Roula Khalaf, Editor of the Financial Times, curates a selection of her preferred stories in a weekly newsletter called the Editor’s Digest, available for free. Kinu Kelly, an American business executive, attended the 137th China Import and Export Fair in Guangzhou with a specific aim: to seek Chinese suppliers capable of manufacturing her required goods outside of China. Kelly, who is a product development head based in New York, emphasized the necessity of this move.
Kelly’s efforts to branch out her supply chain exemplify how attendees of the Canton Fair are navigating the evolving landscape of global trade, particularly after U.S. President Donald Trump imposed tariffs on a range of Chinese products, reaching up to 145 percent. The Canton Fair, China’s most significant export exhibition, was initially established by Mao Zedong in 1957 to mitigate the impact of a U.S. trade embargo against China and has since become a pivotal connection between China’s extensive manufacturing sector and international clients. However, the recent tariffs from the U.S. and corresponding 125 percent tariffs from China have elevated concerns about a potential decoupling of the world’s two largest economies.
Within the Canton Fair, American buyers and Chinese manufacturers sought alternative markets and trade routes to counter the effect of these tariffs. This situation led to an accumulation of unsellable stock due to heightened prices. Ren Chaoqun, a product manager at XStrap—which produces car roof straps for American retailers like Walmart from a factory with over 100 staff in Jiangsu, China—expressed the challenges of accommodating such high tariffs. The specificity of products designed for U.S. clients may require overcoming regulatory hurdles or rebranding to enter different markets.
Ren hoped for swift negotiations between the U.S. and China, though no clear timeline for discussions has been established. Many exhibitors at the fair noted the difficulty in maintaining sales to the U.S. market under the new tariffs. Shen Senjian, a sales manager at AutoLine, which manufactures appliances for recreational vehicles, stated that U.S. clients had halted orders due to prohibitive tariffs, forcing them to explore European or Belt and Road Initiative markets.
Some exporters are considering relocating production outside China. After initial tariffs in 2018, many had already commenced operations overseas. The fair highlighted booths from various Southeast Asian countries like Vietnam and Thailand, as U.S. buyers sought cost-effective solutions. Vera Li from Quanzhou Viition Gifts, a manufacturer with facilities in Cambodia and Fujian, China, indicated that U.S. duties would expedite their plans to shift production to Southeast Asia.
Despite plans to increase the workforce in their Cambodian factory, Trump’s threat of reciprocal tariffs on global trading partners keeps exporters cautious. Countries with significant trade surpluses with the U.S., such as Vietnam and Cambodia, could face tariffs up to 49 percent. Nancy Yi, a sales manager at Flextech Co, which has factories in China and Vietnam, acknowledged the current lack of definitive solutions amidst policy uncertainties.
Ultimately, U.S. companies seeking manufacturing solutions in Southeast Asia might find it necessary, as noted by sourcing executive John Chen. Chen highlighted the priority of moving manufacturing operations outside of China. If tariffs extend to Southeast Asian nations, companies may have no alternative but to absorb these costs, although reshoring manufacturing to the U.S., as suggested by President Trump, remains unrealistic due to the absence of an existing supply chain.
