NEW YORK: Big US companies are accelerating efforts to move more of their supply chains from China to neighboring countries in light of Trump administration tariffs.
Companies in sectors such as technology, clothing and footwear are exporting more goods from emerging giants including Vietnam and Malaysia, data show, reports AFP.At the same time, the shift has exposed the murkiness of trade export rules, putting a premium on lawyers expert in the minutiae of US customs rules.
“We have a lot of questions from our members,” said Sage Chandler, vice
president of international trade at the Consumer Technology Association.
“Companies are trying to find ways to avoid having to pay 25 percent.”
Some companies may be pushing the envelope a little too much, violating US rules against “transhipments,” the routing of China-made goods through other countries to evade tariffs, legal experts say.
President Donald Trump since last year has slapped 25 percent duties on $250 billion worth of Chinese imports and threatened additional levies on all other Chinese items coming to the United States — though the two sides agreed last month to hold their fire for now.Trump’s trade measures have led some multinationals to fortify their North American operations and others to transfer some manufacturing capacity from China to any number of countries, including Vietnam, Cambodia, Malaysia, the Philipines, Bangladesh, India and Ethiopia.
Exports of computers and electronics from Vietnam to the United States have risen 71.6 percent in the first five months of 2019 compared with the year-ago period, according to government data.
The pattern has also held for other machines and equipment, with exports from Vietnam rising 54.4 percent over that period.
Even before Trump targeted China on trade, US companies had been reducing their dependence on China because of increasing production costs and elevated transport expenses compared with other Asian countries.
But the trade war has sped up those moves.
Ralph Lauren has “accelerated the diversification of our supply chain to mitigate the long-term impact of any potential tariff outcomes,” said a spokesperson for the clothing company, adding that tariffs have so far not hit the company’s goods.
Xcel Brands, which owns Isaac Mizrahi, Judith Ripka and other fashion houses, will cease manufacturing in China in 2020, a big shift from two years ago when the country was the source of 100 percent of its merchandise.
The company has moved clothes-making operations to Vietnam, Cambodia and Bangladesh, and is exploring adding capacity in Central America, Mexico and Canada.