Clutching a “Reciprocal Tariffs” board at his side, US President Donald Trump upgraded his powerful trade storm in the global supply chain to a category that few in its path have ever felt.
And with it, he has brewed a vortex of uncertainties, forcing businesses from Guangdong to Los Angeles to reconsider development strategies – suddenly, plans to manufacture in or source from emerging markets have turned cloudy as the tariff storm rages.
Fernando Ching Lau, a Los Angeles supermarket owner, says Trump’s immigration crackdown had already hurt his business – with fearful families avoiding stores. And now, with tariff hikes hitting broad swathes of the planet, the cost is about to grow.
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“The tariff policies will hit me even harder – sourcing locations, order volumes, and procurement costs are all becoming far less predictable,” Lau said.
According to Lau, the cost per container – including goods and logistics – currently runs between US$30,000 to US$50,000. By summer, he believes, it could rise by 50 per cent.
Lau originally planned to shift some purchasing from China to Vietnam, Turkey and Mexico. But now, with the US imposing tariffs on those countries as well, he said he intends to pause or slow down the transition.
“As a small supermarket chain, we don’t have Walmart’s advantages – no dedicated shipping solutions, no dominant supply-chain leverage,” Lau said. “We can’t make long-term contingency plans like the big players can. Our only option is to constantly seek alternative suppliers, hoping to source lower-tax products.”
An operations director at a Japan-invested manufacturing firm based in Guangdong, who declined to give the firm’s name on record, similarly said her company would suspend plans to relocate some of Guangdong’s production capacity to Southeast Asia – a strategy that was thoroughly discussed last year and had been scheduled for implementation this year.
On Wednesday, Trump revealed his reciprocal tariff plan with his big board, intent on erasing a trade deficit between the US and other countries.
He unveiled fresh levies that the US is applying to goods coming from nearly 60 countries, including a 34 per cent reciprocal tariff on China, 46 per cent on Vietnam, and 20 per cent on the European Union.
Japan will face a 24 per cent tariff, and South Korean goods will be charged 25 per cent. Goods from Thailand, Indonesia and India will be levied 36 per cent, 32 per cent, and 26 per cent, respectively.
These include a baseline tariff of 10 per cent – which will take effect on Saturday – and individualised higher reciprocal tariffs – which will take effect on Wednesday.
Mexico and Canada were missing from Trump’s latest tariff chart, as they are already facing 25 per cent additional duties for what Trump sees as a failure to act on the flow of illegal drugs and immigrants into the US.
Gao Zhendong, a supply-chain specialist and secretary-in-general of the China-Vietnam Industrial Service Alliance, said that the tariff policies could see further adjustments over the next week, as Trump might negotiate with these countries to get what he wants.
“This creates tremendous uncertainty for China – nations such as Vietnam and Mexico may introduce unpredictable policy changes for Chinese-funded local enterprises, in a bid to secure tariff concessions or exemptions,” Gao said.
“For China’s SMEs, there’s virtually no way out now. Any sector that isn’t labour-intensive must double down on technological and industrial upgrading,” he added, noting how companies with cutting-edge technology might be able to break through trade barriers, while others must “abandon wishful thinking”.
Despite the uncertainties stemming from global trade tensions, Mark Li, co-founder of HippoBot Technology, whose company makes a pool-cleaning robot, still sees potential opportunities.
Similar to other companies, though, they will delay relocating supply chains to Mexico or Southeast Asia, with benefits eroded by tariffs.
Still, Li said that the “synchronised pressure” from global tariff hikes “could prevent competitive price disparities from growing, which could be good news for us”.
“Our primary rivals are European brands, which now face a similar tariff hike,” he explained.
More from South China Morning Post:
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