Turbulent Global Trade Landscape: Perspectives from Shenzhen Tech Companies
Escalating US-China trade war causes apprehension over employment prospects for mainland enterprises operating across borders
Navigating the rocky waters of global trade has never been more challenging, especially for tech and electronics companies in Shenzhen, China. These companies are being tested by the recent waves of tariff hikes imposed by the US under President Trump. Let's take a closer look at how these policies are impacting the trade landscape.
The US Tariff Saga
- Tariff policy: The new Tariff policy, effective from April 2025, will see a base increase of 10% on imports from all countries, with China facing even more significant hikes of up to 125%.
- Economic Impact: Analysts predict that these tariffs could shrink the U.S. GDP by approximately 8% and reduce wages by 7%, with the impact on global real GDP growth being a decrease of 0.7% in the fourth quarter of 2025 from 2.1% earlier in the year[1][2].
A Tale of Two Shenzhen Employees
Doris Zhang
A fresh graduate, Doris Zhang landed her first job in a Shenzhen-based tech company targeting the US market in January. Driven by the promise of designing and implementing marketing strategies for international consumers, she was eager to make her mark. However, the company's cost-cutting measures, including departmental restructuring, have left her uncertain about her future and question if she can clear her probation[3].
Anna Yang
As a purchaser at an electronics company in Shenzhen, Anna Yang found herself abruptly moved from the foreign sourcing department to the domestic one. The 125% tariff increase on American imports has forced companies like hers to adapt, causing a major shift in focus.
Coping Strategies and Market Adaptations
- Bracing for Higher Costs: Shenzhen companies now face increased costs from the escalated tariffs on imported components and finished goods intended for export to the US. As a result, they might need to raise their prices to maintain profit margins, which could result in reduced demand[4].
- Altering Supply Chains: To avoid tariffs, supply chains may be disrupted or rerouted, potentially leading to delays and production bottlenecks. Some companies might look to alternative suppliers or production sites outside of China to circumvent tariffs.
- Reviving the Home Market: With the US market becoming increasingly challenging, Shenzhen companies may focus on domestically-oriented sales, generating demand within China and neighboring Asian markets.
Localized Support and Government Intervention
- Subsidies or Investments: In response to the challenges faced by Shenzhen companies, the Chinese government may offer support mechanisms, like subsidies or investments, to help companies cope with the tariff hikes and stay competitive.
- Despite the turbulent global trade landscape, Doris Zhang's motivation to execute innovative marketing strategies for her Shenzhen-based tech company remains unwavering, even with the uncertainty surrounding her job due to cost-cutting measures.
- Anna Yang, another employee in Shenzhen's tech industry, is now tasked with domestic sourcing as a result of the 125% tariff increase on American imports, which significantly impacts the economy and industry of both China and the US.
- In order to counterbalance the rise in costs due to tariffs, tech companies in Shenzhen are considering price increases to maintain their profit margins, which could potentially lead to reduced demand in the US market.
- Faced with these challenging times, some Shenzhen companies are reevaluating their supply chains, looking towards alternative suppliers or production sites outside of China as a means to bypass tariffs and ensure the continuity of their operations.
- In an effort to support and sustain Shenzhen's tech companies amid the tariff saga, the Chinese government may provide subsidies or investments to help these businesses adapt, build resilience, and regain their competitive edge in the global finance sector.
