For the past five years, Liu Miao has been selling clothing to wholesale buyers in the United States through Amazon. However, this trade has come to an abrupt halt.
Liu owns a small factory in Guangzhou, long recognized as a hub for China's competitive garment industry. Alongside other factory managers, who have long operated on thin profit margins, he revealed last week that the combined impact of tariffs and new U.S. taxes on inexpensive imports has severely disrupted their operations. Additionally, supply chain costs have surged.
Tariffs have made it impossible for Liu to continue selling on Amazon, where he previously earned about one dollar per garment but now only receives fifty cents. He was reluctant to reduce his workers’ wages, as employees clustered around his motorcycle parked on the sidewalk, with a sample dress hanging from the handlebars.
"Right now, selling anything to the U.S. is unfeasible," Liu said. "The tariffs are just too high."
Platforms like Amazon, Shein, and Temu have brought China's vast manufacturing supply chain to the global marketplace. These online platforms enabled thousands of small Guangzhou factories to reach American buyers. Since shipments under $800 entered the U.S. duty-free, factories and platforms could offer products at highly competitive prices.
Exports have been a major driver of China’s economic growth in recent years, with e-commerce thriving particularly well. In one Guangzhou neighborhood, luxury foreign cars such as Mercedes-Benz, BMW, and Cadillac were parked outside factories paying workers roughly $60 a day to mass-produce garments sold on apps like Shein and Amazon.
Now, with escalating trade tensions forcing a decoupling between the world’s two largest economies, many Guangzhou businesses are facing a critical crossroads.
Tariffs have compounded existing challenges for clothing manufacturers. Profitability is increasingly difficult as the Chinese government struggles to stimulate consumer spending following the country's real estate market collapse. Without rising property values, many Chinese consumers are restricting their expenditures.
This downturn impacted Zhang Chen, who owned six clothing stores in central China’s Hubei province. After customers failed to return post-pandemic and rents remained high, he decided to close all his stores.
"In 2020, business didn’t recover; in 2021, it was still down. By 2022, seeing no improvement, it seemed it would never bounce back," Zhang said. He now earns about $100 a day delivering freshly sewn garments to Shein collection points near the airport.
Guangzhou’s garment factories are not the automated workshops producing electric vehicles or semiconductor campuses central to China’s long-term geopolitical and technological resilience efforts. Nonetheless, these clothing factories employ millions striving to make a living.
In interviews, nine factory owners and managers in Guangzhou expressed considerations of relocating their operations—some to provinces like Hubei, nearly 600 miles away—where labor costs are lower. A few are contemplating moves to countries such as Vietnam, where many Chinese factories have established bases to avoid potential new tariffs as steep as those currently imposed on Chinese exports.
Many factory owners reported declining orders and have suspended some production lines. All noted seeing neighboring businesses shutter in recent months.
On the day the U.S. policy ended duty-free imports from China, Liu Bin closed his large garment factory, where piles of Shein packages pressed against the windows.
Liu’s factory specializes in dresses and tops designed for beach parties or evening dates, with Shein typically purchasing around 100,000 pieces monthly. But after orders were halved in April, production began shifting to Jiangxi province. He could no longer afford the rent in Guangzhou.
Liu shared that Shein offered incentives to help cover costs of moving operations to Vietnam, which he considered, "but tariffs in Vietnam also increased even further."
He also attempted to find buyers on TikTok and Temu, but orders declined across all platforms. "Everything is dropping; we’re just waiting and watching," Liu said.
Temu announced last Friday it had ceased direct shipments from China to U.S. buyers. Shein did not respond to requests for comment.
The Chinese government has encouraged domestic e-commerce platforms to support small businesses targeting the national market. However, cautious consumer spending in China makes it difficult for factories to match previous export volumes.
Han Junxiu, who sells novelty socks on Shein and Temu, expressed skepticism that the U.S. government could suddenly impose tariffs on low-value packages entering the country at a rate of four million daily.
"I don’t think that’s very realistic," Han said after closing his stall at the Canton Fair, the province’s annual export event.
His plush socks for pajama parties remain among the most popular items.
Han noted that such everyday goods are precisely the types Americans will continue to need from Chinese manufacturers. "Where else are they going to buy all this?" he asked.
