Mass layoffs in China have been temporarily halted following a significant de-escalation in the US-China trade war. This shift comes after successful diplomatic talks in Geneva, resulting in a substantial reduction in US-China trade tariffs.
In recent months, the United States had imposed an aggressive 145% tariff on Chinese imports in an attempt to curb China’s rapidly expanding economy, heavily reliant on its manufacturing and production sectors. This high tariff had economists warning of potentially severe consequences.
Experts like Alicia Garcia-Herrero, Chief Asia Pacific Economist at Natixis, and Lu Zhe, Chief Economist at Soochow Securities, projected that the steep tariffs could lead to the loss of 6–9 million jobs across China. However, after the Geneva negotiations, the U.S. agreed to lower the US-China trade tariffs from 145% to 30%, while China also responded by reducing its tariffs on American goods from 125% to 10%.
Although this move has slowed the wave of layoffs, economists caution that even a 30% tariff remains a significant burden. Projections now suggest China may still face 4–5 million job losses and a 0.7% slowdown in economic growth by 2025.
A key factor influencing the U.S. decision to lower US-China trade tariffs is the American dependence on China’s skilled, low-cost labor. Viral videos on Chinese social media recently highlighted how products made for $10 in China are sold in the U.S. for $300–$400 after branding—drawing attention to the true cost of production and sparking public debate.
Despite these tariff reductions, some U.S. companies are reevaluating their global supply chains. Tech giant Apple, for instance, has announced a strategic shift of its manufacturing operations from China to India. The move is aimed at ensuring production stability and minimizing risks from future US-China trade tariffs or geopolitical tensions.
While the Geneva agreement marks a notable thaw in trade relations, the long-term implications of the current tariff levels continue to pose challenges for China’s economy and the global market.