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On April 3, 2025, trucks in Bangkok, Thailand.
Athit perawongmetha | Reuters
Many companies have steadily reduced their dependence on China as a production center since the first term of President Donald Trump, hoping to dull the impact of punitive levies from the United States. Then the last “mutual” tariffs appeared.
The transition of Trump to introduce tariffs to the goods on a wider country now puts these plans for diversification in outrage and leaving the companies that decide to decide where and how their goods are made.
Steve Grinspon, CEO of Housaware, based in Illinois, began moving more from China to Vietnam during the first Trump presidential term. The company supplies homemade strength such as racks, coat hangers and laundry for American giants such as Walmart. Target and Amazon.
The company relied on Chinese suppliers up to 70% of its products before Trump. This fate has since decreased to a third when Vietnam and Taiwan have become increasingly important as search directions.
The news of high tariffs in Taiwan and Vietnamese bites, given significant investments, Grinspon said.
“It has defeated our company. It’s disappointing. It’s upsetting. It’s unpleasant,” Grinspon said.
“As an American company, it is incredibly harmful that our own government does it,” he said, noting that moving to the United States is not an option, given the high cost of labor and the lack of the necessary infrastructure.
He only said that tariffs will make businesses charge higher prices, resulting in prices for these products less competitive, he said.
Trump’s trading war with China’s its first term It fueled the “China Plus one” strategy, in which many manufacturers transfer part of their production from China to other Asian countries with less cost
But after Trump’s last announcement, a much wider tariff regime – including a minimum of 10% of the base tariff in all countries and much higher tariff rates in some Asian economies – firms that have followed “China plus one” can be forced to overestimate their capabilities.
“China Plus Strategy was seriously cut off the Trump tariffs that still covered each American trading partner,” said CNBC Eswar Prasad, Professor of International Trade and Economics.
“The viability of the transfer and restructuring of supply chains through countries such as Vietnam and India, with which the United States had more constructive trade relations, was defeated by the last round of tariffs,” he added.
India and Vietnam were the two major beneficiaries of this shift from China, especially in sectors of clothing and consumer electronics. For example, an American technological giant Apple the product is greater Products in both countries.
Imports from India, Vietnam and Taiwan have now suffered With additional levies for a total amount of 26%, 46%and 32%respectively. Carita 104% tariff for China also came into force on Wednesday.
According to Prasad, the high level of tariffs imposed on the US imports from China means that there is still an advantage in routing chains of supplies through countries subject to relatively less tariffs.
“However, all the logic underlying global supply networks, as a means of shortening costs and increased efficiency, was reduced by tariffs,” he said, adding that it would be substantially adding the costs of “slim and medium supply chain” that cross national boundaries, often many times.
Change the land
Specialists in economic and supply networks point out that the sincerity of Trump’s tariff rates remain uncertain, and many expect that they will decline on the basis of talks between Trump administration and individual countries.
Daniel Newman, CEO and Chief Analyst of the Research Firm focused on The Futurum Group technology, said CNBC that he does not believe that the tariffs will remain in their current form, and if he expects “more fair trades” will be made with trading partners, such as Vietnam.
There were signs that Vietnam and India intends to talk to Trump on trading conditions. However, the uncertainty associated with these negotiations creates a dilemma for companies.
“I have talked to several heads and business executives who have talked about their workarounds in the last decades, which could be potentially problematic, and the current uncertainty, making it virtually impossible to create sufficient softening plans for really at any time,” said Newman.
According to Newman, the companies affected by the tariffs will work hard with their supply chain teams to determine the right strategy for mitigating the consequences. But, “if the tariffs adhere to their current species, some of China plus one investment may be in vain,” he added.
Wait and look?
As trading negotiations are unfolding, many companies are waiting before you change any production plans.
“I think they wait to find out how everything is solved. Countries, including Vietnam, try to agree with Trump. I cannot predict how it will, but the companies are likely to expect whether it will reduce tariffs,” said William Reins, Chala chairman in the international business and international research center.
If these bilateral talks do not receive, the companies will be forced to consider further arbitration for a long time – the movement of parts of their supply networks to countries with smaller tariffs, he added.
According to the Trump administration, tariffs are part of the plan to create a mass revival of US production. Some experts said CNBC that a certain number of overlappings and investments in the US will probably happen in certain industries.
“When faced with a very uncertain and changing tariff landscape and other trade restrictions, corporations are likely to emphasize the stability, not the efficiency of the supply networks,” Passad said.
“This can mean a greater extent of production (in the US), as well as evading friends in countries that are at least regarded as geopolitical allies of the US,” the Prasad added.
However, the movement of production can be a long, capital process for many supply networks, especially in high -tech industries.
For example, the Apple Foxconn partner took several years to start producing advanced iPhones in India and at the factories justify collided with many struggles.
“Investments in factories that are once made cannot be easily or instantly canceled … Moving these factories to another place will take several years,” said Arthur Dong, professor of strategy and economics at Georgetown.
In addition, depending on the industry industry is limited by various factors when considering shifts in supply chains such as supply deposits, infrastructure, quality and cost of local work, regulation and management.
Such factors leave companies with a difficult solution, said Dong, who added that some may choose a storm on Trump’s three to four-year supplies, hoping for a change in politics in the upcoming intermediate elections.
