Tariffs put pressure on companies: China's industry is doing worse and worse

Tariffs put pressure on companies China's industry is doing worse and worse 30.04.2025, 08:03

Tariffs of up to 145 percent on Chinese goods: The trade conflict with the US is causing China considerable problems. Whether state-owned or private, companies are significantly more pessimistic about the future. Although the mood may be gloomy, Beijing is trying to project its strength with a propaganda video.

Under the ongoing pressure of the trade conflict with the US, sentiment in China's manufacturing sector has deteriorated noticeably. According to the Beijing Bureau of Statistics, the Purchasing Managers' Index (PMI) in April was 49 points, 1.5 points lower than the previous month. Experts had previously expected a reading around 50 points.

The PMI is an important leading indicator for analysts and decision-makers. A reading above 50 points indicates expanding factory activity. Below this reading indicates a deteriorating mood among corporate purchasing managers. The government PMI surveys large state-owned enterprises.

At the same time, the Chinese business media outlet Caixin published its PMI, which also reflects the sentiment of export-oriented and smaller private companies. Although it was higher at 50.4 points, it was significantly lower than in March (51.2 points). One reason for this was the decline in new orders amid the tense trade situation, it said.

This is the first sign of an impact on companies' business prospects since the escalation of the trade conflict with the new US administration in early April. President Donald Trump has repeatedly increased tariffs on Chinese goods, so that imports are now subject to surcharges of up to 145 percent.

China denies talks with US side

China retaliated with additional tariffs of 125 percent on US imports. Beijing also restricted exports of important minerals and magnets and targeted US aircraft manufacturer Boeing, forcing Chinese airlines to refuse to accept aircraft they had delivered. However, China reportedly made individual exceptions to the import tariffs for certain goods, such as semiconductors, for which the People's Republic is dependent on US manufacturers.

A relaxation in the dispute between the world's two largest economies appears to be nowhere in sight. Trump asserted that talks with the Chinese side were ongoing, but this was denied in China. The People's Republic recently reiterated its intention to stick to its growth target of around five percent for this year, despite weak domestic demand and the effects of a real estate crisis, and pledged support to companies affected by US tariffs.

On Tuesday, the Foreign Ministry released a propaganda video titled "Never Kneel." It juxtaposes gloomy images of the United States with modern Chinese factories to promote China as a stable partner. "Bowing to a tyrant is like drinking poison to quench your thirst," the video states. There are concerns in Beijing that Washington could encourage other countries to impose trade coercive measures against China.