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Workers who take care in a factory in Ankang, China.
CNBC
Like Washington-Beijing outstanding commercial tensionsChinese manufacturers are fighting for ways of adjusting their supply chains and removing intense rates.
The additional rates of 10% of the president of the United States in China’s assets entered into force on Tuesday, which brought the new cumulative rates in almost a month to 20%.
Fresh rates also arrived In addition to several existing rates In Chinese imports, it is placed under the Biden administration, including 100% taxes in electric vehicles, 50% in solar cells and 25% in steel, aluminum, EV batteries and key minerals.
The effective average rate of the United States in Chinese products will reach 33%, compared to around 13% before Trump began his latest mandate in January, according to estimates of the main economist of Nomura in China, Ting Lu.
China on Tuesday retaliation For American tariffs with additional tariffs of up to 15% on selected goods from the United States and exports restricted to 15 US companies. The measures will enter into force as of March 10.
“It will be a survival game for Chinese companies, (as) its final result will be affected,” Edwin Tan, general manager of the Global Logistics Firm Asian Tigers China, told CNBC.
Several business owners dedicated to selling products to the US. Some published screenshots of emails from US clients who request to reduce prices and not do so would lead to the cancellation of existing orders.
Companies are covering their bets because they cannot identify today what will be the differentiation in the rate from one country to another.
Eric Martin-Neuville
Vice President of Asia-Pacific and Middle East in Geodis
In the period prior to the US presidential elections. UU. Last year, Mian Bing, owner of a stationary manufacturer based in Guangdong, received requests from a key client in Hong Kong to consider establishing production in Southeast Asia in the middle of the expectations that more tariffs would be submitted under the second Trump mandate.
Shortly after, the company bought industrial lands in Cambodia and began building a factory that will be operational at the end of this year, he told CNBC.
When Trump raised tariffs on Chinese products during his first presidential mandate, many Chinese companies have embarked on the call “China+1” strategyexpanding supply and manufacturing to a third country, such as Vietnam, Thailand and Mexico.
Unlike the last commercial war of the United States-China, Chinese companies can now expect their relocation plans due to “Trump’s unpredictability (from Trump),” said Lynn Song, China economist China Chief of Ing. “The last thing companies want would be to commit great resources to move to a country just to find that it is also subject to heavy tariffs,” he added.
Workers who produce garments in a textile factory that supplies clothes to the fast fashion e -fashion commerce company in Guangzhou in the province of Guangdong in southern China.
Jade gao | AFP | Getty images
Trump’s tariff agenda in his second term has spread beyond China. Its administration has advanced with 25% tariffs in Canada and Mexico and warned of additional rates on any country that has a significant commercial surplus with the United States.
“According to Trump’s policy, nobody knows where he will get to tariffs,” he said so, before adding: “No country is safe at this time.”
Consequently, Chinese companies seeking a third country to redirect their supply chains with the aim of sending their products to the United States are finding that task is much more difficult.
Instead of the typical “China + 1” plan, many have adopted a “Chinese + Many Strategy”, Cynthia Ding, founding partner of Sega Ventures, a risk capital firm based in Singapore to CNBC, which refers to the practice of establishing operations in multiple countries.
“This inevitably increases operating costs, but it is a necessary compensation for the safety of the supply chain. Ultimately, these costs are transmitted to customers,” he added.
‘China more many’
Chinese companies seeking ways to mitigate the impacts of American tariffs have expanded production to Southeast Asian countries in recent years, mainly Singapore, Indonesia and Vietnam.
According to Rhodium Group, the sectors of electronic clothing and consumption devices have seen more production than others, such as automotive and solar industries, Rhodium Group.
Direct investment out of China in the manufacturing industry in the ASEAN, a block of Southeast Asian countries, almost tripled about $ 9.2 billion in 2023, You from around $ 3.2 billion in 2017According to the China Ministry of Commerce.
Greenfield Investment, which refers to the creation of factories and new operations in a foreign country, dominated the foreign investment of Chinese companies in 2024, representing more than 80% of the total value of the transaction, According to the data compiled by Rhodium Group.
“Vietnam has offered manufacturers an easy and practical form of China,” said the research group in February. 4. Report, but it is likely that the country has been under increasing scrutiny of the White House due to its great surplus with us and a substantial investment in China.
Vietnam’s commercial surplus with the United States shot approximately 18% per year for A height record last year. The country Simple average rate rate In partners with the most favored nation state, including the US, it stood at 9.4%, compared to the US that raised 3.3%from 2023.
Other countries such as Indonesia, Philippines and Singapore can see lower risks, but they are not “immune” to possible tariffs, according to Tiannchen Xu, senior economist of the Economic Intelligence Unit.
Therefore, that has fed a trend of companies that diversify operations in multiple countries in the region.
“Companies are covering their bets because they cannot identify today what will be the differentiation in the rate from one country to another,” said Eric Martin-Neuville, vice president of Asia-Pacific and the Middle East of the Global Geodis logistics firm.
Do we reformulate an option?
Some Chinese companies are considering moving part or all of the production to the United States, with the desire to dodge tariffs and directly access the US market.
A worker who uses a mask and protective gloves gathers facial shields at Hasbro’s manufacturing facilities owned by Cartamundi in East Longmeadow, Massachusetts, on Wednesday, April 29, 2020.
Adam Glanzman | Bloomberg | Getty images
Bryan Zheng, founder and CEO of Livall, a Guangdong -based company that sells smart cycling helmets, said he had decided to “wait and see” how tariff actions will be developed before embarking on a huge Greenfield investment.
Although gradually increases the prices of its inventories that are already in the US.
The official data of the Ministry of Commerce of China showed that the United States remained the fifth largest destination for foreign foreign investment in China, With $ 83.7 billion that flow to the USA. At the end of 2023.
The manufacturing sector saw the largest investment in China that year, according to the data, which represent 30.6% of the total amount.
However, investment flows in sensitive technologies, such as semiconductors, artificial intelligence and biotechnology, can continue with certain restrictions, said Cao Yuan, partner of Yingke Law Firm based in Beijing.
– Yulia Jiang of CNBC contributed to this report.
