May 9, 2025 - Politics & Policy
China talks are coming, but the pain is already here
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Illustration: Lazaro Gamio/Axios
The U.S. and China have been trading jabs and flexing ahead of this weekend’s trade talks.
- But with the fates of businesses, consumer products, and jobs hanging in the balance, the two global superpowers are locked in the world’s most expensive game of chicken.
Why it matters: The pain that has already reverberated from the sky-high tariff rates between the world’s two largest economies won’t fade quickly — even if they broker a deal this weekend.
- President Trump suggested cutting the U.S. tariff rate on China to 80% ahead of trade talks. It's a number that was unimaginable just a few months ago and is still untenable for scores of American businesses.
Zoom out: Companies are considering layoffs and rethinking business plans.
- Apollo’s Torsten Slok forecasts layoffs — in trucking, logistics and retail — if tariffs don’t come down.
- MGA Entertainment, America’s largest privately held toymaker, which owns brands like Bratz and Little Tikes, is pausing plans to expand an Ohio factory. CEO Isaac Larian told Retail Dive inputs for toys, like doll hair, often come from China and other countries and will be significantly more expensive. “Frankly if these tariffs do not go away we have no choice but to do layoffs,” Larian said.
- Some smaller businesses, including a hay exporter in central Washington and a toy company in eastern Pennsylvania, have already cut jobs.
Zoom in: Goods are stuck on either side of the ocean as trades screeches to a halt.
- Exports of U.S. soybeans and pork to China — their biggest buyer — are plunging.
- Inflatable snowmen, women's clothes, bubble blasters and more are sitting in a Chinese factories as their American buyers figures out if they can still afford to import them, The Wall Street Journal reports.
- Exports from more than 20 major U.S. ports have fallen in the last five weeks, Fortune reports. Official Chinese data released Friday showed exports to the U.S. fell 21% in April, CNBC noted.
Prices are going up: Chinese e-commerce companies Temu and Shein have already hiked up prices.
- Other companies are warning that they'll only be able to rely on stockpiled inventory or absorb the cost of tariffs for so long.
- Cocokind, an American beauty brand, has an eye cream that's been going viral from rave TikTok reviews. The company said parts of the cream's packaging come from China, and tariffs have jacked up the costs of production to the point where Cocokind is losing money on sales. "Long term, we can't be selling this at its current price," founder Priscilla Tsai said in a video.
- Almost all strollers and car seats sold in the U.S. are made in China — and companies are raising prices.
The bottom line: Even with a swift U.S.-China deal, it's unlikely we'll go back to the status quo before Trump 2.0.
- Businesses are bruised, price hikes will be sticky, and many lost jobs are gone for good.
