How are Chinese manufacturers coping with Trump's tariffs?
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How are Chinese manufacturers coping with Trump's tariffs? Live from the UK, this is the Marketplace Morning Report from the BBC World Service. Hello, I'm Nick Koreshi in for Leanna Byrne.

Sky-high tariffs on Chinese goods arriving at the US border are already having a knock-on effect for many companies. Major US retailers met President Trump yesterday, and in China, many manufacturers are warehousing stock, as the BBC's Laura Bicker found when she visited a sales fair in China's manufacturing heartland. We're heading into the Canton Fair, but...

This place has so many halls that even we're getting lost and having to ask for directions. Are we going the right way? Yes. The whole fair takes up a space of around 200 football fields, so that gives you an idea of the size of this. And today's quite a bit is...

apples, carrots and just one or two things to add on. This area has everything you might need for the home from toothbrushes to vacuum cleaners, coffee machines, blenders, washing machines, fridges.

As well as household goods, this year the Canton Fair is full of bewildered traders wondering if they can still sell to the US market, including Lionel Xu from Sorbo Technology. For the US market we have more than 15%. 50%? 50%. More than 50% in the US market. So it's very hard for us because of President Trump.

This is crazy. He's crazy. What are you going to do? What's going to happen? How are you going to sell your products? I mean, we will go better in one month or in two months because I believe Trump will change his mind. So you think you have your fingers crossed? Yeah, I believe I have my fingers crossed, yeah.

Lionel's orders bound for the US are piled in his warehouse, waiting. And his company is not the only one. Amy is selling electric ovens and ice cream makers for the Guangdong Sailing Trade Company. How is business for you these days? Not good, not bad. Not good, not bad? Yes.

How about tariffs? Do you still sell to the US? No. Stop production already. You've stopped production already? Yeah, all the products are in the warehouse, yeah. They're all in the warehouse? Yeah, in the warehouse, yeah. Do you think that will change? Do you think there will be a deal? Maybe.

Most of the stallholders we spoke to who export to America say all their exports are in warehouses waiting to be shipped. There's a long way to go before China and the US resolve this dispute and that will leave many, many manufacturers here in Guangdong in limbo. In China, I'm the BBC's Laura Bicker for Marketplace. OK, let's do some numbers, shall we?

Swiss drugs giant Roche is investing $50 billion in the US over five years to avoid trade tariffs. It's expected to create 12,000 jobs.

And on Trump's labelling of the Federal Reserve Chair, Jerome Powell as a major loser has had consequences. After a sell-off in the US, European shares edged lower in early trade, while Asian stocks battled to hold ground. Gold, meanwhile, has surged to another record of $3,500 an ounce as investors seek a safe haven.

Now, Vice President J.D. Vance is in India this week. He's been talking trade with Prime Minister Narendra Modi as higher U.S. tariffs loom. India is a major trading partner with the U.S. It also plays a key role in the international diamond trade, which has been buffeted by Donald Trump's so-called reciprocal tariff plan. My colleague Luke Wilson caught up with diamond industry expert Paul Zimnicki of Diamond Analytics.

and asked him what impact the levies are having. I guess I would start by noting that the diamond trade is an especially global industry. Diamonds are primarily mined in sub-Saharan Africa, Russia, Canada. They're traded in hubs like Belgium, the UAE, Hong Kong. And

and they're cut and polished in India. And then they're primarily consumed by markets like America, Europe, Japan. That said, as far as the tariffs are concerned, the source origin of a diamond is considered where it was transformed, i.e. cut and polished. And again, the large majority of this takes place in India. So the U.S. tariff on Indian goods is what's key here. And that initial reciprocal tariff, if you will, was 26%.

It's now 10% until early July, that same base level for pretty much every country other than China. And the tariff is at the wholesale level. So for natural diamonds, at least, it's quite consequential. And for those customers who are still planning to go out to buy diamonds, what does that look like for them? How does this feed through into prices and supply and demand, like you say?

Diamonds already in the U.S. are theoretically more valuable now because, again, they have the cost of that tariff already embedded in them.

What I could say is when the initial reciprocal tariffs were announced, the diamond trade essentially froze up. And then, you know, the following week when the pause was initiated, you started to see some flow open back up. But there's going to continue to be hesitancy, you know, until we have more clarity. And this may continue for, you know, at least, you know, the next three months. And can you give us an idea of

how big a part of the diamond market the US is and therefore kind of how consequential these tariffs are. I estimate that upwards of 55% of total global diamond jewelry is consumed in the US. China has been the second largest consumer of diamonds.

However, given what they're going through on a more macro level, luxury consumption in China has fallen quite dramatically. Last year, I estimate diamond consumption in China was down 50% year over year. India has actually stepped up and is now the second largest consumer of diamonds.

But again, you know, America is still by far the primary consumer. So it's kind of the key to this industry. Paul Zimnitsky, Diamond Industry Analyst based in New York. Thanks very much for joining us on Marketplace. My pleasure. Thank you. And let me just tell you, J.D. Vance is on his feet right now giving a speech in Jaipur. He says India and the U.S. have much to offer one another. This has been the Marketplace Morning Report. I'm Nick Horatio. Thanks for listening.

Some people see sustainable investing as a meaningful tool in the fight against climate change. Others call it woke capitalism. I'm Amy Scott, host of How We Survive, a podcast from Marketplace. And this week, the team heads to Texas, where a backlash against climate-conscious investing took root. I essentially just said if you boycott fossil fuels, you can't do business with the state of Texas. And we'll look at the dark money behind the attack.

Listen to How We Survive wherever you get your podcasts.