Chinese factories, battered by sky‑high import duties, are breathing a tentative sigh of relief after the United States agreed to suspend its steepest China‑targeted tariffs for 90 days. Announced on May 12 following intensive trade talks in Geneva, the pause reduces levies on goods from a peak of 145 percent to roughly 30 percent, effectively removing the punitive surtax rates imposed in early April. In return, Beijing will roll back its own retaliatory duties that had spiked to 125 percent. With the truce kicking in on May 14 and set to run through mid‑August, the immediate threat of mass layoffs among China’s export‑oriented workforce has receded—at least temporarily.
The tariff rollback is the sharpest de‑escalation since the trade war intensified this spring, when both sides imposed unprecedented levies that froze bilateral trade flows. U.S. ports reported drastic declines in Chinese cargo, while Chinese factories—from electronics assemblers in Shenzhen to furniture makers in Zhejiang—had begun mothballing production lines. As April’s levies bit into manufacturers’ margins, many employers signaled intentions to cut workforces, with some studies warning of up to six million job losses if duties remained in place. The 90‑day respite now offers a crucial window for companies to revive output and rehire workers before the dispute flares again.
For Liu Shengzun, a 42‑year‑old lighting‑fixture assembler in Guangdong, the pause could not come soon enough. Liu lost two jobs within weeks after tariffs tripled: first at a bulb manufacturer, then at a shoe factory. Faced with mounting bills and scarce factory work, he returned to his hometown to tend rice paddies—a stark shift from his previous monthly earnings of over 5,000 yuan. “Factories couldn’t afford to keep us on,” Liu said. “This truce means they might run full shifts again. I’m hopeful that I can find steady work before August.” His story underscores the human stakes: millions of migrant laborers risk being sent back to rural areas without alternative livelihoods.
Economists calculating the impact estimate the tariff suspension has cut the number of jobs at risk by at least a third. Before the Geneva accord, forecasts suggested as many as 6 million layoffs if triple‑digit duties held. Now, with duties capped at 30 percent and other tariffs rolled back, that figure may fall below two million. Gains in export orders have already been reported: port activity in Shanghai and Ningbo jumped in the days following the announcement, and manufacturers have begun front‑loading shipments to beat the mid‑August deadline. Investment banks have also responded, revising China’s 2025 GDP forecast upward by roughly 0.2 percentage points, citing the removal of tariff headwinds and renewed corporate confidence.
Chinese policy‑makers, keen to preserve social stability, have welcomed the temporary cease‑fire. The Ministry of Commerce indicated that it would expedite approvals for key exports, including rare earth minerals—critical components for semiconductors and electric vehicle batteries—that had been restricted under emergency measures in early April. Meanwhile, state‑backed media praised the truce as a victory for “pragmatic diplomacy” that shields workers and keeps factory gates open. The People’s Bank of China, which last week introduced a new lending tool to funnel cheap credit into labour‑intensive services, hinted at further stimulus should unemployment climb.
In local economies where export factories are the lifeblood, governors have swiftly mobilized relief. Municipal governments in Jiangsu and Guangdong provinces announced subsidies for exporters to offset remaining 30 percent duties, as well as temporary tax rebates for re‑hiring laid‑off staff. Training programs in automotive parts and electronics assembly are being expanded in manufacturing hubs such as Changzhou and Dongguan, targeting workers displaced by seasonal downturns. Analysts say these measures, combined with the tariff pause, could keep urban unemployment below the 5 percent threshold that Beijing regards as critical.
However, the fragility of the truce looms large. With duties reverting to punitive levels in August unless extended, companies remain cautious about long‑term hiring. “A 30 percent tariff is still a significant cost,” noted a policy adviser. “Firms will be slow to ramp up full operations until they see a durable agreement.” The Geneva pact did not address non‑tariff barriers—such as lists of “unreliable entities” or export restrictions on strategic inputs—leaving unresolved points that could reignite tensions. U.S. officials have indicated the pause is contingent on continued negotiations; if dialogue stalls, the 90‑day break may prove only a brief reprieve.
American exporters, similarly, are eyeing the suspension warily. U.S. farmers and machinery makers, hit by China’s counter‑tariffs earlier this spring, will see duties cut from 125 percent to 10 percent over the same period. But many worry that if Beijing does not follow through on lifting non‑tariff curbs—such as approval delays on critical agricultural biotech products—their access to Chinese markets will remain constrained. The White House has emphasized that any extension of tariff relief will depend on tangible Chinese commitments, setting the stage for high‑stakes negotiations in coming weeks.
Global markets reacted positively to the cease‑fire. Asian equities advanced on the news, and commodity prices for industrial metals jumped on expectations of revived demand from Chinese industry. The yuan strengthened slightly against the dollar, reflecting reduced pressure on China’s export sector. Yet volatility persisted, with investors bracing for renewed uncertainty as the August expiration approaches. Major central banks, including the Fed and the PBoC, are monitoring employment data closely; a surge in layoffs could force policymakers to adjust monetary settings to support growth.
Back in the Pearl River Delta, factory owners are cautiously optimistic. A manager at a socket‑manufacturer in Foshan reported that production lines have resumed two additional shifts, bringing back 200 workers laid off in early April. “We’re not hiring at the same pace as before February,” he said, “but this pause gives us breathing room to plan and invest.” In Hubei province, a car‑parts supplier has renegotiated contracts with European clients, banking on steadier output through midsummer. For now, the narrative is one of temporary relief rather than lasting victory—a delicate balance between economic pragmatism and political brinkmanship.
As the trade truce unfolds, Chinese authorities are under pressure to convert the tariff break into broader economic recovery. Industrial production data due later this month will offer the first glimpse of whether the ghost of April’s tariff shock has receded. For workers like Liu, the difference between 145 percent and 30 percent duties could mean the revival of factory floors, paychecks, and urban livelihoods. Yet the looming August deadline hangs over every dialogue, every shipping manifest, and every hiring decision—an ever‑present reminder that peace in the tariff war is, for now, only temporary.
(Source:www.reuters.com)
The tariff rollback is the sharpest de‑escalation since the trade war intensified this spring, when both sides imposed unprecedented levies that froze bilateral trade flows. U.S. ports reported drastic declines in Chinese cargo, while Chinese factories—from electronics assemblers in Shenzhen to furniture makers in Zhejiang—had begun mothballing production lines. As April’s levies bit into manufacturers’ margins, many employers signaled intentions to cut workforces, with some studies warning of up to six million job losses if duties remained in place. The 90‑day respite now offers a crucial window for companies to revive output and rehire workers before the dispute flares again.
For Liu Shengzun, a 42‑year‑old lighting‑fixture assembler in Guangdong, the pause could not come soon enough. Liu lost two jobs within weeks after tariffs tripled: first at a bulb manufacturer, then at a shoe factory. Faced with mounting bills and scarce factory work, he returned to his hometown to tend rice paddies—a stark shift from his previous monthly earnings of over 5,000 yuan. “Factories couldn’t afford to keep us on,” Liu said. “This truce means they might run full shifts again. I’m hopeful that I can find steady work before August.” His story underscores the human stakes: millions of migrant laborers risk being sent back to rural areas without alternative livelihoods.
Economists calculating the impact estimate the tariff suspension has cut the number of jobs at risk by at least a third. Before the Geneva accord, forecasts suggested as many as 6 million layoffs if triple‑digit duties held. Now, with duties capped at 30 percent and other tariffs rolled back, that figure may fall below two million. Gains in export orders have already been reported: port activity in Shanghai and Ningbo jumped in the days following the announcement, and manufacturers have begun front‑loading shipments to beat the mid‑August deadline. Investment banks have also responded, revising China’s 2025 GDP forecast upward by roughly 0.2 percentage points, citing the removal of tariff headwinds and renewed corporate confidence.
Chinese policy‑makers, keen to preserve social stability, have welcomed the temporary cease‑fire. The Ministry of Commerce indicated that it would expedite approvals for key exports, including rare earth minerals—critical components for semiconductors and electric vehicle batteries—that had been restricted under emergency measures in early April. Meanwhile, state‑backed media praised the truce as a victory for “pragmatic diplomacy” that shields workers and keeps factory gates open. The People’s Bank of China, which last week introduced a new lending tool to funnel cheap credit into labour‑intensive services, hinted at further stimulus should unemployment climb.
In local economies where export factories are the lifeblood, governors have swiftly mobilized relief. Municipal governments in Jiangsu and Guangdong provinces announced subsidies for exporters to offset remaining 30 percent duties, as well as temporary tax rebates for re‑hiring laid‑off staff. Training programs in automotive parts and electronics assembly are being expanded in manufacturing hubs such as Changzhou and Dongguan, targeting workers displaced by seasonal downturns. Analysts say these measures, combined with the tariff pause, could keep urban unemployment below the 5 percent threshold that Beijing regards as critical.
However, the fragility of the truce looms large. With duties reverting to punitive levels in August unless extended, companies remain cautious about long‑term hiring. “A 30 percent tariff is still a significant cost,” noted a policy adviser. “Firms will be slow to ramp up full operations until they see a durable agreement.” The Geneva pact did not address non‑tariff barriers—such as lists of “unreliable entities” or export restrictions on strategic inputs—leaving unresolved points that could reignite tensions. U.S. officials have indicated the pause is contingent on continued negotiations; if dialogue stalls, the 90‑day break may prove only a brief reprieve.
American exporters, similarly, are eyeing the suspension warily. U.S. farmers and machinery makers, hit by China’s counter‑tariffs earlier this spring, will see duties cut from 125 percent to 10 percent over the same period. But many worry that if Beijing does not follow through on lifting non‑tariff curbs—such as approval delays on critical agricultural biotech products—their access to Chinese markets will remain constrained. The White House has emphasized that any extension of tariff relief will depend on tangible Chinese commitments, setting the stage for high‑stakes negotiations in coming weeks.
Global markets reacted positively to the cease‑fire. Asian equities advanced on the news, and commodity prices for industrial metals jumped on expectations of revived demand from Chinese industry. The yuan strengthened slightly against the dollar, reflecting reduced pressure on China’s export sector. Yet volatility persisted, with investors bracing for renewed uncertainty as the August expiration approaches. Major central banks, including the Fed and the PBoC, are monitoring employment data closely; a surge in layoffs could force policymakers to adjust monetary settings to support growth.
Back in the Pearl River Delta, factory owners are cautiously optimistic. A manager at a socket‑manufacturer in Foshan reported that production lines have resumed two additional shifts, bringing back 200 workers laid off in early April. “We’re not hiring at the same pace as before February,” he said, “but this pause gives us breathing room to plan and invest.” In Hubei province, a car‑parts supplier has renegotiated contracts with European clients, banking on steadier output through midsummer. For now, the narrative is one of temporary relief rather than lasting victory—a delicate balance between economic pragmatism and political brinkmanship.
As the trade truce unfolds, Chinese authorities are under pressure to convert the tariff break into broader economic recovery. Industrial production data due later this month will offer the first glimpse of whether the ghost of April’s tariff shock has receded. For workers like Liu, the difference between 145 percent and 30 percent duties could mean the revival of factory floors, paychecks, and urban livelihoods. Yet the looming August deadline hangs over every dialogue, every shipping manifest, and every hiring decision—an ever‑present reminder that peace in the tariff war is, for now, only temporary.
(Source:www.reuters.com)
