China Factory Protests Show When US Tariffs Began to Bite
A wave of protests over factory closures in China in recent weeks appeared to show the impact of U.S. tariffs on a highly exposed sector that employs millions.
The demonstrations, a reflection of the export-driven economy’s early pain, came as Chinese officials quietly engaged with U.S. President Donald Trump‘s team weeks before last weekend’s high-profile meeting in Geneva.
Why It Matters
The deal that emerged from U.S. Treasury Secretary Scott Bessent‘s talks with Chinese Vice Premier He Lifeng has cut the countries’ respective tariffs by 115 percent for 90 days.
The pause halted what was approaching a trade embargo—one that led to higher prices and recession risks in the United States and deepened deflationary pressures and a manufacturing glut in China.
Newsweek reached out to the Chinese embassy in Washington, D.C. via email for comment.
What To Know
Both sides had portrayed the other as more desperate to return to the negotiating table.
Trump hailed the interim deal as a win, calling it a “total reset” of bilateral ties. Hu Xijin, former editor of state-run outlet Global Times, called it “not only a win for China, but also a victory for international trade norms and the proper global order.”
Yet despite the public posturing, a quiet meeting between the two governments had already taken place weeks earlier.
Employees work on a production line of stuffed teddy bears for export at a toy factory in Lianyungang, China, on November 22, 2024.
AFP via Getty Images
The Financial Times reported on Tuesday that Bessent and Chinese Finance Minister Lan Fo’an met secretly in the basement of the IMF headquarters in Washington during the agency’s annual spring meeting.
The talks came as protests erupted across China, where the loss of the U.S.—the country’s largest single export market—was forcing factories to shut down. Hundreds of workers turned out to protest unpaid wages and what they described as unjust dismissals, Radio Free Asia reported.
One such company was Guangdong Shenzhen Weilixing Toys Co., a toy manufacturer based in Shenzhen. According to a video shared by @YesterdayBigcat, an X (formerly Twitter) user who frequently posts about China protests, the company abruptly announced its closure on May 6 after U.S.-bound orders ceased.
A notice visible in the footage stated that the company had been operating at a loss for some time: “We will do our best to address issues such as salary payments, social insurance, and other legally required responsibilities.”
According to the account, some 400 workers gathered over two straight days to demand compensation.
China’s official manufacturing Purchasing Managers’ Index (PMI), a key gauge of factory activity, dipped to a 16-month low in April.
The prospect of losing millions of manufacturing jobs—still central to China’s economy—is what drove Beijing’s swift willingness to enter talks, Trinh Nguyen, an economist with the research division of investment bank Natixis, wrote on X.
China’s economy has already been grappling with a years-long property market crisis, high youth unemployment, and tepid consumer demand as the economy cools after decades of sky-high growth.
“The [tariff] pain will be immediate and it will hurt the most vulnerable. Full stop. And after years of economic slowdown already,” Nguyen said.
“And this is why we got de-escalation. Not just Trump needing an off-ramp but also one that China cannot afford, unless tolerating pain is a strategy and pain on the U.S. side may or may not come as they can try to buy toys somewhere else.”
What Happens Next
Markets jumped on the deal, and Goldman Sachs lowered its U.S. recession forecast to 35 percent from 45 percent. But analysts caution there’s a long road ahead during the 90-day cooling-off period.
It remains to be seen whether the Trump administration can meaningfully reduce the nearly $300 billion trade deficit with China, which has been a long-standing grievance for the president.