Despite a tariff rollback easing the threat of mass layoffs in China, millions of jobs remain at risk as uncertainty clouds the manufacturing sector.
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| China avoids immediate economic crisis with U.S. tariff reductions, but factory job losses and export uncertainty continue to threaten economic recovery. Image: FP/ CH |
BEIJING, China — May 16, 2025:
Chinese worker Liu Shengzun, once earning a stable income at factories in Guangdong, lost two jobs in April after U.S. tariffs surged to as high as 145%, forcing manufacturers to slash output. Although this week’s rollback in duties brought some relief, Liu has now returned to subsistence farming in his rural hometown, discouraged by the lack of opportunities.
“It’s been extremely difficult this year to find steady employment,” said the 42-year-old, whose previous monthly income of up to 6,000 yuan ($832) has vanished. “I can barely afford food.”
The Geneva negotiations last week marked a turning point in the U.S.-China trade standoff, helping Beijing avert a feared scenario of mass unemployment that could undermine political stability — a core concern for China’s Communist Party.
Yet even with tariffs now lowered to around 30%, the damage from the earlier spike lingers. “Factories will be able to resume operations, but it’s still difficult to do business at 30%,” said a senior policy adviser, speaking anonymously. “Over time, this will weigh on economic development.”
Before the de-escalation, internal government signals had raised red flags about rising bankruptcy risks in labor-intensive sectors like toys and furniture. Now, economists estimate the number of threatened jobs has declined to under one million — down from prior estimates of up to nine million during peak tariff levels.
Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, warned that even under current conditions, 4–6 million jobs could still be lost. GDP growth for 2025 could slow by 1.6 percentage points unless tariffs fall further.
To offset the labor shock, Beijing is ramping up investment in public works and directing central bank lending toward services and elder care sectors. “Corporate investment remains weak, so public spending will be critical,” said Jia Kang, head of the China Academy of New Supply-Side Economics.
Still, many businesses are wary of returning to pre-tariff hiring levels. Exporters fear the unpredictability of U.S. policy, particularly with President Donald Trump’s fluctuating stance.
Li Qiang, a former export intermediary, now works as a ride-hailing driver in Chengdu after losing his job when his firm collapsed under lost U.S. contracts. “Trump’s policies can change at any time,” he said. “I don’t see any reason to return to the export sector.”
Despite avoiding an employment collapse, China’s job market remains fragile. As factory workers like Liu struggle to survive and others abandon manufacturing altogether, the deeper wounds of trade conflict may take years to fully heal.