In recent news announced by President Trump, the tariffs on China and the possibility of further tariffs are speeding up the plans of Chinese manufacturers to shift production to Southeast Asia. They hope to avoid US tariffs by making this move.
On February 4th, the US officially imposed a 10% additional tariff on all Chinese imports. The Wall Street Journal reported that for many Chinese manufacturers, Trump’s return to the White House has added urgency to their plans to set up factories or find partners in other countries, especially in Southeast Asia. Some other companies have started to shift more production overseas.
As the US presidential election approached last year, Agilian Technology, an electronics manufacturer in China, became increasingly concerned that if Trump returned to the White House and imposed new tariffs, one of their major customers demanded to devise contingency plans for such a situation. Shortly after, an executive of Agilian visited a factory in Malaysia to explore moving some production there.
Now, Trump’s imposition of a 10% tariff on Chinese products and the possibility of further tariffs in the future are forcing Agilian to swiftly establish production lines in Malaysia, aiming to ship the first batch of products to the US in the spring.
“This has compelled us to accelerate our progress,” Renaud Anjoran, Executive Vice President of Agilian, was quoted as saying by Hua Daily. He is set to visit India soon to explore other factories.
Anjoran estimates that about half of the products manufactured by Agilian are sold to customers in the US. He mentioned that despite the fluctuating nature of Trump’s tariff policies, Agilian cannot afford to sit back and wait for things to settle. He believes that selling goods from Chinese manufacturers to the US will only become increasingly difficult, an inevitable trend.
Lenston Tyre, a tire manufacturer in Qingdao, sales director William Guo stated that the company is increasing production at its factories in Cambodia and Thailand. He estimated that about half of their customers are Americans.
Since Trump first ran for president, Steve Greenspon, CEO of Illinois-based household products company Honey-Can-Do International, has been intending to move more production lines out of China. Retailers like Walmart have been urging him to diversify production lines.
Greenspon estimated that before the first round of tariffs on China initiated by Trump, roughly 50% of the company’s products were manufactured in China, with the rest produced in Vietnam and Taiwan. Currently, the proportions of production in China, Vietnam, and Taiwan are approximately 20%, 60%, and 20%, respectively.
One of his Chinese contract manufacturers who produces velvet coat hangers is building a factory in Cambodia. Greenspon anticipates that the factory will be completed and operational within about six months. Once operational, production will be shifted there.
“I would be surprised if we still have any major business operations in China by the end of 2025,” Greenspon said.
To circumvent tariffs, Chinese companies have expanded production to countries like Vietnam, Indonesia, and Thailand. However, uncertainty remains as to whether they can ultimately evade US tariffs since Trump may impose tariffs on these countries as well. For example, in Mexico, Chinese investment has increased in recent years, but the 25% tariff imposed by the US on Mexico will take effect on March 4th after being temporarily suspended for a month.
Mexico is striving to reach an agreement with the US before the tariffs take effect. President Claudia Sheinbaum stated in a press conference on Monday, February 24th, that Mexican officials are negotiating with the US in Washington and aiming to reach a “significant agreement” by Friday.
According to Bloomberg, sources revealed that the Trump administration has advised Mexican officials that as part of efforts to avoid US tariffs, Mexico should impose tariffs on Chinese goods.
President Sheinbaum of Mexico has taken steps to counter cheap imports from China, supporting domestic industries while appeasing the Trump administration.
Businesses in China are preparing for further hardships. The Trump administration’s plan to impose high harbor fees on Chinese ships will have a significant impact on shipping giants like COSCO (China Ocean Shipping Company).
As per a proposal released by the US Trade Representative’s Office on February 21st, the US will levy high fees on Chinese shipping companies and any Chinese-made ships entering US ports. The proposal involves three parts of charges on operators, operators using Chinese-made ships, and operators who ordered ships from China.
Bloomberg cited sources stating that the Trump administration is drafting stricter semiconductor export control measures and pressuring major allies to enhance restrictions on China’s chip industry to curb the Chinese Communist Party’s development of artificial intelligence (AI) and military expansion.