Reference News Network, August 6 report. According to the website of the UK's Financial Times, August 4 report, Chinese exporters are rethinking their investments in overseas factories, as the US has imposed tariffs on alternative production centers and implemented new restrictions on "transshipment," forcing exporters to rethink the entire Asian supply chain.

In recent years, manufacturers have invested billions of dollars in Southeast Asia as part of the "China + 1" strategy. This strategy was implemented after Trump's first trade war against China, aiming to reduce the impact of US tariffs.

However, in the trade negotiations with Beijing, the US has significantly reduced tariffs on Chinese goods while imposing tariffs ranging from 10% to 40% on goods from other countries in the region.

Trump's tariff campaign has changed the business landscape in the region, eroding manufacturers' profit margins and weakening their motivation to move production out of China.

The latest tariff measures introduced by the US on July 31 impose a 40% tariff on goods transshipped through a third country to the US, further casting doubt on the feasibility of overseas investments.

Lu Zihui, an economist at Oxford Economics in Asia, said: "The 'China + 1' strategy will face significant pressure." She added that some companies would look for more distant new production bases, but many companies would return to China, "the initial costs of transferring to new markets would be extremely high."

Richard Laub, CEO of Longyuan Company, said that US customers initially panicked and rushed to find new suppliers in Southeast Asia, but this panic has subsided, and many customers choose to continue purchasing from China "until the situation becomes clear."

Chinese manufacturers who chose to stay during the first wave of Trump's trade policies now feel relieved.

Zhao Fen (a phonetic name), who owns several toy factories in Dongguan, said that many of her peers opened factories in Vietnam, but now "they all regret it." She said that rising land prices, low labor efficiency, and increasing tariffs have raised many companies' costs.

Adam Fazackley, operations manager of a US home goods manufacturer, said that he has already transferred orders to Cambodia this year, but sacrificed flexibility, efficiency, and logistical convenience.

As for the next order, he said he will pay attention to the tariff differences. "If the tariff rate difference is not significant, we will produce in China." (Translated by Qing Songzhu)

Original: https://www.toutiao.com/article/7535358764896911882/

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