In Depth: Despite Slowdown in U.S. Orders, Global Buyers Flock to China’s Biggest Trade Fair
By Wang Jing, Zhai Shaohui and Wang Xintong
While Trump’s steep tariff hikes are likely to have decimated Chinese exports to the U.S., China’s biggest trade expo welcomed a bumper crop of buyers.
The 137th edition of the Canton Fair, often seen as a barometer of demand for Chinese exports, kicked off in southern manufacturing hub Guangzhou on April 15. Its first phase concluded Saturday, drawing 148,600 overseas buyers from around the globe, a 20.2% increase from the comparable period last year, official data showed. The fair’s second phase runs from Wednesday to April 27, followed by the third phase from May 1 to 5.
The first phase of the fair focuses on advanced manufacturing, especially machinery and electronics. China possesses the world’s most complete supply chain for electromechanical products, which constituted nearly 60% of its total exports last year — making it particularly exposed to trade disruption. Now, companies are making difficult decisions about pausing orders, absorbing costs, or finding workarounds.
Hitting the pause button on U.S. orders
The chill in U.S.-China trade was palpable at the fair. One American buyer noted that there were “significantly fewer” U.S. attendees compared with previous years.
Yang Shanquan, general manager of Foshan Suoer Electronic Industry Co. Ltd., a maker of inverters and car audio equipment, told Caixin several of its American clients skipped the fair this year.
Yang explained the stark reality: “Based on our clients’ calculations, once U.S. tariffs exceed 60%, adding shipping costs makes our products slightly more expensive in the U.S. than comparable Brazilian goods. We lose competitiveness.” Faced with levies that dwarf that figure, Yang and his U.S. clients mutually agreed to suspend deliveries of existing orders. “We decided to wait and see,” he told Caixin.
The trade war between the world’s two largest economies has been escalating rapidly since U.S. President Donald Trump announced “reciprocal tariffs” on trading partners early this month. Chinese goods shipped to the U.S. now face levies of up to 245%.
There was a common refrain among exhibitors heavily reliant on the U.S. market. Wang Lei, an executive at Safewell Group Holdings (China) Co. Ltd., told Caixin that U.S. orders constitute about 30% of their business. While a pause in orders will hurt their short-term cash flow, both his firm and its U.S. partners view the disruption as likely temporary. “‘Don’t worry’ is the phrase we’re using most with our U.S. clients right now,” he said.
Pausing, not canceling, orders makes sense because machinery and electronics are often born from close supplier-buyer collaboration, customization and ongoing upgrades. Plus, China’s ability to efficiently deliver tailored, cost-effective solutions keeps relationships strong.
“This business demands extremely high supply chain stability. Partnerships are usually long-term and fixed,” explained a buyer from an Ohio-based manufacturer. His firm sources roughly 30% of its parts and materials from China. “Developing products to meet technical specifications takes years of working together.”
As the cost of finding and vetting alternative suppliers is prohibitively high, his company’s only viable option is to sit tight and observe. “Our president seems completely unaware that our dependence on China is far greater than China’s dependence on us,” he lamented, predicting the administration would eventually have to adjust its tariff policy due to the pain inflicted on businesses.
Trump on Tuesday signaled a possibility in lowering the tariffs on Chinese goods, telling reporters at the White House that “it’ll come down substantially, but it won’t be zero.”
Despite the U.S.’ efforts to reduce its economic reliance on China, official data have suggested a complete decoupling will remain difficult — at least in trade. Chinese customs data shows that Chinese exports to the U.S. fluctuated yet grew from $478.4 billion in 2018 to $524.7 billion in 2024. Meanwhile, China’s share of total global exports climbed from 11.8% to 14.7%, reflecting broader market diversification by Chinese manufacturers.
Rising demand for China-made parts
Yang observed a noticeable uptick in new customers from Mexico and Brazil.
Since the China-U.S. trade war began, Latin American businesses have been increasingly sourcing components or semi-finished goods — products that are partially manufactured but not yet fully assembled or ready for sale — from China for final assembly back home. Some buyers were even willing to pay full price for finished appliances, provided suppliers disassembled them into large, easy-to-reassemble kits.
A Peruvian buyer at the fair, who sources metal components from China for machinery manufacturing clients in Peru, told Caixin that the current U.S.-China friction hadn’t negatively impacted his business. In fact, he saw himself as a beneficiary. “Many of my American customers used to source from both China and Peru,” he explained. “With the U.S. raising tariffs on China, these American customers now prefer to buy more from me.”
A January report by China International Capital Corp. Ltd. noted that while China’s role as a global center for finished goods has diminished somewhat since 2020 amid supply chain restructuring, its share of semi-finished goods exports has continued to grow, rising from 42% to 46% of its export structure between 2017 and 2023.
The report said exports of these semi-finished goods grew much faster to emerging economies. From 2017 to 2023, the compound annual growth rate (CAGR) of such exports to Vietnam was 12%, and to Mexico, 16%. In contrast, the figure for exports to the U.S. was only 3%. “The industrialization of emerging markets is likely an important reason for the acceleration of China’s intermediate goods exports,” the report pointed out.
Chinese companies are also chasing this trend by building more production facilities overseas. An executive at a battery manufacturing firm told Caixin they’re planning another factory in Malaysia, after opening one in Vietnam in 2019 specifically to handle U.S. orders, which account for around 30% of their company’s total orders.
Other challenges and opportunities
Traditionally, companies have used two main paths to circumvent tariffs: relocating parts of the supply chain and engaging in transshipment — re-exporting goods through a third country to disguise their origin. A consultant helping companies with transshipment told Caixin some firms — like the battery manufacturing firm — have set up plants in Southeast Asia to obtain a third-country certificate of origin.
But this route is facing intense scrutiny. Liu Chun, vice president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, warned in an article for the Canton Fair’s official publication that Chinese overseas investments are already on Washington’s radar. She cited a U.S. Commerce Department rule from September restricting certain Chinese software and parts in vehicles, potentially “completely prohibiting the export of Chinese cars and some parts to the United States, thereby weakening the impetus for new Chinese investments in Mexico.”
Companies also fear ramped-up U.S. origin audits, making compliance costly and risky, Liu said. U.S. Customs reportedly implemented a new origin verification system on April 15, requiring importers to provide documentation tracing back through three tiers of the supply chain. For key countries like Vietnam, Malaysia, Thailand, Indonesia and Mexico, stricter checks are being implemented. Penalties for tariff evasion are severe, potentially including fines of up to 300% of the evaded duties and clawbacks of profits over the past decade, plus asset freezes.
“U.S. customers want the high-quality products made in our China factory, but they are unwilling to bear the risks of transshipment,” said the battery company executive. And producers are equally wary. “If just one shipment gets seized by U.S. Customs, it could wipe out our entire year’s profit,” the executive said.
With traditional circumvention paths narrowing, an April 16 report by Zheshang Securities Co. Ltd. points to a potential new phenomenon: “quasi-transshipment.” In this model, other countries prioritize fulfilling U.S. demand with their own production capacity. If this leaves their domestic markets short, they then import goods from China to fill the gap.
“Traditional paths for Chinese companies to circumvent tariffs may be restricted in the future, and ‘quasi-transshipment’ is expected to become a new option for Chinese goods,” the report said. Industries with adaptable supply chains — light manufacturing, textiles and apparel, and home appliances — are seen as prime candidates for this evolving trade pattern.
Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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