Trump prices have broader effects on manufacturing in Asia this time

Taipei, Taiwan – The first time that President Trump has imposed prices on Chinese products in 2018, he sparked a race for manufacturers that had long been based on China to start looking for other options. The objective was to stimulate the manufacture of the United States, reduce a commercial imbalance and punish China for business practices Trump said it was unfair.

Now, in his second term, Trump has increased taxes on steel and aluminum imports to 25% and has levied new 25% prices on imports from Canada and Mexico, as well as an additional 10% rate on Chinese products. On March 24, he announced a 25% rate on automotive imports, and with his new “reciprocal” tariff plan which will be announced on Wednesday, other countries will probably also be in his reticle.

After the 2018 sample, companies that produced their products in China initially extended to Asian countries such as Vietnam, Indonesia and India. But the current uncertainty surrounding trade policy has now transformed planning into something of a supposition game that could reshape the world manufacturing landscape.

The Times spoke with Robin Song, a specialist in the supply chain in China and Asia at Kuehne + Nagel, a Swiss logistics company that advises customers to develop their manufacturing operations, to ask how companies operating in China could react to new prices. This conversation has been modified for duration and clarity.

How was the 2018 trade war Assign manufacturing in China?

The first devices struck devices such as refrigerators and washing machines, as well as mechanical and electric parts. These companies have started to establish factories in Thailand and Southeast Asia.

Then renewable energies. Goods taxing the United States and solar panels have also motivated Chinese companies involved in renewable energies to extend their supply chain in Vietnam, Thailand and even Cambodia.

In recent months of the administration of President Biden, (US officials) also put prices on goods outside Southeast Asia, which destroyed the investment (there). Solar panel companies have therefore suspended operations or can be used this market to produce for alternative countries. And they actually listened to the US government. Right now, the best leaders in solar panels move their production lines in the United States

What is the impact of the new trade war?

It’s like a wrestling wrestling. Some companies move their production in countries that are not on the anti-dumping or compensatory tax lists of the United States, some are moving to Indonesia. Saudi Arabia and the Middle East have also become very hot at the moment. Right now, some guys are moving to Oman. Someone also moves to Egypt.

The domination of China in electric vehicles has also prompted the United States to impose prices on electric cars. How did it affect the market?

For electric vehicles, with Europe putting taxes on Chinese electric vehicles from 10% to 30%, another example is the Chinese automaker byd by building a factory in Hungary. We also see joint ventures or acquisitions (by other companies of Chinese electric vehicles) such as Chery acquiring an old factory in Nissan (in Spain) or signing a joint venture with (automotive manufacturer) Renault. These partnerships use production sites or assets inherited to produce electric vehicles as a new model of collaboration.

For EV batteries, the trend is different. Indonesia has mineral resources like nickel. Morocco also has a lot of mineral resources. Hungary is also politically stable, so … there is a lot of battery investment (in new factories).

Vietnam has been a popular alternative for manufacturers who seek to develop outside China. Will it change?

There was a very great expectation that everyone went to Vietnam.

But keep in mind that there is even more than a commercial difference of $ 100 billion between the United States and Vietnam, and China is still the main country of export to Vietnam. This means that Vietnam has a trade deficit with China and that the United States has a trade deficit with Vietnam. The United States is experiencing this escape (so that Chinese goods reach the United States). Vietnam Building A autonomous supply chain can be the only way to (satisfy) the United States

Some Taiwanese manufacturers are starting to move certain continental China modules to Vietnam as an Essay. In the event that something happens that is unfavorable, they will stop and move again.

I have not seen many big names invested in Vietnam, but they push their suppliers upstream to invest instead. They say: “I’m going to get involved in this customer order, then you invest it”, which means that everyone is currently taking advantage of their supply chain position – wholesalers, distributors, dealers – to push suppliers to move to Southeast Asia.

If someone says to me: “I have my diverse supply chain, I don’t have a single source of export. I have Indonesia. I have Egypt ”, so this uncertainty goes down. »»