Chinese Factories Idle Production as U.S. Tariffs Hit Hard

Chinese manufacturers are scaling back production and seeking new markets as U.S. tariffs take a growing toll, according to companies and analysts. The resulting drop in orders is also costing jobs, pushing some exporters to pivot to domestic sales channels like livestreaming.

“I know several factories that have told half their employees to go home for a few weeks and stopped most production,” said Cameron Johnson, senior partner at Shanghai-based Tidalwave Solutions. He noted that producers of toys, sporting goods, and low-cost goods — typical Dollar Store items — are the most heavily impacted.

While the scale of disruption remains moderate, it is already evident in key manufacturing hubs like Yiwu and Dongguan. Analysts warn the situation could worsen if tariffs remain in place. Many companies are hoping for tariff reductions, but in the meantime, furloughs and production halts are spreading.

Goldman Sachs estimates that between 10 million and 20 million Chinese workers are involved in businesses exporting to the U.S., a significant portion of the country’s 473 million urban workforce as of last year.

Some manufacturers have proactively shifted toward alternative trade routes and diversified markets, but many smaller exporters are struggling to adjust quickly enough.