Tariffs shatter Huntar and other Chinese factories with US-destined goods

President Trump’s decision to slap a 145% tariff on Chinese imports on April 9 has plunged scores of factories in southern China into crisis, and none more so than Huntar Company Inc. Although the US reviewed the tariffs downward to a temporary 30% for China, CEO Jason Cheung, has watched order books at its Shaoguan factory in Guangdong Province evaporate almost overnight as US clients cancelled shipments of educational toys destined for Walmart and Target. Hunter now sits under a burden of cancelled orders Faced with an existential threat, Cheung halted production immediately, slashed output by roughly two-thirds, laid off a third of his 400 Chinese staff, and cut wages and hours for those who remained. Cheung’s urgency reflects the precarious margins under which toy makers operate. Huntar, a US-owned company in China, manufactures plastic learning aids for North American retailers, including Learning Resources Inc.’s Numberblocks, which help children grasp early math concepts, and under its own Popular Playthings label. The sudden imposition of hefty duties transformed what was already a razor-thin business into a financial sinkhole. “I needed to start saving money as soon as possible,” Cheung explained. The factory now sits on $750,000 worth of cancelled orders, much of which Cheung cannot recover even if tariffs ease, thanks to ballooning shipping rates that spiked from $2,000 to more than $20,000 per container after the pandemic. Chinese-based factories account for about 80% of toys sold in the United States, according to The Toy Association. Yet Huntar is unusual in that it straddles both sides of the trade divide, legally Chinese-owned, but run by an American small-business scion whose 15 US employees would lose their jobs if operations collapse. On paper, Cheung epitomizes the spectre President Trump cites to justify tariffs, the foreign manufacturer undermining domestic industry. In reality, he embodies the small-business entrepreneur the policy was meant to shield. Levies are expected to shatter toy companies With coffers dwindling, Cheung is racing against a self-imposed deadline of about one month to secure a Vietnamese partner. He concedes that he may have to “cannibalize” his own operation, outsourcing parts of his product line while cutting other segments, to survive. According to Reuters, retaining the Shaoguan facility in the hope of a swift trade-war resolution is a high-risk gamble, keeping heavy overheads on life support while producing at 30% capacity would deplete his reserves within weeks. Huntar’s clients feel the pain, too. Rick Woldenberg, CEO of Learning Resources, which employs 500 people in the US and makes 60% of its toys in China, estimates that duties on his shipments would soar from $2 million to $100 million annually. He has already cancelled future Chinese production and sued the US government to block the tariffs. “It’s not who we want to be,” Woldenberg says of penalizing his Chinese suppliers, “but they know we have no choice.” An April Toy Association survey found that 45% of small and mid-size US toy companies expect the levies to shatter their businesses within weeks or months. Beijing’s alarm over factory closures appears to have jolted it back to the negotiating table. Over the weekend in Geneva, senior US and Chinese officials held their first face-to-face talks since the tariff blitz began. Reports indicate that negotiators agreed on a 90-day hiatus in tariff increases, with reciprocal duties slashed by 115 percentage points, effectively trimming US levies on Chinese goods to 30% and China’s on US products to 10%. Yet for factories like Huntar, even a reduced 30% tariff offers little relief. Cheung points out that any levy north of 50% renders the business unsustainable. “On a practical level, there’s no difference between 80 percent and 145 percent,” he argues. With just weeks of runway left, he continues refreshing his browser dozens of times a day, scouring for any sign that Washington or Beijing might relent further. KEY Difference Wire helps crypto brands break through and dominate headlines fast Source: https://www.cryptopolitan.com/tariffs-shatter-huntar-and-chinese-factories/