In May this year, the US said it would increase tariffs on Chinese semiconductors from 25 per cent to 50 per cent by 2025.
Other tariffs – including a 100 per cent duty on Chinese electric vehicles, 50 per cent on solar cells, and 25 per cent on steel, aluminium, EV batteries and key minerals – went into effect on Sep 27.
Despite the cost savings it can pass on to customers from operating in Vietnam, IBE Electronics still has to battle some challenges.
Due to the country’s nascent supporting industry, the production time is two weeks longer there compared with its factory in China. There is also an additional 5 per cent shipping cost.
POTENTIAL FUTURE IMPORT TARIFFS
Relocating from China may also not protect companies from the risks of further escalations in the trade war.
Analysts expect the standoff to continue regardless of whether Democratic presidential nominee Kamala Harris or her Republican rival – and former president – Donald Trump wins the election on Tuesday (Nov 5).
However, under a Trump administration, several countries could have a reason to fear the future of their trade ties with the US.
Trump announced that if reelected, he will impose 10 to 20 per cent in duties across the board on all imports. This is separate from the tariff of 60 per cent or more on Chinese imports into the US that he plans to put in place.
“Many more Chinese companies will come to Vietnam in the future. However, we are also worried about tariffs on Vietnam as well, so that’s why we need to have a facility in the US,” said Ms Xu.