Workers who care for care at the factory in ankang in China.
CNBC
Like Washington-Beijing Trade tensionChinese manufacturers are looking for ways to adjust their supply chains and start with escalating tariffs.
An additional 10% of US President Donald Trump on goods from China came on Tuesday, bringing new cumulative tariffs in just about a month to 20%.
Fresh tariffs also arrived Over a few existing tariffs At Chinese imports, set under the biden administration, including 100% of the customs on electric vehicles, 50% on solar cells and 25% on steel, aluminum, EV batteries and key minerals.
The average effective US tariff rate on Chinese goods should reach 33%, which is about 13% before Trump began his latest term in January, according to the estimates of the Chinese economist Nomure Ting Lu.
China on Tuesday avenged On US tariffs with additional tariffs up to 15% on selected American goods and limited exports to 15 US companies. Measures could enter into force of March 10.
“It will be a survival game for Chinese companies, [as] CNBC will affect their bottom line, “said Edwin Tan, the general director of the global logistics company Asian Tigers China, for CNBC.
Numerous owners of companies engaged in the sale of the US goods have taken a variety of social media platforms to express concern about the growing tariffs. Some published shots e -a few of US clients seeking to reduce prices and not to do so would lead to the cancellation of existing orders.
The companies protect their bets because they are not able to recognize today what will be distinguished in the tariff from one country to another.
Eric Martin-Neuville
Vice President of the Asian-Pacific and Middle East on Geodis
In leadership until last year’s US presidential elections, Mian Bing, the owner of a stationary manufacturer based in Guangdong, received the requests of a key client in Hong Kong to consider setting production in Southeast Asia due to expectation that more tariffs will be found under Trump’s second work.
Shortly thereafter, the company bought industrial land in Cambodia and started building a factory that would start later this year, she told CNBC.
When Trump has raised tariffs to Chinese goods during his first presidential term, many Chinese companies have embarked on the so -called “China+1” strategyExpanding sources and production to third country, such as Vietnam, Thailand and Mexico.
Unlike the last trade war in the USA, Chinese companies can now stay on their movement plans due to “unpredictable [Trump’s] Tarife, “said Lynn Song, Chinese economist in Ing -in.” The last thing companies want to be to be committed to huge resources to move to the country just to find that it is also subject to heavy tariffs, “he added.
Workers who produce clothing at a textile factory that supplies the clothing of a company for fast fashion emails Shein in Guangzhou, southern Chinese province of Guangdong.
Jade gao | AFP | Getty Images
Trump’s tariff agenda in his second term has spread beyond China only. His administration progressed with 25% of tariffs to Canada and Mexico and warned of further tariffs to any country that has a significant trade surplus with the USA
“According to Trump’s politics, no one knows where the tariffs will hit,” Tan said before adding: “No country is currently safe.”
Consequently, Chinese companies seeking a third country to redirect their supply chains with the aim of sending their goods to the United States consider that task is much harder.
Instead of the typical “China + 1” plan, many accepted the “China + Many” strategy, “said Cynthia Ding, founder of Sega Ventures, told CNBC based in Singapore, referring to the practice of establishing operations in several countries.
“It inevitably increases operational costs, but it is a necessary compromise for the safety of the supply chain. Ultimately, these costs are transferred to customers,” she added.
‘China Plus Many’
Chinese companies seeking ways to alleviate the impact of US tariffs have expanded production to Southeast Asia countries in recent years, primarily Singapore, Indonesia and Vietnam.
Clothing and consumer electronics sectors recorded more production shifted from China than others, such as cars and solar industry, Rhodium Group states.
External direct investments from China to the production industry in Asean, a block of Southeast Asia countries, almost tripled $ 9.2 billion in 2023,, compared to about $ 3.2 billion in 2017according to the Chinese Ministry of Trade.
Greenfield Investment, related to the establishment of factories and new surgery in a foreign country, dominated the output direct foreign investment by Chinese companies 2024, which accounts for more than 80% of the total transaction value, According to the data compiled by Rhodium Group.
“Vietnam offered manufacturers a simple and practical way out of China,” the February research group said .4. A report, but the country is likely to be under the increasing surveillance of the White House because of the great excess with the USA and significant investments from China.
Vietnamese trade surplus with the USA rose approximately 18% per year a record high last year. Earth Simple average tariff On partners with the most glorious nation status, including the United States, was 9.4%, Compared to the USA who charged 3.3%From 2023.
Other countries such as Indonesia, Philippines and Singapore can see lower risks, but they are also not “immune to potential tariffs, according to Tianchen Xu, a higher economist in the Economic Intelligence Unit.
So, this has encouraged the trend of diversification of business business in several countries in the region.
“The companies protect their bets because they are not able to determine today what the differentiation in the tariff from one country to another will be,” said Eric Martin-Neuville, Vice President of the Asian-Pacific and Middle East on the Global Logistics Company Geodis.
We still divert the option?
Some Chinese companies are considering moving a part or all of the US production, with the desire to avoid tariffs and approaches the US market directly.
A worker worn by a protective mask and gloves assembles face shields at the Hasbro production facility owned by Cartamundi in East Longmeadow, Massachusetts, on Wednesday, April 29, 2020.
Adam Glanzman | Bloomberg | Getty Images
Bryan Zheng, founder and director of LIVALL, headquartered at Guangdong selling smart cycling helmets, said he decided to “wait and see” how tariff actions would take place before embarking on a huge investment in Greenfield.
Although gradually increasing the prices of their stocks already in the US, Zheng considers that in two years he brings a plan to move some production to the US that would include sources of parts from Chinese suppliers, but holding packaging on the last kilometer and assembling business in the US, he said.
The official data of the Chinese Ministry of Trade showed that the US remained the fifth largest destination of Chinese external direct investment aside ,, with $ 83.7 billion that has been following the US from the end of 2023.
The manufacturing sector recorded the largest investment from China that year, showing data, which makes up 30.6% of the total amount.
Nevertheless, investment flows in sensitive technologies, such as semiconductors, artificial intelligence and biotechnics, are likely to face certain limitations, said Cao Yuan, a partner at Yingke’s law firm based in Beijing.
– CNBC -ov Yulia Jiang contributed to this report.
