69% Tariff Cripples China’s Foreign Trade, Companies Close Overnight, Economy Set Back 30 Year

Summary

A Chinese entrepreneur, overwhelmed by tariffs and a slowdown in exports, shares his struggles in a heartfelt video. His factory, La Gu, producing kitchenware for the US and Europe, faces devastating tariffs imposed by the US. This situation reflects the broader crisis impacting many Chinese businesses, where tariffs, high taxes, and limited market options are pushing companies towards bankruptcy. Despite some suggestions like shifting production or focusing on domestic sales, the uncertainty and pessimism among entrepreneurs grow, signaling a potential collapse of China’s foreign trade sector and an uncertain future for many industries.

Takeaways

• 😀 Lao, a 1980s-born entrepreneur from Jerja, is struggling with piles of unsold goods due to U.S. tariffs, which have disrupted his business.
• 😀 The U.S. raised tariffs by 20% in early March 2025 in response to the fentanyl issue, which led to a significant slowdown in Lao's sales.
• 😀 On April 2nd, President Trump imposed an additional 34% tariff, marking a devastating blow to Lao's factory, pushing him to the brink of bankruptcy.
• 😀 Lao’s factory, which employs over 60 workers, specializes in kitchenware products and primarily exports to Europe and the U.S.
• 😀 Social media has sparked widespread discussions and sympathy regarding Lao’s situation, with some offering advice, while others express frustration and pessimism.
• 😀 Domestic market suggestions have been met with skepticism as many question if domestic demand can replace the lost export market.
• 😀 The Chinese economy heavily relies on foreign trade, with 30-40% of its economy tied to exports, and a collapse in foreign trade could lead to widespread job losses.
• 😀 Shifting production to alternative countries like Vietnam has proven ineffective, as Vietnam now faces even higher tariffs than China.
• 😀 Many businesses, especially in the cross-border e-commerce sector, are facing an existential crisis due to the new tariff policies, with some even going bankrupt.
• 😀 The Chinese government has implemented retaliatory measures, including a 34% tariff on U.S. imports and export controls on U.S. entities, marking a firm stance in the ongoing trade war.

Q & A

What is the main issue facing La's kitchenware factory?

La's kitchenware factory is struggling with a large backlog of goods stuck in the warehouse due to the increased tariffs imposed by the US, which have caused a severe slowdown in sales.

How have US tariffs affected La's business specifically?

The US tariffs, which have increased by 54% in 2025, have greatly reduced La's ability to export his kitchenware products to the US, resulting in a crisis of unsold goods and financial uncertainty.

What emotional impact have the tariffs had on Chinese entrepreneurs like La?

Many Chinese entrepreneurs, including La, are feeling frustrated and helpless, as the tariffs have disrupted their business operations, leading to fears of bankruptcy or closure.

What has been the public response to La's situation?

The public response has been a mix of sympathy, advice, and frustration. Some people suggest focusing on the domestic market, but others point out that domestic demand is weak, and many entrepreneurs are struggling due to the lack of export opportunities.

What suggestions have been made for La to overcome his challenges?

Suggestions include focusing on domestic sales, raising prices to offset tariff increases, and shifting production to countries like Vietnam or selling to the EU and Russia. However, most of these solutions have been deemed impractical or ineffective.

How has the global tariff situation affected other countries in Southeast Asia?

Countries like Cambodia, Laos, and Vietnam have also been hit with high tariffs. Many Chinese companies had moved their factories to these countries in an attempt to avoid tariffs, but these countries are now facing even higher tariffs themselves, making the strategy ineffective.

How are small and medium-sized businesses being impacted by the tariffs?

Small and medium-sized businesses, particularly in industries like cross-border e-commerce and manufacturing, are facing devastating losses due to the high tariffs, forcing many to close down or severely reduce operations.

What have the Chinese government's actions been in response to the US tariffs?

In response to the US tariffs, the Chinese government has implemented retaliatory measures, including imposing equal tariffs on US imports and placing certain US companies on an export control list, signaling a more hardline stance in the trade war.

What is the broader economic impact of these tariff increases on China?

The tariff increases are not only hurting export businesses but also potentially leading to a collapse of China's foreign trade industry. This could result in widespread economic regression and pressure on the domestic economy.

How has the US responded to China's countermeasures?

The US has responded aggressively to China's countermeasures, with President Trump warning that China has 'played it wrong' and suggesting that the US may escalate the conflict with even harsher countermeasures.