China’s Manufacturing Sector Takes a Hit From Higher US Tariffs

China’s Manufacturing Purchasing Managers’ Index fell below 50 in April. A reading below 50 means contraction in manufacturing activity over that in the previous month. Manufacturing Purchasing Managers’ Index of National Bureau of Statistics of China came down to 49 in April from 50.5 in March.

Manufacturing Takes a Hit from Higher US Tariffs

The reason for this contraction is the high import tariffs imposed on Chinese goods by US President Trump. With these high tariffs many US companies have cancelled the orders that they placed with Chinese manufacturing companies. China’s economy is heavily dependent on exports of manufactured goods. Around 70% of the goods that are sold on Amazon’s platform in USA are manufactured in China, according to data from The Economist.

China’s Economic Slowdown May Worsen

With uncertainty looming over the horizon many Chinese manufacturers have cancelled their purchase orders for raw materials and other inputs that go into manufacturing. If this decline in manufacturing continues then the economic slowdown in China will be aggravated. This in turn will have an adverse impact on global economy too. China’s manufacturing sector is a major consumer of commodities and other raw materials. Demand and prices of commodities may therefore go down.