Women in blue cloth hairnets sew the finishing touches on plush pink piggies and orange stuffed foxes, before tossing them onto giant piles in Maria Liao’s factory in southern China. They will be boxed and shipped to the United States, where many of Ms. Liao’s clients are based.
The factory is quieter than it should be. Orders are down this year, as Ms. Liao’s customers hesitate in the face of a succession of tariffs that President Trump has put on products coming from China, another round of which will probably come this week. The duties have upended small businesses in the United States that depend on factories in China to build the things they design and sell.
The tariffs are also reverberating on the other side of the ocean in two-floor factories like Ms. Liao’s Dongguan Yarunli Toys.
“We are helpless,” said Ms. Liao, 33, who runs the factory with her older brother. “I don’t know what the next quarter will be like.”
Ms. Liao is one of millions of people in China who sew, cut, build and assemble the toys, clothes, tools and cars that Americans use every day. The work they do allows companies to make and sell things to households in the United States quickly and cheaply.
With its $1 trillion global trade surplus, China remains the world’s manufacturing powerhouse. But Ms. Liao’s struggles show how Mr. Trump’s tariffs, which include a base of 20 percent on all goods, are challenging a long-held truth in China. The United States may no longer be the main destination for products made by small-businesses like Ms. Liao’s.
One of her customers, who sells toy dolls based on characters from a book, recently asked for a 20 percent price cut — something Ms. Liao said she could not accommodate. She makes a 30 percent profit margin on the goods she produces, a cushion that allows for the fluctuation of costs for material and labor. Such a steep cut in prices would wipe out most of her profit, making it difficult to continue operating, Ms. Liao said.
Still, it wasn’t easy for her to say no. Last year, that customer ordered 25,000 toy dolls, one of the biggest single orders Ms. Liao received. This year, overall orders are down nearly 30 percent, she said.
For hard-working Chinese businesses that had long tied their prosperity to the demands of American customers, Mr. Trump’s aim to sever trade ties with China is forcing a more urgent question: What next?
It is a hard one for Ms. Liao to answer. For starters, American companies make up 30 percent of her export business. She also values the harder-to-measure cultural benefits she has gained from trade with the United States.
Working with U.S. businesses has changed her outlook on everything from how she conducts business to how she sees her place in society.
Ms. Liao started her factory with her brother in 2019 after five years of working in another toy factory and helping to find new customers. She said she had been more reserved when interacting with clients. But then she starting working with American business owners who were direct and open about everything, right down to their personal lives.
One customer in particular has had an outsize influence on her life, Ms. Liao said.
Erica Campbell’s Phoenix-based company, Be a Heart, has been a client of Ms. Liao’s since the beginning. Ms. Campbell’s orders for Jesus and Mary dolls have made up one-tenth of Ms. Liao’s work.
In that time, Ms. Liao and Ms. Campbell, 36, each gave birth to their first children. Their personal lives have become intertwined with conversations about business collaborations and product designs. Ms. Liao said it was the first time she had known a woman who juggled family duties and her own business. In their conversations, Ms. Liao said, Ms. Campbell would sometimes describe finding time in the middle of the night to draw a design for the next product.
Seeing a woman juggle work and home gave her confidence to keep working after her daughter’s birth, Ms. Liao said.
A few months ago, Ms. Liao messaged Ms. Campbell to tell her that business was really slow, weighed down by the worsening trade tensions between China and the United States. She was trying to figure out how to keep things afloat. In response, Ms. Campbell shared her own challenges. “I’m flailing,” Ms. Campbell wrote back. One of her employees had just left unexpectedly and Ms. Campbell had recently given birth to her third child. “Motherhood is kicking my butt,” she said.
Then she had an idea. Ms. Liao could take over some of the work that the employee had been doing, sourcing materials and communicating with other factories in China. “She did it so well,” Ms. Campbell said.
When Ms. Campbell finally placed her 2025 Christmas production order with Ms. Liao a few weeks ago, it was half the size of her order last year because of the uncertainty over tariffs and a recession, something that Mr. Trump has said is possible.
For now, Ms. Campbell plans to shoulder most of the tariffs and pass some of the cost on to her customers. But if tariffs go above 20 percent, she said, she will have to talk to Ms. Liao about what to do next.
It will be a difficult conversation. Ms. Campbell said she didn’t feel comfortable asking her Chinese partner to take on costs that Ms. Liao had no control over.
“We are often dealing with the same small-business stressors and have had to navigate so much,” Ms. Campbell said. “People like to create this divide, but we are the same and were just born in different countries.”
To Ms. Liao, if everyone raises their costs to soften the blow of tariffs, it could lead to a situation she would prefer not to confront: “We may not be able to serve American customers.”
Li You contributed research.
Content Source: www.nytimes.com