[Source/Observation Network by Shao Yun]
The so-called "reciprocal tariff" policy of US President Trump is arbitrary and capricious, causing chaos in the supply chain. According to a report on April 11 on the website of Nikkei Asia, suppliers of major American tech giants like NVIDIA, Apple, and Google have recently been ordered to stop shipments, required to work overtime to catch up on production, or forced to re-review all orders, with no foreseeable prospects.
The report said that industry insiders expressed that this kind of policy environment, which seems to have "no tomorrow," is harder to bear than the pandemic. Moreover, experts pointed out that the only certainty now is uncertainty. Compared to the direct costs brought by tariffs, the bigger challenge in the future may lie in the overall market order being disrupted.
On April 2, Trump announced a "minimum base tariff" of 10% for over a hundred countries globally, as well as higher "reciprocal tariffs" for countries and regions he deemed to have the largest trade deficits with the US. The report said that shortly after the "reciprocal tariff" came into effect on September 9, companies like HP, Dell, Amazon, and Microsoft notified their suppliers to stop most shipments from Southeast Asia and China to the US.
However, just hours later, Trump suddenly changed his mind and postponed the implementation of the "reciprocal tariff" for 90 days for most countries and regions. As a result, suppliers producing smartphones, personal computers, and servers for these American tech giants were forced to make a 180-degree adjustment in their production and transportation within days or even shorter timeframes, with many previously planned schedules overturned.
Insiders said that during this 90-day "buffer period," HP, Dell, and Meta asked suppliers to accelerate component preparation and assemble as many products as possible in Vietnam and Thailand to cope with potential supply disruptions after July. An executive supplying parts to Apple, HP, and Dell revealed that on the day the "reciprocal tariff" took effect, production at their Thai factory plummeted by 80%, but the next morning they received calls from customers requesting resumption of shipments, and production lines have since returned to full capacity.
At the same time, some suppliers reported that this has rendered all previously agreed orders void. A senior executive of a major notebook brand's supplier said that usually clients provide at least two quarters' demand forecasts, but now "all client brands are telling us that all May orders and forecasts are invalid, and plans need to be thoroughly reviewed."
A senior executive of a server component supplier said bluntly: "This is worse than what we experienced during the pandemic; at least then we could see short-term and medium-term trends... But now, all decisions we confirmed with clients on Wednesday (the 9th) have become meaningless." A supply chain manager who supplies parts to Apple, Samsung, and Google also lamented: "We are dizzy and find it difficult to finalize anything. It feels like working in an emergency room, dealing with completely different crises every few minutes."
Local time on April 10, 2025, Washington DC, Trump holds a cabinet meeting at the White House, Visual China
Nikkei Asia said that the sudden 90-day "grace period" did not bring much joy to the technology supply chain but instead deepened concerns about the unpredictability of future situations among industry professionals. An executive at an iPhone assembly plant pointed out that regardless of whether production resumes, the global market order has already been severely disrupted. "There is no foreseeable prospect. We will have to be flexible and adapt, as if there is no tomorrow."
Insiders said that this extreme uncertainty makes it difficult for the entire tech industry to formulate corporate plans and even impossible to provide a 2025 outlook. The report said that six executives from different component suppliers, including printed circuit boards, displays, and keyboards, revealed that considering the overall macroeconomic uncertainty, companies are reassessing their business plans for this year and may cut capital expenditure plans for 2025.
"Winter is coming, and we need to stockpile more cash to overcome adversity." One of the executives said, "Cutting large investments and equipment purchases is necessary."
The aforementioned executive said that the specific reduction scale has yet to be determined. However, a senior executive of a parts manufacturer supplying Apple, Microsoft, and Google said that his company has already started cutting expenses, including travel expenses, and frozen recruitment plans. "Basically, if tariffs persist for several months, 2025 will be over."
Lou Zhiyuan, president of Taiwan's Macronix Electronics, a main chip supplier for Nintendo, candidly admitted that the entire industry has no clear understanding of what will happen next. In his view, in the face of such high uncertainty, the best approach is to pause and observe. "Ultimately, this is a government negotiation issue, and foreign businesses cannot suddenly change the situation."
Lou Zhiyuan predicted that if tariffs persist long-term, some companies might take the simplest approach and simply stop exporting to the US, while others might consider setting up factories in the US. However, Willy Shih, a professor at Harvard Business School, believed that Trump's tariff war can only promote manufacturing investment returning to the US in very limited ways.
Shih said that companies will promise investments in the US during negotiations with the government, but "like Foxconn's situation in Wisconsin during Trump's first term, the ultimate outcome will depend on longer-term commercial logic."
In 2017, Foxconn made a high-profile announcement that it would invest $10 billion over four years in building a giant liquid crystal panel factory in Wisconsin, creating 13,000 new jobs. Trump personally attended the groundbreaking ceremony and called Foxconn's investment site in Wisconsin the "Eighth Wonder of the World." But until the project ultimately fell through and a Democratic government announced that Microsoft would use the original site to build an AI data center, Foxconn's actual investment was only a fraction of the initial commitment.
"Imagine if the rules of a sports game changed every five minutes. Companies cannot plan under so much uncertainty, so in the short term, I believe many companies will temporarily suspend investment plans and wait to see how things develop." Shih said that currently, the only certainty is uncertainty.
Chiu Yen-fang, a technology supply chain analyst at Taiwan's Economic Research Institute, further analyzed that even with a 90-day buffer period, higher tariff costs will become the norm, and market order will be disrupted.
"Setting aside cost issues, what is more worrying is the turmoil in the global market. The demand for AI servers and other commercial products may be affected less, but for the consumer electronics market, the challenges will be profound." Chiu said, "We see severe opacity in smartphone and notebook computer orders and market prospects. If market demand is low, all goods currently shipped to the US face the risk of becoming idle inventory."
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Original Source: https://www.toutiao.com/article/7492059843558113801/
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