Has Trump cancelled Christmas?

Christmas decorations displayed at Zhanbang Christmas Company at Yiwu International Trade Market in Yiwu, Zhejiang province, China. — Reuters

CHINESE producers of plastic Christmas trees and other festive decorations say orders from US clients, which are crucial for their business, should have started to come in by now. But because of surging import tariffs, they haven’t.

US President Donald Trump has imposed 125% tariffs on Chinese imports so far this year in an escalating trade war that threatens great pain for the world’s largest exporter of manufactured goods.

US retailers are almost completely reliant on China for Christmas decorations, where they source 87% of such goods – worth roughly US$4bil (RM17.7bil).

Chinese factories are also heavily dependent on the US market, where they sell half of what they make.

If Americans want new Christmas decorations this year, they will have to pay a lot more for them – if they can find them on the shelves at all.

“So far this year, none of my American customers have placed any orders,” said Qun Ying, who runs an artificial Christmas tree factory in the eastern city of Jinhua.

Customers shopping for Christmas decorations at a store at Yiwu International Trade Market. — Reuters

“Of course it’s about the tariffs. By mid-April, all the orders are normally finalised, but right now, it’s hard to know if any orders are coming. Maybe American customers won’t buy anything this year.”

In Shaoxing, some 160km from Jinhua, factory owner Liu Song was confident his business can cope by trying to sell more to Russia, Europe and South-East Asia, which together take 75% of his products already.

“We are worried that US orders will come down,” he said, while adding, “We will definitely win this trade war.”

Jessica Guo, who also manages a Christmas tree factory in Jinhua, said she was just notified by an important US ­customer that it is pausing a 3mil yuan (RM1.82mil) order for which she had already spent 400,000 yuan (RM242,810) on materials.

She expects that order will soon be cancelled and worries about her business.

“My peers and I rely on US orders to survive,” Guo said. “This will inevitably affect a lot of people. No one can escape.”

Economists say the trade war will shave 1-2 percentage points off Chinese econo­mic growth this year, exacerbate indus­trial overcapacity issues, threaten jobs and further fuel deflationary forces.

Customers shopping for Christmas decorations at a store in the Yiwu International Trade Market, in Yiwu, Zhejiang province. — Reuters

As Chinese exporters sell less to the US, which last year bought goods worth more than US$400bil (RM1.77 trillion), they will have to compete ever more intensely on prices in other markets.

This will hit their already-thin profit margins and force them to cut costs at home, economists say.

Guo’s 10,800sqm factory employs 140 people regularly, but that number can hit 200 in peak production season over the summer. This year, she does not expect to need extra workers.

“Losing the US market will definitely impact many people’s jobs,” said Guo.

Domestic demand for Christmas decorations in China is insignificant, she added.

Sourcing from countries other than China will be difficult. The second-biggest exporter of Christmas decorations to the US is Cambodia, which makes 5.5% of the goods. But Trump has also imposed levies on Cambodian imports.

Shifting production to the US, one of Trump’s goals in imposing tariffs on China and almost every other country in the world, is not feasible, says Jami Warner, executive director of the American Christmas Tree Association.

“They certainly can’t be made in the United States. There’s no manufacturing, the technology isn’t here, the labour market isn’t here,” said Warner.

Warner, who expects significant, but hard to estimate, price increases, says 80% of all Christmas trees displayed in the US are artificial.

The pre-lit trees, which is most of them, are only made in China.

She decries her industry becoming ­collateral damage in a geopolitical fight.

“What our members make and sell are not strategic products,” said Warner.

“We’re not threatening. We’re a happy, joyful business. We’d like to stay in that joyful business.” — Reuters