by Misa Norigami and Joseph Wilde-Ramsing, SOMO

In April 2025, the Trump administration imposed steep new tariffs on Chinese imports. Within hours of the tariff hike, US buyers began cancelling orders from Chinese factories. Some demanded drastic price reductions of 20-30% to offset the duties. The sharp drop in orders from US brands leaves Chinese manufacturing factories scrambling and workers bracing for the fallout.

In May 2025, the US and China agreed on a temporary deal to scale back some tariffs for 90 days while trade talks continue. The Trump administration framed the deal as its “historic trade win.” The Chinese Ministry of Commerce released a parallel statement, calling the agreement “an important step towards stabilising bilateral trade.” But the trade war is far from over, and the back-and-forth only increases uncertainty. Most importantly, for the millions of workers on the frontlines of China’s manufacturing sector, there was no mention of their losses or vulnerability.

Tariffs trigger factory shocks in China

These tariff shocks build on a longer trend of supply chains shifting away from China in recent years due to economic and geopolitical tensions and pandemic disruptions.

In our recent research report Chain of Consequences, SOMO and China Labour Bulletin (CLB) demonstrated the serious consequences of this trend on Chinese workers. As orders reduced, factories had to relocate or shut down. This often led to non-payment of wages and compensation, with little or no prior notice of business changes to affected workers. Workers in turn expressed their dissatisfaction. CLB’s Strike Map shows that strikes and protest actions by workers in Chinese manufacturing sectors increased tenfold from 2022 to 2023. Of the 174 labour protests recorded by CLB in 2024, 31 were linked to supply chains of American apparel and electronics companies.

In one case, workers at Apple supplier Protek (Shanghai) Limited went on strike in July 2024 over ownership changes. Instead of consulting with workers and paying compensation in accordance with Chinese law, management urged workers to sign new contracts under the guise of an "intra-company transfer," which denied workers their legally-mandated compensation. This case highlights persistent gaps in Apple’s human rights due diligence and the urgent need for strong protection of supply chain workers' rights in key business decisions affecting them, such as disengagement or relocating production.

CLB’s recent report further shows how the April tariffs led to wage arrears, forced unpaid leave, and sudden dismissals in China’s garment sector. Many workers were simply told that orders had disappeared, without explanation or compensation.

American brands' responsible exit obligations

Withdrawing from a supply chain or supplier relationship does not absolve companies of responsibility for affected workers. The concept of “responsible exit” has gained prominence in the business and human rights arena; if a brand leaves a factory or region, it should do so in a way that avoids or minimises harm to workers. In practice, this means giving suppliers and workers reasonable notice, ensuring supplier companies are able to fulfil all outstanding payment obligations, and assisting with severance pay or transition support.

International normative standards such as the UN Guiding Principles on Business and Human Rights (UNGPs) and OECD Guidelines for Multinational Enterprises on Responsible Business Conduct affirm that businesses should seek to identify, prevent, mitigate and remediate adverse impacts of their withdrawal or price pressure. The report Responsible disengagement in the time of corona by SOMO, ECCHR and PAX explores what this means in practice. In some situations, due diligence could lead a company to decide against disengaging all together and instead adopt other measures to withstand the crisis, such as by suspending or reducing executive pay or dividend payments to shareholders. This is particularly pertinent in face of the unpredictability of the Trump administration, which could possibly roll back the tariffs at any moment.

In contrast to such responsible disengagement measures, sudden exits that leave a trail of unpaid and adversely impacted Chinese workers represent a clear failure to respect human rights and international norms for responsible business conduct.

Responsible purchasing practices under strain

Beyond exit strategies, brands are being scrutinised for their purchasing practices during the tariff turmoil. Responsible purchasing means stable, predictable orders and fair pricing, but the tariff hikes have triggered the opposite. U.S. brands like Walmart and Amazon demanded heavy discounts from Chinese suppliers, shifting the burden of tariffs onto suppliers and their workers. This mirrors the order cancellation chaos seen during the COVID-19 pandemic, when multinational companies dropped suppliers overnight or forced them to absorb order adjustment costs, often without conducting proper human rights due diligence.

The Fair Labor Association warned that tariff-driven sourcing shifts can increase harm to workers. The Ethical Trading Initiative also urged companies to mitigate harm by providing notice, contributing to compensation, and working collaboratively with suppliers. As the Clean Clothes Campaign stated, “Garment workers cannot be made to pay the price for Trump’s tariff war.”

One concrete solution is for companies to join the PayYourWorkers campaign, which calls on brands to guarantee payment of full wages and severance. In moments of global disruption—whether from a pandemic or a trade war—initiatives like this provide a clear path for companies to uphold their human rights obligations.

Centring workers in a time of geopolitical risk

While companies can reorganise their supply chains, they cannot shift the burden of costs and harms onto workers. In the context of the current tariffs, that means US apparel and electronics companies should be actively working to mitigate the impact on their Chinese suppliers’ workforce. This can be by honouring existing contracts, assisting with transition financing, or, at minimum, refraining from sudden cancellations that lead to wage violations. The evidence so far, however, paints a troubling picture: supply chain workers are bearing the brunt of global political manoeuvres, and brand accountability has not kept pace. Unless companies implement the OECD Guidelines and UNGPs in earnest by putting workers at the centre, the chain of consequences from policies like these tariffs will continue to inflict misery on those least equipped to absorb it. The situation in China’s factories is a stark reminder that responsible business conduct cannot be a fair-weather commitment. When crisis strikes, be it a pandemic or a tariff war, the real test of corporate responsibility is how a company treats the people at the bottom of its supply chain.