China's factories are suffering greatly from Trump's tariffs

China's factories are suffering greatly from Trump's tariffs

In April 2025, industrial activity in China recorded its fastest decline in 16 months as high US tariffs put significant pressure on the manufacturing sector. This reinforces the urgency with which Beijing wants to implement fresh economic stimulus.

Factories in crisis

The manufacturing purchasing managers' index (PMI) fell to 49.0 in April, the weakest reading since December 2023. A PMI below 50 signals a contraction. Loud Data from the National Statistics Office (NBS) This decline is due to “sharp changes in the external environment and other factors,” said Zhao Qinghe, a senior statistician at the NBS, in a statement Explanation announced.

Trade war and economic prospects

The dramatic decline highlights the damage that US President Donald Trump's 145% tariffs on Chinese goods have already inflicted on the country's export-dependent economy. Chinese manufacturers have been feeling the impact of those tariffs since last month, as order cancellations and production cuts mounted, sparking new concerns about the country's growth prospects.

Signs of Beijing's initiatives

The April data represents a setback for Beijing as top leaders try to maintain a defiantly assertive stance in the trade war with Trump. Before this development, the Chinese economy was already struggling with weak domestic consumption and a protracted real estate crisis.

Details on the current company situation

Although service and construction activity showed a marginal increase, April data suggests an overall decline. A parallel indicator of new export orders also fell to 44.7, the lowest level since late 2022, when the country was still grappling with the fallout from the Covid-19 pandemic.

Market analysis and forecasts

Robin Xing, Morgan Stanley's chief China economist, said in a research note on Wednesday that the decline in the PMI reflects the impact of tariffs, which have led to a deterioration in external demand. “We believe the impact of tariffs will be felt most strongly this quarter as many exporters have halted production and shipments to the US amid heightened uncertainties surrounding tariffs,” the report said.

Government reacts with measures

Analysts expect the Chinese government to increase fiscal and monetary stimulus in the coming months to boost growth. Beijing already began a gradual rollout of modest measures last year, including easier access to credit for struggling companies and other steps to stimulate domestic consumption.

Expectations and announcements from Beijing

So far, however, the government has refrained from aggressive nationwide stimulus measures. Instead, Beijing has pledged targeted support to boost consumption and ease pressure on exporters, hinting at further measures to be unveiled in the coming months.

Political statements and trade conflicts

At a press conference On Monday, Zhao Chenxin, vice chairman of the National Development and Reform Commission, said Beijing has "sufficient policy reserves" to respond to economic needs and that implementation of measures already set will be accelerated.

The same day, Chinese Foreign Minister Wang Yi rejected calls for a negotiated tariff standoff with Washington, stressing that appeasement of US threats would only embolden the "tyrant." His comments, which he made on the sidelines of a meeting in Rio de Janeiro, reflect a powerful message social media videos shared by his ministry, calling on the international community to resist the “tyrant” from the US.

Trump's views on tariffs

In an interview broadcast on Tuesday, Trump said China "deserved" the 145% tariffs he imposed and claimed Beijing would absorb them. "China will probably swallow these tariffs. But at 145 you basically can't do business with the United States anymore," he said in an interview with ABC News.