A Chinese toy manufacturing company nearly went out of business last year, saved only by a trade agreement that came just one day before the firm would have collapsed, according to company executives.
David Cheung, who operates Huntar Company alongside his brother Jason, revealed that their family business was on the verge of bankruptcy when the United States and China reached a trade agreement in Geneva on May 12 last year. The deal reduced the most severe tariffs that had been crippling their operations.
At the exact moment the trade truce was announced, Huntar’s manufacturing equipment was preparing to leave Chinese customs as part of a desperate attempt to relocate production to Vietnam and keep the company afloat.
The Cheung brothers immediately recalled their shipment upon learning of the trade deal, later realizing this split-second choice had rescued their enterprise.
“That one day would have changed everything,” Cheung explained. “We were very, very lucky.”
If the manufacturing molds had crossed into Vietnam, the company would have faced two costly scenarios: either setting up operations in the new country or navigating lengthy customs processes to bring the equipment back to China. Both options would have delayed production for two complete cycles, draining essential cash reserves.
The near-collapse of Huntar demonstrates the severe impact the trade dispute had on international businesses and highlights potential risks if economic relations between the superpowers deteriorate further.
Huntar operates in Shaoguan, a southern Chinese city, where it employs between 400 and 500 workers producing educational toys sold at major American retailers like Walmart and Target. Company leadership hopes recent diplomatic meetings between U.S. and Chinese officials could establish more predictable trade relationships.
Economic experts believe an extension of the current tariff pause is probable, pointing to China’s control over rare earth mineral production as a key negotiating advantage. These materials are essential for American industries, including defense contractors, and China effectively leveraged this dependency during previous trade discussions.
“China’s export curbs were an important reminder that economic interdependence cuts both ways,” noted Neil Shearing, chief economist at Capital Economics.
“President Trump discovered that the U.S. did not, in fact, ‘hold all the cards’.”
However, Shearing cautioned that efforts to improve relations haven’t addressed fundamental issues driving the conflict, including China’s massive $1.2 trillion trade surplus and America’s reliance on Chinese manufacturing.
The United States has criticized China for mercantilism – policies that promote exports while limiting imports to increase national wealth and influence. China counters that America is attempting to suppress its economic growth.
“It is a negative feedback loop: geopolitics worsen imbalances, and imbalances worsen geopolitical tensions,” Shearing observed.
Paradoxically, Huntar’s existence stems from the very differences between the two nations that now create tension. David Cheung’s father fled Communist China by swimming across a river into British-controlled Hong Kong, then immigrated to California in 1978, attracted by American freedoms.
Working as a janitor in San Francisco and selling merchandise at flea markets for additional income, he eventually saved enough money to establish the business his sons now operate. The family pursued the American dream until, like many U.S. manufacturers, they shifted production to China.
In the toy industry specifically, China produces 80% of products purchased by American consumers, according to The Toy Association trade group.
Given these interconnected supply chains, Cheung anticipates that U.S.-China tensions will continue affecting manufacturing networks regardless of diplomatic outcomes.
American wholesale buyers still request alternative production locations, though most recognize the need “to keep as much in China as possible because that’s where we have the infrastructure. That’s where everything is, frankly, better manufactured,” Cheung stated.
“There’s always this political cloud hanging over their heads where they don’t want to be in the same position that they were in a year ago.”
While Huntar maintains a partnership with a Vietnamese manufacturer for certain products, any major relocation efforts face new challenges. Plastic sourcing costs have increased more than 40% since U.S.-Israeli military actions against Iran disrupted oil and petroleum product supplies.
Despite ongoing uncertainties, stable tariff rates allow Huntar to continue operations.
“I can’t hope for tariff rates to go down. That’s a fool’s dream,” Cheung admitted. “I just hope they remain stable.”
