In the latest edition of her weekly newsletter, Roula Khalaf, Editor of the Financial Times, highlights the rapid response of Chinese exporters as they grapple with overwhelming tariffs imposed by the United States. As the worlds two largest economies appear headed toward an economic split, these tariffs have forced Chinese companies into a corner, prompting drastic measures such as raising prices, cancelling shipments, and rerouting goods to alternative markets.

On Wednesday, President Joe Biden announced a temporary 90-day halt on imposing additional tariffs on most countries, yet the 104 percent tariffs on Chinese goods remain firmly in place, alongside an additional punitive tariff of 21 percent aimed at penalizing Beijing for its retaliatory actions.

In light of these developments, Chinese sellers active on e-commerce platforms are reportedly increasing prices by as much as 70 percent for American consumers. Many sellers are also contemplating exiting the US market altogether, as the financial strain induced by these punitive tariffs renders trade unsustainable, according to findings from one of China's largest e-commerce associations.

Wang Xin, president of the Shenzhen Cross-Border E-Commerce Association which advocates for over 2,000 sellers in China stressed that the burden of the sudden tariff increases is simply too heavy for many Chinese sellers. Chinese sellers will not be able to take on the extra financial burden from the US tariff hikes, he emphasized.

Wang, whose association's members sell a variety of products on platforms such as Amazon, Shein, and Temu, remarked on the immense pressure facing the industry. We are going through fire and water, he added, alluding to the difficulties sellers are encountering in the current climate.

Some sellers from Guangzhou, who work with Temu, revealed that they have been exploring options such as constructing factories in third countries, including Jordan, where they can finish goods and subsequently re-export them to the US. Others are attempting to reroute shipments through nations that have established trade treaties with the US. However, the landscape remains fraught with uncertainty as Trump has hinted at the potential for extending tariffs beyond China.

Currently, many Chinese merchants find themselves in a state of apprehension and are adopting a wait-and-see approach. Hu Jianlong, the chief executive of Brands Factory an e-commerce insights platform expressed the challenge of making long-term plans in such a volatile environment. Its extremely difficult to make long-term plans right now, he stated.

Shipping companies are also reporting a significant spike in cancelled transpacific orders, with industry insiders anticipating further disruptions in the forthcoming weeks. We are seeing now a tremendous amount of cancellations, one freight industry representative from Shanghai reported. Theres just so much uncertainty that people are pulling containers.

The cancellations are not limited to outbound shipments; there are signs that trade is becoming increasingly vulnerable to Beijings own retaliatory tariffs on imports from the US. For instance, a shipment of gas from the US was cancelled due to heightened Chinese tariffs, as the US exports a range of products, including agricultural goods and machinery, to China.

On Thursday, China implemented its additional 84 percent retaliatory tariffs against US imports, bringing the total tariff rate on American products to over 100 percent. Despite signaling that President Xi Jinping will not yield in the ongoing trade war, China refrained from immediately matching Trumps even steeper tariff rates.

The Chinese commerce ministry stated, If you want to talk, the door is open, but the dialogue must be conducted on an equal footing on the basis of mutual respect, while adding, If you want to fight, China will fight to the end. Pressure, threats and blackmail are not the right way to deal with China.

Additionally, the renminbi has depreciated to its lowest level since 2007, suggesting that Beijing is prepared to tolerate a gradual decline in response to US tariffs. The onshore renminbi fell to Rmb7.351 against the dollar in early trading, marking its weakest point in almost 18 years, though it later recovered slightly to trade around Rmb7.337 per dollar.

US Treasury Secretary Scott Bessent issued a warning to China regarding the potential consequences of currency devaluation. Meanwhile, Beijing is engaging in a range of diplomatic efforts, conducting talks with European Commission trade commissioner Maro efovi and Malaysias trade minister Zafrul Aziz, whose nation chairs the ASEAN trading bloc in Southeast Asia. China is willing to work with its trading partners, including ASEAN, to... jointly maintain the multilateral trading system, said a statement from the Chinese commerce ministry.

In the wake of these tariffs, US stock markets experienced a notable surge following Trumps announcement, with the blue-chip S&P 500 index closing up 9.5 percent. This upward trend continued into Thursday, as Japans Topix index climbed 8.1 percent and Taiwans Taiex advanced by 9.3 percent. Similarly, the Stoxx Europe 600 index rose by 5.5 percent in afternoon trading, with Germanys DAX increasing by 8.3 percent and the FTSE 100 advancing by 6.1 percent.

In stark contrast, China's stock indices showed relatively subdued movement but still closed in the green, reflecting the influence of the national teamgovernment-backed institutionson market performance. The CSI 300 saw a modest rise of 1.3 percent, while Hong Kongs Hang Seng index closed up by 2 percent.

This ongoing trade war, characterized by sharp retaliatory tariffs and political posturing, continues to reshape the landscapes of international trade. As both nations navigate this turbulent economic environment, the ramifications for global markets and supply chains remain significant and far-reaching.