Staying put: small China firms postpone plans to move to Vietnam after trade war truce
- Small Chinese manufacturing firms are reconsidering plans to move to Vietnam to avoid US trade tariffs
- Costs of relocating to Vietnam have soared this year
Chinese export manufacturers have seized on the weekend’s trade war truce to reconsider moving their operations to Vietnam, where the costs of relocation are high and rising.
The 90-day stay on a rise in US tariffs on US$200 billion worth of Chinese exports has reassured companies enough to put their moving plans on hold.
A 10 per cent tariff was seen as difficult but manageable for most businesses, but a 25 per cent tariff would have been the death knell for many firms, and was a key motivation for Chinese manufacturers to relocate.
Many of these businesses seem to be banking on the Chinese and US governments being able to settle their differences and end the trade war next year, so that the tariff issue disappears.
But observers say the 90-day grace period is much too short to successfully negotiate a resolution of US and Chinese differences on thorny issues like state-owned enterprise reform and the “Made in China 2025” industrial plan.
Twist in Trump’s trade war: manufacturers are fleeing China, but just not for US shores
US President Donald Trump threatened again on Tuesday to go ahead with raising the tariff to 25 per cent from 10 per cent at the end of the 90-day period if China did not offer sufficient concessions.