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China's exporters fret over Trump tariffs

The world will be keeping a close watch on Chinese Vice Premier Liu He's talks in Washington, which come days after Donald Trump said he would more than double tariffs on Chinese imports
The world will be keeping a close watch on Chinese Vice Premier Liu He's talks in Washington, which come days after Donald Trump said he would more than double tariffs on Chinese imports The world will be keeping a close watch on Chinese Vice Premier Liu He's talks in Washington, which come days after Donald Trump said he would more than double tariffs on Chinese imports AFP
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Beijing (AFP)

With the eyes of the world on Washington for this week's high-stakes trade talks between China and the United States, none will be more focused than those of Chinese exporters who are increasingly worried about the impact of more tariffs.

Companies shipping a range of products from seafood to furniture are among those in the firing line as the economic superpowers try to resolve a trade war that has seen both sides impose levies on hundreds of billions worth of goods.

Donald Trump at the weekend raised the pressure on Beijing, saying he would more than double punitive tariffs on $200 billion of imports Friday when China's top trade negotiator, Vice Premier Liu He, is in Washington for the two-day meeting.

Firms making their wares in China are already hurting under US punitive duties imposed last year and insiders at several of them told AFP that Trump's latest measures would force them to relocate production and lay off staff.

"We're waiting for the results of the negotiation. If Trump wants to do anything we can't stop him," said an employee at Tongwei Hainan Aquatic Products, which specialises in tilapia and ships most of its product to the US.

"Last year the customer couldn't accept higher prices so our factory needed to lower the price to stay in business," the employee said, adding some smaller competitors had shut up shop.

Easy to farm, tilapia is known as "aquatic chicken" in the seafood industry and the cheap fillets that come frozen from China pile up on American dinner tables.

Last year 84 percent of US frozen tilapia imports, worth $435 million, came from China, according to US data.

But Trump's 10 percent tariffs have hampered sales this year, with American imports of the fish roughly halved in January and down in February.

- Sharing the burden -

"After the latest tariff news, our customers have suspended shipments and there haven't been any new orders," said Emily Wang of Hainan Zhongyi Frozen Food, which also specialises in tilapia.

Ninety percent of the 300-person company's seafood exports go to the US, she said, and shipments leaving this week would not be able to beat Friday's tariff hike.

"The whole industry is like this, customers are waiting and watching, suspending orders, holding off on new orders, and suspending shipments," she said.

The downturn is broader than just tilapia.

China's goods shipments to the US fell 10 percent on-year in the first four months of the year, according to customs data released Wednesday.

Business slipped at China's largest trade show, the three-week Canton Fair, which wrapped up on Sunday.

The number of international buyers fell about four percent from last year's fair, organisers said, and export orders fell one percent.

In the US the prices of imports from China have fallen since September, when Washington imposed the 10 percent tariffs, according to research from trade data firm Panjiva.

"Our intuition is that Chinese exporters have in some instances lowered the price at which they sell to US buyers in order to share the burden of the tariff," said Christopher Rogers, an analyst at Panjiva.

"It would not be a surprise to see more of the same if tariffs are increased to 25 percent on the $200 billion of products," he said.

Sun, a manager at a large wood door manufacturer in northeast China that ships the vast majority of its product across the Pacific, said his factory had done just that, splitting the cost of the tariffs 50:50 with their American buyers.

- 'Great uncertainties' -

But the factory won't be able to share the burden if duties are hiked to 25 percent, Sun said.

"If we lower prices any more we won't have any profit," he said.

"Our orders will fall but we won't go bankrupt. We will have to retrench but we still have some customers in other countries like Japan and France. We will definitely have to lay off people. We wouldn't need that many workers."

After Trump's initial tariffs hit, the door company rented space for a second factory in Indonesia, with production slated to start there later this year, Sun said.

Shifting US-bound production outside of China has been a common tactic for Chinese and American firms this year as the long-running trade fight has festered.

US-based Brooks Running Company said Wednesday that it is moving some shoe production to Vietnam from China because of the uncertainty of an additional 25 percent tariff, shifting about 8,000 jobs.

Markor Furnishings of Urumqi told securities regulators Monday that it had bought a US sofa manufacturer and a Vietnamese wood furniture maker last year to dodge Trump's tariffs.

"The unending relapses in China-US trade frictions have brought great uncertainties to our company's international development and exports," the firm said.

For now many companies in China producing everything from textiles to shoes to chemicals to tilapia are left waiting for the results of this week's negotiations.

"If the tariffs go up to 25 percent, costs will go up, customers so far have suspended orders, I don't know what will happen," said Wang of Hainan Zhongyi.

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