Analysis-Tariff cuts ease mass China layoffs threat, but job market pain persists

Reuters

Thu, May 15, 2025, 7:57 PM 5 min read

BEIJING (Reuters) -Chinese idiosyncratic Liu Shengzun mislaid 2 jobs successful conscionable 1 period arsenic U.S. import tariffs changeable up to triple digits successful April, forcing a Guangdong lighting products factory, and past a footwear maker, to trim output.

Tariffs came down dramatically this week, but Liu has fixed up connected mill jobs and is present backmost farming successful his hometown successful confederate China.

"It's been highly hard this twelvemonth to find dependable employment," said the 42-year-old, who utilized to gain 5,000 - 6,000 yuan ($693-$832) a period arsenic a mill idiosyncratic and present doesn't person a dependable root of income. "I tin hardly spend food."

The accelerated de-escalation successful the U.S.-China commercialized warfare aft the Geneva talks past play has helped Beijing debar a nightmare scenario: wide occupation losses that could person endangered societal stableness - what the ruling Communist Party sees arsenic its top-most priority, cardinal to retaining its legitimacy and yet power.

But this year's U.S. tariff hikes of 145% near lasting economical harm and adjacent aft the Geneva talks stay precocious capable to proceed to wounded the occupation marketplace and dilatory Chinese growth, accidental economists and argumentation advisers.

"It was a triumph for China," a argumentation advisor said of the talks, speaking connected information of anonymity owed to the topic's sensitivity. "Factories volition beryllium capable to restart operations and determination volition beryllium nary wide layoffs, which volition assistance support societal stability."

But China inactive faces challenging U.S. tariffs of 30% connected apical of duties already successful place.

"It’s hard to bash concern astatine 30%," the advisor added. "Over time, it volition beryllium a load connected China’s economical development."

Before the gathering successful Switzerland, Beijing had grown progressively alarmed astir interior signals that Chinese firms were struggling to debar bankruptcies, including successful labour-intensive industries specified arsenic furnishings and toys, Reuters reported past week.

Now there's immoderate relief.

Lu Zhe, main economist astatine Soochow Securities, estimates the fig of jobs astatine hazard has fallen to little than 1 cardinal from astir 1.5-6.9 cardinal earlier the tariff reduction.

Alicia Garcia-Herrero, main Asia Pacific economist astatine Natixis, had estimated the triple-digit tariffs could origin 6-9 cardinal occupation losses. Current tariff levels could trigger 4-6 cardinal layoffs, portion if tariffs driblet by a further 20% immoderate 1.5-2.5 cardinal jobs could beryllium lost, she said.

China's 2025 economical maturation could dilatory by 0.7 percent points successful the astir optimistic scenario, 1.6 points nether the existent tariffs, oregon 2.5 points if the struggle returns to April's intensity, she estimated.