in Guangdong province, China.

But Huntar CEO Jason Cheung, 45, had already halted production at the 600,000-square-foot facility in Shaoguan. He saw the tariff for what it was: an existential threat to his company, which manufactures educational toys bound for the shelves of Walmart and Target, like Learning Resources Inc's Numberblocks, which help teach kids math.

"I needed to start saving money as soon as possible," Mr Cheung said. In the weeks since, he has cut production by 60% to 70%, laid off a third of the factory's 400 Chinese workers, and reduced hours and wages to those still employed.

Now, he's pursuing a frantic, long-shot effort to move his operation to Vietnam before the company his dad founded 42 years ago runs out of money.

He figures he has about a month. Huntar's plight typifies a crisis facing countless factories in China, where about 80% of toys sold in the US are manufactured, according to trade group The Toy Association. New orders have fallen sharply amid a brutal trade war with the United States that threatens to devastate the sector in both countries.

Huntar is also unique in one key way: based in the US, it straddles both sides of the trade war.

On paper, Mr Cheung is Trump's bogeyman, the Chinese factory owner taking American jobs. But he's also the US small business owner tariffs were meant to protect. He's the American son of a Chinese immigrant, running a second-generation family-owned business that employs 15 people in the US, people who would lose their jobs if Huntar falters.

Trump has said tariffs will incentivise companies to reshore manufacturing, or, at least, drive it out of China.