China’s exporters to increase the descent to overcome Donald Trump’s tariffs

Chinese manufacturers say they will accelerate efforts to transfer production to other countries to avoid US tariffs, after President Donald Trump announced a new commercial offensive against the second largest economy in the world.

Beijing is considering how to retaliate against Trump’s decision on Saturday of imposing an additional 10 percent rate on Chinese exporters, with options from the counterpariffs to export controls and monetary depreciation.

The relatively silenced initial response of the Chinese government, combined with Trump’s truce with Canada and Mexico on Monday and its plans for a call with President Xi Jinping of China in the next few days, have fed the hopes in Beijing that there may be space that there may be To negotiate.

But with the rate that will enter into force on Tuesday, companies in the southern Heartlands of China said that their strategies included transferring some production to places, including the Middle East, passing the cost to American customers and looking for alternative markets.

“Many Chinese exporters, especially in the consumer products market, had already lost part of their US market in recent years after tariff , referring to Trump taxes imposed as part of a commercial war during his first term in office.

Lu said Brothersbox planned to transfer part of its production to the United Arab Emirates this year to point to the US market. “We hope to recover them,” he said about his American clients.

Trump’s threat of an additional 10 percent rate on Chinese products, which he attributed to Beijing’s supposed inaction in fentanyl exports to the United States, was raised during his electoral campaign.

But Chinese companies have already been diversifying their trade in recent years. The direct participation of the country of American imports fell eight percentage points between 2017 and 2023, according to a report by Rhodium Group last year.

Some Chinese production moved to third countries, from where it is exported to the United States. The participation of American imports from Vietnam and Mexico, for example, increased substantially during the same period.

Lynn Song, the main economist of China in ING, said the rate would have a limited effect because “many of the prices -sensitive exports to the United States have already been redirected as a result of the first commercial war.”

With Trump aimed at Mexico, Chinese companies would probably change more trade towards Southeast Asia and Latin America, he said.

The most sophisticated Chinese exports, such as machine pieces, would also be difficult to replace, which means that American buyers would have to absorb price increases.

Tony Cao de Foshan Nanhai Yingya Hardware Products, a company in the province of Guangdong in southern China that manufactures about 5 percent of its sales in the US. UU., Said that Trump’s tariffs would affect US importers more than Chinese producers.

“They need to buy Chinese products,” said Cao. “Their acquisition costs will increase and, therefore, their sales prices will increase.”

Some analysts said that the speed of the promised implementation of the rate raised a challenge for Beijing, and questioned how much more Chinese manufacturing capacity could easily move abroad.

“Anyone who can (move the supply chains) has already done it,” said Cameron Johnson, partner of the consultant Tidalwave Solutions. Countries like Vietnam, where Chinese companies have established production lines, could also be affected by tariffs, he said.

“Anyone who has a significant commercial surplus with the US.

Amy Lin, sales manager of the Chinese Footwear manufacturer Teshuailong, said that investment abroad required more capital and labor than his company could gather. Instead, Teshuailong would look for new customers in markets such as the Middle East. “Life continues,” Lin said.

Beijing criticized the new Trump tariffs and threatened to file a demand before the World Trade Organization, but has not yet announced reprisals.

Analysts pointed out options such as export controls in rare earths, which are essential for the new energy industry, or antitrust research as a recently announced against the US Chips Company. UU. NVIDIA.

Johnson de Tidalwave said other measures could include more controls on exports of drones and electric vehicles to the United States.

Most analysts believe that Washington will impose more tariffs, particularly after the conclusion of an investigation that Trump ordered the 2019 trade agreement with Beijing during his first administration.

While imports of American agricultural products in China increased slightly after that agreement, their purchases of American manufactured goods decreased by 2020 and 2021 as the pandemic wreaked havoc on global supply chains.

Meanwhile, some analysts believe that China’s best strategy is to silently reduce their own imports of specific American products, such as airplanes, agricultural products and medical devices.

This could damage the constituencies of the powerful Republican politicians or industry groups, such as farmers and the oil and gasoline sector, while waiting for the opportunity to negotiate a new agreement.

“We do not download the possibility of reciprocal tariff , and possibly the EU.

“Trump is clearly still open to an agreement at some point,” added Beddor, pointing to his postponement of a Tiktok prohibition, the short video platform controlled by the Chinese and a call last month with XI.

Economists said Trump’s policies could strengthen China’s economy by forcing Beijing to concentrate on difficult structural reforms, such as directing more resources towards homes instead of infrastructure and industry.

China reported a general commercial surplus of almost $ 1TN last year, since the country was based on external demand to compensate for a weak national economy and a deceleration of the deep property sector.

“The irony of the First Commercial War,” said Song of ING, was that he reinforced China’s search for “technological self -sufficiency.”

Others warned, however, that China’s economy was in a much weaker position now. In 2018, the country was able to use the depreciation of the exchange rate, the commercial deviation and a reduction in the gain margins of the exporters to mitigate the rates, said Barclays analysts.

“The previous channels have decreased significantly, which suggests a much greater impact on China’s trade this time,” they said.

Data visualization by Alan Smith and Haohsiang Ko