Trump's trade war worse this time?

Orders have evaporated for Richard Chen, who manufactures Christmas decorations in southern China for retailers including Walmart and Costco, facing crippling US tariffs.

- CASEY HALL JAMES POMFRET

“The orders are half of what they were last year,” said Mr. Chen, who is based in the manufacturing hub of Dongguan. He is now in survival mode.

“There’s no more scope to cut prices. But to get orders we sometimes have to take a price cut ... we have no choice,” Mr. Chen said, declining to elaborate on cuts he has been forced to.

“We’re losing money.”

On Feb 4, US President Donald Trump applied a new 10% tariff to the $400 billion worth of Chinese goods exported annually to the United States, with an additional 10% tariff announced on March 4 and further reciprocal tariffs expected tomorrow.

Chinese suppliers and their American clients are now coming to grips with the grim reality that this trade war will hit harder than in Trump’s first term in 2018.

This time is different because low-end manufacturers are already struggling with razor-thin margins, so they cannot cut prices to help their US customers, and local Chinese governments that might have provided support to protect jobs are mostly too cash-strapped to give new subsidies.

THIN MARGINS

Suppliers estimate wages have grown by 2-5% since the first US-China trade row.

At 70-90% raw material eyes have climbed for some sectors as overseas competition has intensified, making Trump’s latest tariffs the final straw for many low-end manufacturers.

Liz Picarazzi, the Brooklyn-based founder and CEO of trash box company Citibin, said her goods produced in China are now subject to 52.5% tariffs, so she can no longer afford to manufacture there.