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China’s economy takes a hit as factories experience sharp decline in orders following Trump tariffs

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President Trump’s tariffs on Chinese imports are delivering a direct blow to China’s economy, with new data showing factory activity dropping sharply in April. The fallout signals growing pressure on Beijing as it struggles to prop up a slowing economy amid a bruising trade standoff.

Key Details:

  • China’s manufacturing index plunged to 49.0 in April — the steepest monthly decline in over a year.
  • Orders for Chinese exports hit their lowest point since the Covid-19 pandemic, according to official data.
  • U.S. tariffs on Chinese goods have reached 145%, with China retaliating at 125%, intensifying the standoff.

Diving Deeper:

Three weeks into a high-stakes trade war, President Trump’s aggressive tariff strategy is showing early signs of success — at least when it comes to putting economic pressure on America’s chief global rival. A new report from China’s National Bureau of Statistics shows the country’s manufacturing sector suffered its sharpest monthly slowdown in over a year. The cause? A dramatic drop in new export orders from the United States, where tariffs on Chinese-made goods have soared to 145%.

The manufacturing purchasing managers’ index fell to 49.0 in April — a contraction level that underlines just how deeply U.S. tariffs are biting. It’s the first clear sign from China’s own official data that the trade measures imposed by President Trump are starting to weaken the export-reliant Chinese economy. A sub-index measuring new export orders reached its lowest point since the Covid-19 pandemic, and factory employment fell to levels not seen since early 2024.

Despite retaliatory tariffs of 125% on U.S. goods, Beijing appears to be scrambling to shore up its economy. China’s government has unveiled a series of internal stimulus measures to boost consumer spending and stabilize employment. These include pension increases, subsidies, and a new law promising more protection for private businesses — a clear sign that confidence among Chinese entrepreneurs is eroding under Xi Jinping’s increasing centralization of economic power.

President Trump, on the other hand, remains defiant. “China was ripping us off like nobody’s ever ripped us off,” he said Tuesday in an interview, dismissing concerns that his policies would harm American consumers. He predicted Beijing would “eat those tariffs,” a statement that appears more prescient as China’s economic woes grow more apparent.

Still, the impact is not one-sided. Major U.S. companies like UPS and General Motors have warned of job cuts and revised earnings projections, respectively. Consumer confidence has also dipped. Yet the broader strategy from the Trump administration appears to be focused on playing the long game — applying sustained pressure on China to level the playing field for American workers and businesses.

Economists are warning of potential global fallout if the trade dispute lingers. However, Beijing may have more to lose. Analysts at Capital Economics now predict China’s growth will fall well short of its 5% target for the year, citing the strain on exports and weak domestic consumption. Meanwhile, Nomura Securities estimates up to 15.8 million Chinese jobs could be at risk if U.S. exports continue to decline.

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Carney’s Bungling of the Tariff Issue Requires a Reset in Canada’s Approach to Trump

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Preston Manning  

Rank and file Americans are best positioned to insist upon a relaxation of Mr. Trump’s tariff policies – that populist base which Mr. Carney neither understands nor respects but whom the President cannot afford to ignore or alienate if he wishes to retain their political support.

By now it is becoming apparent that Mark Carney’s government is seriously bungling Canada’s response to U.S. President Donald Trump’s tariff initiatives. By ill-advisedly imposing counter-tariffs only to withdraw them later, Ottawa temporarily played with “elbows up” – only to learn that, as in hockey, pursuing such a strategy in the absence of a strong offence simply draws penalties and gives the other side a manpower advantage.

As the list of Mr. Carney’s missteps on the tariff file grows – costing Canadians jobs, incomes, and increases in prices – surely it is becoming clear that a fundamental reset is required in Canada’s approach to Mr. Trump and his tariff initiatives if their negative consequences for both Canada and the U.S. are to be overcome.

So what and where is the reset button that could be pushed to redress those initiatives? Who is in the best position to push it, and when is the best opportunity to do so?

That button is not to be found in Washington or on Wall Street, but rather among those to whom Mr. Trump made a promise – time and time again – namely, the American people. “We’re going to get the prices down. We have to get them down. It’s too much. Groceries, cars, everything. We’re going to get the prices down,” he declared repeatedly throughout the 2024 presidential election campaign.

That was the promise. But the current reality is price increases for Americans on food, energy, furniture, and paper products, as well as projected increases in the cost of homes, industrial structures, and public infrastructure as tariffs on steel, aluminum, softwood lumber and timber take their toll. In other words, the reality is not a decrease but an increase in the cost of living for millions of American consumers and voters.

Who then is best positioned to insist upon a relaxation of Mr. Trump’s tariff policies? Not Mr. Carney and his officials, nor even the traditional Washington influencers, but those rank-and-file Americans comprising the massive populist wave that put Mr. Trump in the White House for a second time – that populist base which Mr. Carney neither understands nor respects but whom the President cannot afford to ignore or alienate if he wishes to retain their political support.

So when will be the first real opportunity for Mr. Trump’s core constituency to speak to him effectively – through their votes – about modifying his approach to tariffs? It will be in the months running up to the midterm congressional elections in November, 2026, in which the 435 seats of the House of Representatives andmore crucially, the 35 seats in the US Senate, will be up for election.

Most of those Republican candidates standing for election will want to be pro-Trump to retain hardcore Republican voters, but they will also want to be anti-tariff to secure the support of voters suffering from tariff-induced price increases. How can they be both? By being fully supportive of Mr. Trump’s war on illegal drugs and migrants, bloated bureaucracies, and the mis-management of government finances, while at the same time campaigning as “tariff modifiers”. By asking voters to send them to Washington to support Mr. Trump but to remove the price-increasing-sting of his tariff policies through the negotiation of “reciprocity agreements” with major US trading partners to achieve that objective – just as former president William McKinley, whom Mr. Trump professes to admire, did many years ago.

The election of just a few tariff-moderating Republicans to the U.S. Senate in 2026, to be present when the tariff bill embodying Mr. Trump’s policies eventually gets to that chamber, will do more to improve tariff-disrupting Canada-U.S. trade relations than the ineffectual efforts of those like Mr. Carney who seek to get to Mr. Trump by traditional elite-to-elite negotiating practices.

Getting to Mr. Trump on the tariff issue through his own populist base raises some obvious questions. Which U.S. states, for example, are experiencing the greatest price increases as a result of the tariff wars, and of those, which offer the greatest opportunities to nominate and elect tariff-modifying Republicans to the Senate? Where in the U.S., at the state or national level, are there the beginnings of a grassroots tariff-modification movement, and how might such a movement be encouraged and supported by Canadians as well as Americans.

Americans of course have a vested interest in securing research-informed answers to such questions. But so do Canadians. More on these questions and answers shortly. They are the keys to achieving the desire of the vast majority of rank and file citizens on both sides of the border for a restoration of amicable economic and social relations between our two countries.

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Labour disputes loom large over Canadian economy

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From the Fraser Institute

By Fred McMahon

With labour disputes on the rise, Team Canada faces our greatest economic challenges in decades. It’s a bad look when team members jump the bench for the walk-out/lock-out penalty box—elbows up on the team, not on the ice.

Economic difficulties have escalated in recent years—miserable productivity growth, COVID and its inflation-drenched recovery, the uninvited U.S. trade war, and a government spending spree that left Canada deeply in debt and exacerbated all other difficulties.

Over the same period, labour disputes grew. Hours lost to disputes have been trending down for decades, but up since 2015. For the nine preceding years, the average hours lost annually was 224,000; for the nine years since, it’s been 190,000, but increasing over the years. In 2016, 74,000 hours were lost compared to 362,900 hours in 2023 and 293,600 last year.

Ironically, work stoppages typically occur only if they can wreck havoc on the Canadian economy. They hit sectors where customers and clients have little or no alternative. When customers have choices, they’ll walk away from a shutdown supplier. That encourages workers and businesses to figure out a solution before a strike.

Disputes in transportation and government services are particularly damaging. When Air Canada grounds flights, people and businesses already have tickets and plans. Options are limited and pricey. There is only one Port of Montreal. If it shuts down, there are no other Ports of Montreal. Cargo diversion is, well, limited and pricey. When government employees go on strike, people can’t turn to another government for service.

In 2023 and 2024, Canada suffered 62 transportation such work stoppages, including at the ports of Montreal and Vancouver, Canada’s two largest railways, and the St. Lawrence Seaway.

More disputes are on the way. Canada Post workers recently walked off the job hours after the federal government announced a major move from door-to-door delivery to community mailboxes. In British Columbia, civil servants are on the picket line. Public service unions are preparing to fight efforts to bring federal finances under control. And Air Canada and its flight attendants are now in arbitration after attendants rejected Air Canada’s most recent offer by 99.1 per cent.

As Keith Creel, CEO of Canadian Pacific Kansas City, wrote: “Canada’s message to the world is not one of efficiency, affordability and reliability. Lately, and repeatedly, it’s been the opposite: Disruptions. Delays. Diversions.” This is not a good for Team Canada when Canada needs new investment and entrepreneurship.

Everyone involved in a labour dispute loses. That means Canada losses. Air Canada says its recent strike, three-days long, cost the company $375 million. Employees and customers lose through foregone pay.

More than half a million passengers were directly affected, piling up the losses. Worse is the ripple affect on those not directly affected. When any part of the transportation network is impaired, business and people suffer. The economy is further damaged as investors become skittish about Canadian uncertainty, exacerbating economic difficulties.

Things may get worse. Canada’s economy is shrinking due to the trade war and our own economic mismanagement. That means there’s less stuff to go around. People’s pay on average has to shrink. The economy is not producing enough for everyone to make up “lost wages.” If all wages go up, the economy doesn’t magically start producing more. Instead, money buys less, inflation grows, economic damage intensifies, and there’s even less stuff to go around.

Resentment deepens as workers fight each other over the limited supply of stuff. Those who win make those who lose pay a disproportionate slice of the cost.

Three ways could eliminate or reduce these costs. One is to end unionization in government and essential services. Let the market decide wages. If pay is too low, employees leave for other opportunities, forcing employers to up pay. Another is to incentivize unions to resolve disputes before strikes, for example, by allowing replacement workers. The third is requiring mandatory arbitration, which has an admirable record in Canada of resolving disputes. Legislation should take into account reasonable complaints, whether employers or workers are favoured, and address them.

If Canada’s employers and unions can’t get their act together, only action will avoid dead-loss damage to the Canadian economy, leaving the rest of us as drive-by victims of labour bickering.

Fred McMahon

Senior Fellow, Dr. Michael A. Walker Chair in Economic Freedom
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