Mark Wang, the owner of a Chinese factory, is in a state of limbo these days thanks to President Donald Trump's trade war.

The 20-year veteran of the country's gift industry said he received a letter in early August from his biggest customer, a U.S. retailer he declined to name, urging him to split the cost of a 10 percent duty that the retailer said was being imposed on his products by the Trump administration.

"Ten percent is too high," Wang lamented from his showroom of aroma diffusers, lights, and candleholders. "It is just too much for any of us to absorb."

Wang's company — which he insisted not be named because of business considerations — is based in the industrial town of Dongguan, one of many cities in China's manufacturing south that make up the backbone of the nation's traditional exports. For years, big American companies such as Apple and Walmart have relied on Chinese suppliers to make their products and fill their store shelves. But with costs in China rising, many manufacturers are struggling—and the tariffs only add to the burden.

Wang said his labor and raw material expenses are up as much as 15 percent from last year. He told CNBC that Trump's tariffs will affect more than half of his sales.

In response, he is reorienting his business away from the United States, looking for new customers in Europe, Australia and the Middle East. He said he is also dropping low margin products and scaling back sales destined for the U.S.

"We need to shrink our volumes and focus on what we do best," he said. "Otherwise, we can't survive."