The group, based in Leeds, imports cheap garments made in Rumania. Originally it sold only no- frills underpants in German department stores, which liked the low prices but were unwilling to deal directly with chaotic Rumanian manufacturers.
Stanley Wootliff, Caldwell's chairman, said German sales had been good for the first four months before falling 40 per cent in the subsequent two months.
The Chinese decision meant the forced cancellation of a US contract and a foreign exchange loss on dollars already purchased.
The setbacks cut profits before tax to pounds 147,500 in the six months to 30 April, compared with pounds 176,300 the previous year. Turnover rose 13 per cent to pounds 3.4m, while operating profits were 47 per cent higher at pounds 146,600.
Mr Wootliff said Caldwell's other businesses were developing well. In May it began importing Rumanian underwear into Britain, and is about to order a second container load.
'It is not the same as the German market - the sizing is different - but the principle is the same. We are selling on price, not quality,' Mr Wootliff said.
This month the group is to begin shipping sweatshirts to America, with an initial dollars 2m order.
The interim dividend was unchanged at 0.3875p. The shares fell 9p to 49p.Reuse content