China exporters feel a double squeeze

Chinese exporters are getting hit from both sides: war-linked costs are rising as U.S. tariff relief, where it exists, is aimed at importers, not factories. (usnews.com, cbp.gov) At the Canton Fair in Guangzhou on April 15, plastics exporter Shao Haixia said raw-material costs had jumped 20% since the Iran war began, while her factory’s margins were cut roughly in half to 5% to 6%. Reuters reported the fair had about 32,000 exhibitors. (usnews.com) Another exhibitor, kettle and rice-cooker maker Weking, said output had been halved as orders slowed and plastic, copper and aluminium costs rose; its general manager said the company was still selling at a loss after a 15% price increase and was considering job cuts. (usnews.com) The pressure is showing up in national data. China’s exports rose 2.5% in March from a year earlier, down from a 21.8% jump in January and February combined, as the Middle East conflict pushed up energy and logistics costs and clouded demand. (cnbc.com, apnews.com) China’s economy still grew 5% in the first quarter of 2026, according to official data released April 16, but Reuters and CNBC both reported that export strength was masking weak domestic demand as the Iran war darkened the outlook. (cnbc.com, usnews.com) That leaves exporters looking to Washington as well as the Gulf. U.S. Customs and Border Protection said its new CAPE refund system, launched in phase one on April 20, 2026, lets only Importers of Record or their authorized customs brokers file for refunds of duties imposed under the International Emergency Economic Powers Act. (cbp.gov) That distinction is crucial for Asian suppliers that cut prices to keep U.S. buyers. The Wire, citing Global Trade Research Initiative, reported that approved claims are expected in 60 to 90 days with interest, but exporters cannot claim directly unless they were themselves the U.S. importer on record. (thewire.in, cbp.gov) Indian exporters told The Wire they had offered discounts of up to 25% to stay competitive after Trump’s tariff regime climbed from 10% in April 2025 to 25% on August 7 and 50% on August 28, before the framework was invalidated on February 20, 2026. The same importer-first refund design points to the same bargaining problem for exporters elsewhere, including China. (thewire.in) Beijing enters this stretch from a position of headline strength and factory fragility. China reported a record 2025 trade surplus of nearly $1.2 trillion, but Reuters said the new energy shock is squeezing “already-thin” corporate margins across a manufacturing sector that employs hundreds of millions of people. (usnews.com, usnews.com) For now, the factories making plastic parts, kettles and fans are waiting on two things they cannot control: cheaper shipping and more predictable U.S. trade rules. Until then, the squeeze is landing on margins first and payrolls next. (usnews.com, cbp.gov)