Relief on China's Factory Floors as U.S. Tariffs Temporarily Paused

Factories in southern China are seeing signs of revival after a surprise agreement between the United States and China paused further tariff increases. The deal, reached after weekend negotiations in Switzerland, comes as a relief to manufacturers impacted by the trade war.

Derek Wang, who owns a smart air fryer factory in Foshan, said U.S. buyers resumed orders after a suspension caused by high import taxes. Wang’s products were subject to tariffs of up to 145%, introduced on April 2 under U.S. President Donald Trump's “Liberation Day” declaration.

“We are now back in contact with American clients,” Wang said. “They are willing to absorb some of the tariffs, though we had to reduce prices.”

The tariffs led to halted shipments, canceled production, and worker layoffs. Wang, who studied in Delaware and invested $500,000 to launch his business, said the sudden policy shift placed serious pressure on operations.

The new agreement reduces U.S. tariffs on Chinese goods to 30%, down from 145%. China lowered its own tariffs on U.S. imports to 10%, down from 125%.

President Trump said the deal would last for 90 days while both sides resume talks. He also indicated a possible call with Chinese President Xi Jinping later this week.

Shift in Trade Strategy

The tariff relief is expected to be temporary. In the meantime, many Chinese companies are seeking to diversify exports to Africa, Southeast Asia, and Latin America.

Beijing views diversification as a strength in its trade strategy. Officials have encouraged firms to reduce reliance on U.S. markets as uncertainty continues.

Wang said the experience has prompted him to accelerate plans to enter new regions. “The tariffs were a shock, but they pushed us to move faster,” he added.

Factory Closures and Employment Pressure

Factories in Guangdong, particularly in Foshan’s Shunde district, continue to face economic pressure. Several plants paused hiring or shut down parts of their operations linked to U.S. exports.

Some workers told the BBC they now sleep in public parks to save on accommodation costs. Hostel prices, at 20 yuan per night, match or exceed an hour’s wage for many.

Job postings for factory work advertise pay ranging from 16 to 20 yuan per hour. Despite this, multiple employment agents reported a freeze in hiring, especially at firms dealing with American clients.

Furniture Production Resumes

At Gongyuan Furniture in Foshan, operations halted before tariffs peaked. Owner He Ke, known to clients as HK, said production restarted after the tariff pause. His factory previously employed 200 workers; today, only 40 remain active.

He said the domestic economy has also weakened. “People are more cautious with spending now,” he noted. “We used to buy freely. Now we think twice.”

He said he remains hopeful the U.S. and China will reach a long-term agreement. “I believe both sides will eventually talk things through,” he said.

Economic Outlook

China’s economy continues to lead in electric vehicle and solar panel production and is investing in artificial intelligence. Still, the manufacturing sector remains cautious as geopolitical uncertainty clouds forecasts.

The 90-day ceasefire has brought short-term relief, but longer-term questions remain over global supply chains and bilateral economic relations between the U.S. and China.