U.S. President Donald Trump's trade war with China led many manufacturers to relocate abroad to sidestep high tariffs. Although the U.S. recently reduced tariffs on Chinese imports, manufacturers continue to invest in key manufacturing sites in other parts of Asia, speeding up the restructuring of global supply chains.
As a prime example, Velong Enterprises, produces kitchen and grilling products for U.S. retailers like Walmart. After the U.S. tariffs on Chinese goods rose to 145% on April 9, Velong’s exports from China plummeted to nearly zero. Meanwhile, Velong’s joint ventures in Cambodia and India had a flurry of orders, even for unexpected items like plastic Christmas trees, as U.S. importers sought alternatives.
Velong is now going to expand its operations in Cambodia and is receiving venture capital for the expansion, according to Velong’s American founder, who has lived in China for more than 20 years. In an unexpected twist, the U.S. cut tariffs on Chinese imports to 30% for 90 days on Monday, while China cut its tariffs on U.S. imports to 10%. Despite this 90 day reprieve, Chinese exporters are still at a disadvantage compared to exporters from other countries that now only face a 10% U.S. tariff.