Trade shock: tariffs and war
- Trade policy and energy disruptions dominated the meetings, with tariffs and the Middle East war testing global trade resilience. - Since January 14 the U.S. imposed a 25% tariff on some imports and has floated a possible 100% levy on other goods. - That mix has left China absorbing tariff shocks but now seeing factory orders, costs and employment hit by the Iran war. (commonslibrary.parliament.uk) (bbc.co.uk)
China’s exporters spent months absorbing higher U.S. tariffs. Now the Iran war is raising energy and materials costs at the same time. (whitehouse.gov) (finance.yahoo.com) On January 14, 2026, President Donald Trump issued new Section 232 tariff actions on imports including processed critical minerals and derivative products, part of a wider tariff push the United States Trade Representative tracks on its tariff actions page. On April 2, the White House said some imported steel, aluminum and copper articles would face tariffs as high as 50%, while many derivative articles would face 25%. (whitehouse.gov) (ustr.gov) (whitehouse.gov) Chinese factories entered March in better shape than they look now. China’s official manufacturing purchasing managers’ index rose to 50.4 in March from 49.0 in February, and the new orders index climbed to 51.6, but the employment index stayed below 50 at 48.6. (stats.gov.cn) A private survey told a similar story on timing and pressure. S&P Global’s China manufacturing index came in at 50.8 in March, with input prices and output prices rising at the fastest pace since March 2022 and supplier delivery times lengthening the most since December 2022. (pmi.spglobal.com) By mid-April, Reuters reported that China’s first-quarter growth reached 5.0% from a year earlier, at the top of Beijing’s 4.5% to 5.0% target range, but March exports had slowed to 2.5% growth after 21.8% in January and February. Reuters said the Iran war had pushed up energy costs and put global demand at risk. (money.usnews.com) The pressure is showing up on factory floors and at the Canton Fair in Guangzhou. Reuters reported on April 17 that plastics producer Xiatao saw raw material costs jump 20% after the war began, while its profit margins were cut roughly in half to 5% to 6%. (finance.yahoo.com) Other exporters said the hit was spreading beyond plastics. Reuters reported that appliance maker Weking had seen output cut in half as orders slowed and plastic, copper and aluminum costs rose, and its manager said the company was selling at a loss even after a 15% price increase. (finance.yahoo.com) The trade shock is hitting two weak points in China’s model at once: dependence on foreign buyers and dependence on imported energy moving through open sea lanes. Reuters said China’s strategic oil reserves and broader energy mix have cushioned the first blow, but factories with thin margins and large payrolls remain exposed if the conflict drags on. (money.usnews.com) Washington says the tariffs are meant to protect national security and rebuild domestic industry. Beijing has not accepted that case, and the data from March and April show a different immediate result: stronger price pressure, slower export momentum and more strain on employment before any clear reset in global trade flows. (whitehouse.gov) (stats.gov.cn) (money.usnews.com) For now, the story is not one clean tariff fight or one isolated war shock. It is a manufacturing system taking one blow from trade policy and another from energy disruption, with both arriving in the same quarter. (ustr.gov) (finance.yahoo.com) (money.usnews.com)
