In recent times, the Sino-US foreign trade market has received a number of good news. From official economic and trade consultations releasing clear signals of cooperation, to domestic manufacturing factories welcoming the return of overseas orders, merchants deeply engaged in foreign trade with the United States have gradually come out of the previous operating trough, and the overall operating environment of the foreign trade industry has been significantly improved.
On May 28, the Ministry of Commerce issued an official response to the Sino-US tariff negotiations. The two sides have finalized negotiations to promote reciprocal tax reduction negotiations for goods of the same volume within the cooperation framework of the Trade Council. The overall trade volume involved is expected to reach 30 billion US dollars.
The implementation of this consultation is a key positive development in the process of Sino-US economic and trade cooperation.
The frequency of bilateral economic and trade docking between China and the United States has continued to increase in the past month, and market expectations for a pickup in bilateral trade have continued to rise.
The officially released cooperation framework has stabilized the business confidence of practitioners in the entire industry chain and dispelled most merchants’ concerns about sudden changes in tariffs.
Many foreign trade operators who have been in the industry for more than ten years said that although the volume of orders at this stage is not as good as the peak period of the industry, they have got rid of the difficult situation of having no orders from 2018 to 2019, and production and operations have entered a stable range.
In addition to the implementation of favorable policies, foreign trade export statistics intuitively confirm the industry’s recovery trend.
In April this year, my country’s exports to the United States in dollar terms increased by $252 million compared with the same period last year, a year-on-year increase of 12%.
April last year coincided with the bilateral tariff adjustment cycle. High tariffs hit a large number of export companies that rely on volume to survive. A large number of factory orders shrank significantly, and some small and medium-sized enterprises were forced to suspend production.
The export data in April this year bucked the trend and rose, indicating that domestic foreign trade with the United States is gradually getting rid of the negative impact of high tariffs in the past and returning to the track of normal development.
Foreign trade practitioners in many places along the coast have reported that the number of inquiries from U.S. buyers has steadily increased in recent months. The previously common phenomena of delayed shipments and unilateral cancellations of orders have been significantly reduced, and customers’ willingness to cooperate has continued to rebound.
The changes in production orders of front-line manufacturing companies are the most intuitive manifestation of the improvement in the trade environment.
A company in South China that specializes in smart furniture production has completely experienced a full cycle of orders being transferred out of the country and back again.
In 2019, due to the impact of tariff costs, companies chose to build production branches in Vietnam, and most of the U.S.-directed orders were transferred to overseas factories for production.
At that time, after cost accounting and superimposing local labor and tariff expenses, Vietnam’s OEM cost was higher than that of domestic direct export.
However, the American buyer who had cooperated with the company in the past two months took the initiative to change the cooperation and transferred an order for height-adjustable table products worth US$500,000 back to the domestic factory for processing and production.
The person in charge of the company revealed that in just a few months, three or four long-term U.S. customers have requested the repatriation of similar orders, and the reshoring of such orders has become a normal trend.
The core reason for the reshoring of orders is concentrated on the production supporting and delivery efficiency of high-end goods.
The production process of high-value products is cumbersome and the product quality inspection standards are strict. When it was put into production in Vietnam, the core hardware accessories of the products needed to be shipped out of the country by sea and had to go through multiple layers of customs clearance before they could be delivered to the production plant. The entire supply chain was lengthy.
Problems in any link, such as delays in shipping and blocked customs clearance at ports, will directly delay the product delivery cycle.
With the gradual implementation and stabilization of Sino-US trade-related policies, the cooperation logic of overseas buyers has changed significantly.
For large orders, the benefits brought by stable and on-schedule delivery have surpassed the cost savings from tariffs and become the primary criterion for customers to select OEMs.
Once a delivery delay occurs for a single large order, the economic losses incurred often far exceed the cost of avoiding tariffs. This is also a key factor in why high-end orders are prioritized for returning to domestic manufacturing.
From the official release of a reciprocal tax reduction cooperation plan, to the sharp increase in monthly export data, to the continuous receipt of relocation orders for physical factories, multiple benefits have been implemented, allowing the recovery dividend to effectively cover the entire chain of foreign trade practitioners.
This round of industry recovery is not a short-term market hype, but a real manifestation of the restoration of market confidence in the prospects of bilateral economic and trade.
As bilateral negotiations continue to deepen, more economic and trade benefits will be released.
For merchants rooted in foreign trade with the United States, the long-lasting industry winter has officially come to an end. The industry turning point that has been anticipated for many years has arrived. In the future, the domestic and foreign trade manufacturing industry is expected to rely on the advantages of improving the industrial chain to continue to accept high-quality overseas orders and steadily expand overseas market share.
