Guangdong companies welcome a "ceasefire", but diversify
Laura Bicker

Chinese correspondent

Watch: Trump tariffs left inside Chinese sofa factory

There is a huge blank space in the middle of the factory floor in Foshan, southern China, where workers should weld high-end air racks on the U.S. market.

Derek Wang said his U.S. customers were surprised by his Air Fryer model, which is controlled via a smartphone and can also be baked, baked and grilled.

But on April 2, Donald Trump's "Liberation Day" tariffs hit all Chinese goods entering the United States, eventually reaching 145% - his customers asked him to suspend production.

"For my 40 workers, I tried to continue smiling through anxiety," he told the BBC.

On Wednesday, as a deal to ease the trade war, Mr. Wang said his U.S. buyer returned to the phone.

The two countries still face some tariffs. All Chinese goods entering the United States are subject to a tax of at least 30%, and Beijing imposes a 10% tax on American goods entering the country, less than 125%.

However, after weekend negotiations in Switzerland, the surprising agreement provides some breathing rooms for factories and businesses.

"Currently, our U.S. customers are willing to pay for tariffs. Of course, when they ask us to lower some fees, we have to bargain with them."

BBC/Joyce Liu

Derek Wang spent nearly a million dollars to build his company

Mr. Wang studied engineering in Delaware, USA, and he spent three years helping to develop the French fries model. It cost him $500,000 to set up his company, and he said the tariffs were shocking.

“It feels like my parents divorced. China and we are the most important economic and cultural powers in the world. Their sudden separation will lead to a world we can’t imagine. Up to 145% tariffs mean we have to say goodbye to each other.

But he added: "There is a saying that Chinese people: Good luck comes from bad luck."

Mr. Wang believes that his "good luck" is that the trade war accelerated his plans to keep it away from doing business with the United States.

That's one reason why Beijing believes it prevails in negotiations with Washington. China has a choice, and officials have been actively encouraging the country's companies to do more business in places like Africa, South America and Southeast Asia.

Many other Chinese companies have also told the BBC that they want to diversify from the United States to reduce their reliance on the market - suggesting that there may be more separation between the United States and China over the long term rather than divorce.

BBC/XIQING WANG's spacious and sparse factory interior. Workers were sitting on a long table near the window surrounded by shelves. Behind them, there were very long distances, and there were shelves with boxes piled up on them.BBC/Xiqing Wang

Tariffs mean some factory orders have been suspended...

Donald Trump suggested he might talk to Chinese President Xi Jinping this weekend. Two of the world's largest economies will now attend talks after agreeing to a ceasefire in the 90-day economic war.

Beijing has set the deal as a victory - not only for China, but for all countries facing U.S. tariffs.

But this is valuable.

A short walk through the Shunde District (called the "City of Household Appliances") provides a sobering assessment of the troubled manufacturing industry.

Factory workers use a cool night in Foshan to relax. They overflow to every corner of the local park.

During the day, they pack, shape and assemble almost everything you find in the kitchen – from gas stoves and washing machines to kettles and refrigerators.

At night, after leaving work, I danced in one corner of the small park while having a fierce basketball game in another part.

Posters on street walls touted "stable work and easy" work, involving 16 yuan per hour home appliance factory packaging and tightening products for 30 days, assembling 20 yuan air conditioning units for 20 yuan per hour.

But agents told us that several factories have stopped hiring, especially those related to the United States - some have even closed parts of their production lines.

BBC/Joyce Liu Three unemployed people sat on the ledge in the park, each with a certain distance between them. A man wearing a blue shirt, squatting, looking at his cell phone. Another in a bright yellow shirt leaned against his hands, one foot on the ledge looking at the camera. Next to him was another man in a white shirt, crossed his legs and looked down at his cell phone.BBC/Joyce Liu

...Leave the workers and try to find a job

The BBC was told that several of the workers would sleep in the park to save money. Many of them travel from their hometowns to Foshan, hundreds of kilometers away.

Several nearby hotels offer rooms of RMB 20 per night, which can be paid at least an hour. Many people want to send anything they earn back to their families.

Here is a photo of China's Presidential Team trying to present a sluggish growth, rising unemployment rates and a long-term housing crisis.

"We don't want to hurt China," Trump said after announcing the trade agreement, adding that China was "seriously hurt."

"They are closing the factory. There's a lot of turmoil in them and they're so happy to be able to do something with us."

This may exaggerate Beijing's economic difficulties. When it comes to production of electric vehicles and solar panels, the country is still leading the world, and it has made significant progress in artificial intelligence technology.

Chinese officials also continued to stress that the country could suffer from the economic war. But some on the frontline felt this keenly, which may be part of the reason Beijing began talking to the United States.

BBC/Joyce Liu two men in white shirts, the owner of a sofa factory, bent over to inspect the white sofa in the factory. BBC/Joyce Liu

Chinese business owners say their confidence in the United States has been shaking

The latest "ceasefire" has prompted orders between the two countries as companies want to know if it can continue.

He has called his workers back from his hometown to restart his sofa business Gongyuan Furniture for the United States client.

It will stop even before Trump's tariffs hit 145%.

"We took a day off right away," he said. "Once the tariffs reached 50%, we were already stagnant. When they reached 145%, we certainly couldn't do business. It was impossible."

His production line with about 200 workers once occupied all four floors of the building.

Since the Covid pandemic, he only needed one floor and about 40 employees. But he still has a strange high-profile client - he claims Elon Musk is sitting on one of his couches.

BBC/Joyce Liu is a woman wearing a grey T-shirt sitting in front of a sewing machine in a sofa factory. She wore white earplugs and held a piece of green fabric on the table.BBC/Joyce Liu

At a sofa company, production stopped and when Trump's tariffs started, workers sent workers home

Some workers have returned and lifted the soft chair onto the compressor machine so that it can be ready for the box and transported.

The sewing machine buzzed in the background as workers sewed the fabric into the right shape to cover the memory foam mat.

He said he has seen many changes in Foshan since he started making sofas in 2013.

"We think the global economy is not good. The domestic economy has also been hit and it affects the lives of people here. In the past, when we went out to spend money, we spent a lot of money. We wouldn't consider whether the price is high or cheap. As long as we like it, we would buy it.

Like Mr. Wang and his aerial frying platform, he also said he was considering diversifying his sales from the United States, but he hopes the two largest economies in the world can reach a deal within the next 90 days.

"I'm just a small businessman. But I do know that the game between these two countries is temporary. I think if they want to survive each other for a long time, they will definitely sit down and chat."