China’s exporters to increase offshoring to defeat Donald Trump’s tariffs

Chinese manufacturers say that they will accelerate the efforts to move production to other countries to bypass US tariffs after President Donald Trump announced a new trade offensive against the second largest economy in the world.

Beijing consider to take revenge against Trump Decision on Saturday impose an additional tariff of 10 percent on Chinese exporters, whereby the options range from counter -tariffs to export controls and currency depreciation.

The relatively steamed initial reaction of the Chinese government in combination with Trump’s ceasefire with Canada and Mexico On Monday and his plans for a call with China’s President Xi Jinping In the coming days, hope in Beijing fueled that there may be space for negotiations.

In view of the tariff that is supposed to come into force on Tuesday, companies in China Southern Manufacturing Heartland said that their strategies included the shift in production to locations, including the Middle East, the costs of US customers and the search for alternative markets.

“Many Chinese exporters, especially on the market for consumer products, have already lost part of their US market in recent years after the tariffs had used” Trump imposed on a trade war during his first term.

According to LU, BrothersBox had to bring part of his production to the United Arab Emirates this year in order to address the US market. “We hope to win them back,” he said about his US customers.

Trump cardDuring his election campaign, the risk of an additional tariff of 10 percent was to Chinese goods – which he attributed to Beijing’s alleged inactivity to fentanylexports to the USA.

But Chinese companies have already diversified their trade in recent years. According to a report by the Rhodium Group last year, the country’s direct share in US imports between 2017 and 2023 fell by eight percentage points.

Some Chinese production has moved to the third countries from which it is exported to the USA. The proportion of US imports from Vietnam and Mexico, for example, increased significantly in the same period.

Lynn Song, Greater China Chief Economist Beig, said that the tariff would only have a limited impact, since “a large part of the significant exports to the United States were already redirected due to the first trade war”.

Since Trump aims at Mexico, Chinese companies would probably move more trade towards Southeast Asia and Latin America, he said.

More committed Chinese exports such as machine parts would also be difficult to replace, which means that the US buyers would have to absorb the price increases.

Tony Cao of Foshan Nanhai Yingya Hardware products, a company in the Chinese province of Guangdong, which does around 5 percent of his sales in the USA, said Trump’s tariffs would hit American importers more severe than Chinese producers.

“You have to buy Chinese products,” said Cao. “Your procurement costs will increase and your sales prices will therefore increase accordingly.”

Some analysts said that the speed of the promised implementation of the tariff was a challenge for Beijing and questioned how much Chinese production capacity could easily be moved abroad.

“Anyone who could already move the supply chains already has,” said Cameron Johnson, partner in the advice of Tidalwave Solutions. Countries like VietnamWhere Chinese companies have set up production lines, tariffs could also be hit, he said.

“Anyone who has a significant surplus with the USA will get a form of tariff,” said Johnson.

Amy Lin, sales manager at the Chinese shoe manufacturer Tashuailong, said that overseas, more capital and workers are necessary than their company could apply. Instead, Tashuailong would look for new customers in markets such as the Middle East. “Life continues,” said Lin.

Beijing criticized Trump’s new tariffs and threatened to do so submit a lawsuit to the world trade organization, but still has to announce retaliation.

Analysts pointed out on options such as export controls on rare earths – which are of essential importance for the new energy industry – or antitrust law examinations such as one recently announced Against the US chip company Nvidia.

Johnson von Tidalwave said that other measures could include further controls for exports of drones and electric vehicles to the USA.

Most analysts believe that Washington will impose more tariffs, especially after the conclusion in April an investigation that Trump ordered with Beijing during his first administration in 2019.

While China’s imports of US agricultural products have slightly increased after this deal, the purchases of American manufacturing goods took back in 2020 and 2021 when the pandemic devastated the global supply chains.

In the meantime, some analysts believe that China’s best strategy is to lower its own imports for targeted US products such as aircraft, agricultural products and medical devices.

This could affect the constituencies of powerful Republican politicians or industry groups such as farmers and oil and gas sectors and wait for the chance to negotiate a new deal.

“We have the opportunity to get mutual tariffs (from China), but we believe that they are done quietly” Mexico and possibly the EU.

“Trump is still open to a deal at some point,” added Beddor and pointed to his Shifting a ban On Tikkok, the Chinese-controlled short video platform last month with XI.

The economists said that Trump’s politics could ultimately strengthen the China’s economy by force Beijing to concentrate on difficult structural reforms, e.g. B. more resources on households and not to focus on infrastructure and industry.

Overall, China reported a record Commercial surplus of almost $ 1 TN Last year, the country was based on external demand to compensate for a weak domestic economy and slowing down the deep real estate sector.

“The irony of the first trade war,” said Ing’s song that it increased China’s striving for “technical self -sufficiency”.

However, others warned that China’s economy was now in a much weaker position. In 2018, the country was able to use exchange offices, trade forwarding and a reduction in exporters’ profit margins to alleviate the tariffs, said Barclay analysts.

“The above channels have all reduced significantly, which indicates a much greater impact on Chinese trade,” they said.

Data visualization of Alan Smith and Haohsiang Ko