Liu Miao has been selling clothing on Amazon to US wholesale buyers for the past five years. The transaction suddenly stopped.
Li owns a small factory in Guangzhou, China's highly competitive clothing industry center. He and other factory managers have already dealt with strict profit margins, and last week said that the combination of tariffs and new taxes on President Trump's cheap imports had been deeply reduced to their business. Costs along the supply chain are also increasing.
Customs duties have made it impossible for Li to continue selling on Amazon. And he felt he couldn't cut employee pay, Li said he had put a sample of his dress on the handlebar and parked on the sidewalk as workers in the labour market were busy passing his bike.
“We can't sell anything to the US right now,” Li said. “The tariffs are too high.”
Platforms such as Amazon, Shein, and Temu have brought China's vast manufacturing supply chain to the world's entrances. These online markets have enabled thousands of small Guangzhou factories to contact U.S. shoppers. Also, packages under $800 are not tax-exempt in the US, so the factory and as a result, the platform was able to charge very low prices.
Exports have been a major factor in China's economic growth over the past few years. Business is particularly good in e-commerce. In Guangzhou neighborhoods, foreign luxury cars from Mercedes-Benze, BMW and Cadillac were parked outside the factory where workers pay about $60 a day to sell clothing sold on apps such as Sheen and Amazon.
But now many companies in Guangzhou are facing a turning point as trade tensions enforce the world's two biggest economies.
Tariffs exacerbate the multiple challenges facing clothing manufacturers. The Chinese government has been struggling to make more money as consumers struggle to spend more after the collapse of the country's real estate market. Many Chinese people are keeping their spending down without increasing the value of their homes.
It hurts the business of Zhang Chen, who owned six clothing stores in hubei central state. However, after the Covid-19 pandemic and high rents stayed, when shoppers didn't come back, he decided to close them all.
“In 2020, the business never returned, so it wasn't back in 2021. When it was still back by 2022, it seemed like it never returned,” Zhang said. Now he earns around $100 a day by delivering newly sewn garments to Shane Collection Points near the airport.
The Guangzhou factory does not automate electric vehicles or manufacturing campuses that make semiconductors key to China's long-standing drives to ensure geopolitical resilience through advanced technology. However, Chinese clothing factories employ millions of workers to make a living.
In the interview, nine factory owners and managers in Guangzhou said they are considering moving operations to a province like Hubei, 600 miles away. A few owners said they could move to a country like Vietnam. There, many Chinese factories were established to avoid potential new tariffs that are as high as those already set for China's exports.
Many reported a decline in orders. Others said they have stopped several production lines. It explains everything we see nearby businesses closed in the past few months.
On Friday, as the US policy to end tax-free imports from China came into effect, Liu Bin packed his vast clothing factory, where a mountain of Sheen's packaging was pushed against the window.
Li's factory specializes in dresses and tops intended to be worn on beach parties and date nights, and Shane usually buys around 100,000 pieces from him per month. However, in April, after the company ordered about half of it, he began moving the production line to his neighbor, Jiangxizhou. He could no longer afford rent in Guangzhou.
Liu said Shein was providing incentives to cover the costs of travelling to Vietnam, and he thought “but Vietnam's tariffs have also been higher.”
He also said he tried to find buyers on Tiktok and Temu but ordered on all platforms was dropping. “They're all falling down and we're just waiting and watching,” Li said.
Shane did not respond to requests for comment. Temu said on Friday it had stopped shipping its products directly from China to US buyers.
The Chinese government has encouraged domestic e-commerce platforms to help small businesses sell to their home markets. However, because Chinese consumers are careful about spending, it is as difficult to sell domestically as factories export.
Han Jiang Kyu, who sells novelty socks at Shayne and Taem, said he suspected that the US government could suddenly start collecting tariffs on low-priced packages that came to the US at a rate of 4 million a day.
“I don't think it's realistic,” Han said after closing the booth in the evening at Canton Fair, Guangzhou's annual export trademark.
Pyjama Party Fluffy Socks are some of her most popular products.
This is exactly like Americans still need to buy from Chinese companies, Han said. “Where else do you plan on buying this?” she asked.
Siyi Zhao contributed to the research.
