‘Matter of life or death’: Chinese exporters in fear over Donald Trump tariffs

Xi Jinping has cast China as an island of stability ahead of Donald Trump’s ‘liberation day’, but exporters fear a tsunami of tariffs will submerge the global trading system that China has benefited from more than any other country.

Donald Trump’s global tariffs could cripple Xi Jinping and China’s economy. Artwork: Emilia Tortorella

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Xi Jinping has cast China as an island of stability ahead of Donald Trump’s “liberation day”, but Chinese exporters tell a different story.

They have told The Australian they fear a tsunami of tariffs emanating from Washington will soon submerge the global trading system that China – Australia’s biggest trading partner, by far – has benefited from more than any other country over the past four decades.

Economists have warned that high American trade barriers on China and other big Australian trade partners, including Japan, South Korea and Taiwan, will likely hurt Australia’s economy much more than the tariffs America imposes directly on Australia.

A new report by the US President’s chief trade adviser Jamieson Greer released on Tuesday, “liberation day” eve, confirmed Chinese businesses have a lot to worry about.

The China section in the US Trade Representative’s 2025 report on “Foreign Trade Barriers” ran to almost 50 pages of the 380-page document – far longer than for any other American trade partner.

It spanned longstanding American grievances about Chinese economic policies, including Chinese industrial policy; forced technology transfer; agricultural protectionism; trade secret theft; bad faith trademark registration; restrictions on banking, telecommunications, cloud computing, American movies; sweeping investment barriers; forced labour concerns and export restraints.

Many of the complaints centred on China’s state-supported capitalist model itself.

“China continues to pursue an extensive number of industrial plans and supporting policies and practices that target industries for domination by Chinese companies, both in China and globally,” read the report, which was being studied for clues of the “reciprocal” trade measures Mr Trump has said he will announce on Wednesday.

It added that Beijing’s policies, including its ambitious “Made in China 2025” policy, were “likely to do long-lasting damage to US interests, as well as the interests of the United States’ allies and partners”.

Chinese officials were briefed last week by Mr Greer on America’s concerns. They warned that Beijing would “resolutely retaliate” to new trade restrictions.

International markets, including in Australia, are spooked. The ASX just posted its worst first-quarter performance since the Covid pandemic, slumping by 3.9 per cent.

Mr Liang, an owner of a metal hardware factory in Dongguan in the southern province of Guangdong, told The Australian that things were already much worse than Mr Trump’s first term.

“When Trump raised tariffs [on all Chinese imports] by 20 per cent, it already swallowed all our profit margin,” said Mr Liang said.

Any further tariff, he said, and “we’ll be losing money, for sure”.

What has really rattled China’s manufacturing entrepreneurs is the expansiveness of Mr Trump’s targets.

“You’d start with all countries,” Mr Trump said, triggering a global sell-off of equities on Monday. “Take a look at trade with Asia. I wouldn’t say anybody has treated us fairly.”

In the first Trump administration, many labour-intensive Chinese businesses moved their businesses to Southeast Asia to keep their access to America’s prized market.

Mr Liang had thought that could be the way to deal with Mr Trump’s return. In April, he went to Vietnam, a popular choice for many Chinese businesses, to study the possibility of moving his factory there. Mexico was also on his shortlist of alternative locations.

But he said Mr “Trump’s unpredictability” has changed his mind on that workaround. Vietnam and Mexico seem to be poised for huge American tariffs, he said, “making moving our factory too risky”.

China’s leaders have tried to project a more confident message, but as with their counterparts around the world, they are clearly worried.

President Xi last week met 40-odd global CEOs in Beijing’s Great Hall of the People and implored them to use their “substantial global influence” to try to limit Mr Trump’s assault.

“We hope you will speak with reason, act with pragmatism, firmly oppose retrogressive moves that turn back the clock of history, reject zero-sum thinking, and actively promote co-operation and mutual benefit,” Xi said.

China-dependent global CEOs, including the heads of Australia’s biggest miners, have tried to find words to soothe their biggest customer.

“China is amazing in terms of energy transition, starting from rollouts of solar energy and onshore wind, expanding the grid network, and EVs,” said Rio Tinto CEO Jakob Stausholm during a visit to Beijing last week.

“With its strong foundations in manufacturing, scientific research and urbanisation, China is poised to continue its role as a global economic powerhouse,” said BHP CEO Mike Henry.

China remained “an oasis of certainty”, said Amin Nasser, president of Saudi Aramco.

However, not everyone in Beijing has been so on message.

Lu Feng, an economics professor at Peking University, this week publicised research that found last year China was the subject of almost half of all trade investigations in the World Trade Organisation. China was the target of 198 trade investigations alleging dumping or illegal subsidies in 2024, twice the amount from the previous year and a record.

The surge in WTO complaints came as China’s total exports to the world in 2024 hit a historic peak of over $1.5 trillion.

Notably, a majority of the cases against China in the WTO were lodged by developing countries, including India, Brazil and Pakistan.

“If China’s economy can become more balanced for her own interests, it may also improve relations with other countries,” said Professor Lu.

China’s government has dismissed criticism about imbalances in its economy and maintains the WTO is able to deal with any disputes.

“The WTO is an international organisation based on rules. China stands ready to work with all parties to uphold the multilateral trading system with the WTO at its core and build an open world economy,” Chinese Foreign Ministry spokesman Guo Jiakun said in answer to a question from The Australian on Monday evening.

During a visit this week to China’s manufacturing heartland in the south, many Chinese manufacturers spoke in existential terms about the future.

“For individual businessmen it is a matter of life or death,” Mr Zhou, an executive who helps Chinese firms manage their industrial supply chains, told The Australian.

But they also noted that China has unique advantages that Mr Trump will struggle to best. Economists have warned of huge inflation shocks to American consumers if Mr Trump’s tariff barriers are as high as many expect.

“China has the most complete production line in the world, the hardest-working staff, the largest educated population,” Mr Zhou told The Australian. “Are their people willing to go back to the production line to work? Can they make better products?”

He said he had been reading up on past trade wars, particularly between America and Japan. This one is much more complicated, he concluded.

“It is a contest that each party will have to pay for heavily,” Mr Zhou said. “The US may not necessarily win, nor will China necessarily lose.”