Some countries stand out on the new table of the White House of its so-called reciprocal rates. Cambodia, with a new price of 49%; Vietnam, with 46%; And Thailand, 36%.
Southeast Asia – even compared to its Asian peers – was particularly affected by the “Liberation Day”.
The savings in Southeast Asia have largely benefited from the “China Plus One” strategy, an approach to supply chains where large manufacturers have started to transport some of their supply chains through third countries. Western and Chinese societies have adopted the diversification of supply chains for several reasons: cheaper work outside of China, the avoidance of prices and ensuring resilience in the midst of disturbances such as the COVVI-19 pandemic.
Vietnam had a trade surplus of $ 123.5 billion with the United States last year, which made analysts warn earlier this year that the country was most at risk. Hanoi had tried to win a stay by preventing import rights preventively in the period before April 2. Trump also said on Friday that he had a productive call with the best leader in Vietnam in Lam. According to Trump, Lam offered Reduce Vietnamese prices on American products if the two countries could reach an agreement.
In addition to Vietnam, three other countries in the region have been struck by high prices. Cambodia, Laos and Thailand, which were affected with rate rates of 49%, 48%and 36%, respectively.
The other nations of Southeast Asia faced with new important rates include Indonesia with a price rate of 32% and Malaysia with a rate of 24%.
Vietnam, which derives up to 30% of its GDP from American exports, is likely to be the most difficult.
“In just a few years, Vietnam has gone from the main beneficiary of American-Chinese trade tensions and global resettlement of supply to Asia to a major American tariffs,” HSBC Neumann and Justin Feng economists wrote in a note on Thursday.
The OCBC bank now estimates that Vietnam GDP will increase by 5% this year, against 6.2%, due to prices. (Vietnam leaders had previously hoped that the country could grow up to 8%.)
The Singaporean bank also thinks that Thailand will suffer from Trump prices, reducing its growth forecasts to 2%, compared to 2.8%.
China pressures
The rates raised to come on Vietnam, Thailand, Laos and Cambodia mean that manufacturers can no longer take advantage of these economies, which are geographically close to China, as “more” destinations.
China obtained an additional 34% rate on the “Liberation Day”, in addition to the 20% prices announced above.
This puts companies, including many American American brands, in an obligation. For example, Gap, Nike and Levi diversified their supply chains far from China, moving to other Asian economies to take advantage of lower costs and protect themselves from the American-Chinese trade conflict.
Vietnam manufactures a quarter of Nike products, including half of all its shoes, according to the annual report of the sports company. The Southeast Asian country is also the largest gap supplier, followed by India and Indonesia. Lululemon also supplies 40% of its goods from Vietnam.
In recent years, foreign brands and Southeast Asia have benefited from the “China Plus One” strategy. The savings in Southeast Asia offer lower costs than China, in particular with regard to work, while preserving access to the in-depth network of suppliers in the country. These countries also attracted investments during the first Trump administration to escape the previous prices on China. Finally, the disturbances of the supply chain and the pandemic encouraged companies like Apple to diversify their supply chains, based operations in Vietnam and India to avoid depending on China.
But now, these brands are faced with a range of bad options: stay in Southeast Asia and pay the high prices? Try to find another jurisdiction with lower rate rates? Or move manufacturing to the United States (very expensive)?
This story was initially presented on Fortune.com
