Tariffs begin to affect China: A series of factories halt production, workers are required to take unpaid leave

Production activities in many factories in China are experiencing stagnation, with some even having to temporarily lay off workers, as the ongoing trade war with the U.S. puts pressure on the export industry

Due to most Chinese goods being subject to tariffs of at least 145% when entering the U.S. market, many orders have been canceled or delayed, leading to a wave of stagnation in industrial production in China.

According to the Financial Times, the U.S. market contributed approximately 15% of China’s total export turnover last year. The decline in orders from the U.S. has caused many factories producing everything from household appliances and electronics to products like shoe soles and jeans to cut working hours, halt production, or put workers on unpaid leave.

Many Chinese workers have shared on social media images of production lines with no workers or announcements of factory shutdowns. In Fujian province, a 28-year-old worker said that the plastic factory where she works had stopped production for a week due to a lack of export orders.

In Guangdong province, three recruitment officers in industrial parks reported that many factories have reduced overtime and weekend shifts. However, only those factories that are heavily reliant on U.S. orders have been forced to shut down completely for short periods.

DeHong Electrical Products, an electronics manufacturer based in Dongguan, Guangdong, has given all employees one month off with minimal pay after U.S. clients suspended their orders. In an internal memo, DeHong’s management stated they were under “severe short-term pressure” and were seeking ways to expand into new markets and optimize operational costs.

Similarly, Hangzhou Stellarmed, a manufacturer of endoscopic kits for the U.S. market, has encouraged full-time workers to use the remaining time in April to find new jobs. The company has also supported workers by helping them access recruitment services to increase their chances of finding employment during this difficult period.

Yuanguan Technology, a plastic mold manufacturer in Dongguan, has canceled all weekend shifts. Meanwhile, a 26-year-old man from Zhejiang said that the toy factory he works at, which primarily exports to the U.S., had to put workers on a two-week leave due to fewer orders.

According to Han Dongfang, founder of the China Labour Bulletin, an organization monitoring labor and production activities in China, this is a sign of a “widespread restructuring” in China’s industrial sector.

Although the full scale of the current challenges is unclear, some export-heavy cities such as Shenzhen and Dongguan have begun implementing support programs aimed at “stabilizing foreign trade.” The Shenzhen government recently announced subsidies to help businesses participate in international trade fairs and expanded export insurance coverage to offset losses from canceled U.S. orders.

A manager at Ningbo Taiyun Electric said that production was halted on April 12 but has recently resumed at a smaller scale, mainly serving orders from Europe.

Despite the pressure from the U.S., China maintains a firm stance. Beijing has not taken any steps indicating it is actively seeking dialogue with Washington. Meanwhile, China has imposed a 125% retaliatory tariff on imports from the U.S., further intensifying the bilateral trade tensions.