‘Extreme stress’: How the trade war caught one of China’s richest provinces off guard

For figures involved in all aspects of China’s trade – from exporters to government officials – the past 40 days have been a roller-coaster ride.

The ups and downs of the country’s tariff war with the United States – the rapid escalation of import duties in April only matched by Monday’s 90-day rollback of most levies – have ended with a temporary ceasefire, but not all regions have emerged unscathed.

As businesses lick their wounds and count their losses, one of China’s richest provinces has been hit especially hard after years spent as a beneficiary of close trade ties with the US.

Zhejiang – a coastal economic powerhouse and the country’s second-largest exporter to the US – suffered acutely from the sky-high levies imposed by US President Donald Trump on Chinese goods in early April.

The scars could remain for a long time, even if tariffs are no longer at the triple-digit levels seen before Chinese and US officials finished trade talks in Switzerland. There has been widespread angst as the province reels from the impact of the trade war, in what some observers called an “extreme stress test”.

But in the torrid weeks before the de-escalation, Zhejiang sought to “Trump-proof” itself by guarding against the worst of the fallout. The extensive damage to the province’s economy, the pain businesses endured and how officials reacted could offer valuable lessons, even as the prosperous region was pushed to its limits.

“There are regions slow to pivot away from the US and they are paying the price … Monday’s deal could mean the last chance for businesses to change,” said Zhou Zheng, a senior analyst at China Macro Group, a consultancy firm headquartered in Zurich.