Even if President Trump has accumulated additional prices on China, his business levy dam on Asia countries and unpredictability about what he could do then encouraged some companies to bend in China, exactly the opposite of what he had hoped.
Trump has regularly increased pressure on China. On Wednesday, his new prices on China exceeds 100%, including a last -minute escalation serving as a punishment for Beijing reprisals from previous samples.
However, contrary to what happened during his first mandate, Mr. Trump accompanied the tariff campaign on China with steep import rights over dozens of other countries, including a handful of Asian countries which have become popular alternatives in the previous trade war between Beijing and Washington as a means of bypassing the samples and limiting the disruptions of the supply chain.
But for some companies, the so-called reciprocal rates had the unexpected effect of making China an even more attractive place to produce and buy. He eliminated part of the motivation to diversify production or supply in places such as Vietnam, India or other Asian countries.
In addition, the chaos that followed last week’s announcement made companies add more upheavals with a radical change in their supply chains. Faced with a constant flow and unpredictability, companies choose to stay with what they know: long -standing relationships with Chinese suppliers or manufacturing partners.
“Staying in China and operating China is currently everyone’s strategy,” said Travis Luther, founder of Moso Pillow, a bedding manufacturer based in bamboo fiber.
Luther, who attended a conference for American entrepreneurs this week, said that he, like other business owners, spent time looking for new partners or means of moving from China. Instead, he worked with his Chinese trading partner to find ways to save costs or develop new products. The advantages of costs are only part of what makes China the essential destination to make goods.
“It is not even why most people are in China,” said Luther. “It is because they have very sophisticated manufacturing and engineering processes.”
Trump said prices will help bring back manufacturing to the United States, but that remains a difficult proposal. Currently, most American factories cannot correspond to the manufacturing capacity of China, capacity and speed, even if prices eat in its cost advantages.
While trade tensions have intensified in the first Trump presidency, many American and multinational companies have chosen to remove a certain production from China to less contradictory countries. For the most part, America was not a viable option.
But the change of suppliers is a difficult, expensive and long process. Luther said that a consultant told him that it would cost at least $ 6 million to build an American installation to develop and treat bamboo fibers. And in several years, bamboo growth would take, it should pay the prices to import fibers from China.
A complete overhaul of the supply chain to another country requires time and money – something that companies hesitate to continue unless they know where government policy is heading.
“It is like the fog of war, but it is the fog of the trade war,” said Kit Conklin, a global risk and compliance manager at Demander, a cartography of the supply chain. “There must be a political certainty for the industry to react.”
A senior manager of a manufacturer of international contracts said it was impossible to make long-term decisions on the trip outside of China according to what looks like random decisions of the United States.
“The rules of the game seem to change every day. He believes that we have no choice but to sit tight,” said this framework, who asked not to be identified given the significant nature of tariff discussions in the United States and China.
When American and multinational companies began to move a certain production of China several years ago, many owners of Chinese factories opened facilities in neighboring Asian countries or in Mexico. It was a way to relaunch part of the flow of goods through countries with significantly lower tasks.
But the recent prices on around 60 countries which have imposed 46% tasks in Vietnam, 36% on Thailand and 27% on India “considerably decreases” the incentive to move the factories of China, according to a nomura security research note, a Japanese investment bank.
Nomura has said that if China is still faced with substantial challenges of the higher rate, “the wider price net on its competitors can inadvertently preserve its position in global supply chains.”
Sarah Massie, who heads a consulting practice by advising American companies on foreign trade, said that when prices are hard everywhere, people tend to stick to the status quo. In the world of manufacturing, China is the status quo.
“If everyone is affected, then it definitively stops part of the appearance,” said Ms. Massie. “Because people at least think that we already know what this supplier gives us and we were satisfied with them before the prices, then why do we not remain happy. But if they can continue at this price is a whole different story.”
