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WASHINGTON – US and Japanese companies are striving to reorganize their supply chains, which include Chinese production, to cope with the escalating trade war between Washington and Beijing, with the two companies announcing more tariffs on their respective products.
The US-China conflict enters dangerous waters, a US industry association official said in an e-mail to member companies on May 10 after the US lifted some existing tariffs from 10 percent to 10 percent. 25%. E-mail has also encouraged businesses to take part in a long fight that may include delays in customs and approval.
Washington will also impose additional tariffs on previously excluded Chinese goods valued at approximately $ 300 billion. About 40% of the items covered by the new taxes are consumer goods, including toys and smartphones, compared to around 24% in the last round.
As a result, the California-based camera manufacturer, GoPro, is transferring production of products destined for the United States to Mexico from China. "US production in Mexico helps us avoid any threat of tariffs," said CEO Nick Woodman.
The shoe manufacturer Sketchers USA plans to increase production in India and Vietnam, while the toy maker Hasbro will reduce Chinese purchases to 60% by the end of 2020 compared to the current 70%.
A spring study by consulting firm Bain & Co. found that 60% of some 200 US companies would review their supply chains in the next 12 months.
The next series of US tariffs will cover a wide range of products, from smartphones to wristwatches and clothing. Japanese companies that produce watches and cameras in China for the US market are also forced to re-evaluate their supplier network.
Citizen Watch, for example, makes its cheapest watches for the United States in China. "We have to think about Thai and Chinese production," said director Toshiyuki Furukawa about the possibility of watches being hit by new prices.
Japanese companies also control a significant portion of the digital camera market. Sony, which exports cameras to the United States from production sites in China, said: "We are watching the situation and will explore the necessary responses."
And there is increasing concern that consumer-related products such as clothing will also be subject to 25% tariffs. The operator Uniqlo, Fast Retailing, exports products to the United States from Chinese factories. The company could relocate part of its production to Vietnam and Bangladesh for the North American market, which generates 5% of its global sales.
Automotive interior manufacturer Kasai Kogyo exports molds made in China to the United States. Since 2001, the company has hit 500 million yen ($ 4.57 million). This figure will now increase as the fees have increased to 25%.
However, companies with extensive manufacturing systems in China will find it difficult to gain a foothold. For example, last year, the country has hosted about 380 of the approximately 800 Apple partner facilities, which means that the transfer of the production of items such as the iPhone to d & # 39; Other countries would be problematic.
The trade war also throws a veil over American employment. Businesses cut about 190,000 jobs, according to a survey of layoff plans conducted by the US research firm Challenger in the United States between January and March, a jump of 36% over the previous year. The service sector is strong thanks to strong demand, but the manufacturing sector, which is based on foreign demand, is sluggish.
3M CEO Mike Roman said in April that 2,000 jobs, or 2% of the company's workforce, would be cut. The Minnesota-based company is forced to cut costs as the trade war slows the Chinese economy, one of its major markets.
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