Latest news with #China-plus-one
Business Times
18-05-2025
- Business
- Business Times
Trump's tariff tide lifts Asean ports again – some more than others
[SINGAPORE] Ports across South-east Asia are riding a second wave of a 'great reroute', buoyed by a fresh swell as businesses give Beijing a wide berth to dodge US tariffs – adding to earlier gains when companies adopted the China-plus-one playbook. US President Donald Trump's latest tariff blitz, albeit dialled-back temporarily, has sent businesses rerouting their shipments, with pundits The Business Times spoke to agreeing that ongoing supply chain shifts are putting wind in the sails of South-east Asia's ports – the backbone of global trade. But the region's rising shipping volumes are straining ports, with infrastructure gaps and pandemic-era congestion resurfacing as shippers rush to beat the tariff clock. S&P Global Ratings analyst Yang Shanshan noted that since the tariffs were introduced, the China-US throughput has naturally faced the largest drops, while the largest boost was seen on routes between China and South-east Asia. Ports in Vietnam, India and Malaysia are clear beneficiaries, recording double-digit volume growth, said Praveen Gregory, senior vice-president for ocean freight at DHL Global Forwarding Asia Pacific. 'Smaller ports like Thailand's Laem Chabang are also gaining traction for niche sectors like automotive parts,' he highlighted. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Earlier, the US slapped on China goods an overall tariff of 145 per cent, which has since been cut to 30 per cent after a trade deal was brokered from weekend trade talks in Geneva. South-east Asia earlier faced levies ranging from a baseline 10 per cent to as high as 49 per cent, until Trump on Apr 9 announced a 90-day pause on these reciprocal taxes. While some companies adopted a wait-and-see approach by utilising existing inventory to meet demand or frontloaded orders to ensure sufficient stock on hand, others are changing their sourcing networks where possible, in the short term, added Gregory. 'This can be seen from the surge in demand for alternative sourcing hubs like Vietnam, India and Mexico,' he noted. 'We have also seen an increase in transhipment through South-east Asian hubs like Malaysia.' Despite an additional one to three days in transit times, companies are still pivoting to such regional transhipment hubs as they hunt for alternatives to bypass direct China-US routes, said DHL's Gregory. Similarly, Flexport's vice-president for global ocean procurement Nerijus Poskus pointed out that the tech-focused logistics management firm is seeing a 'notable increase' in requests for quotations originating from Vietnam, Cambodia, Indonesia, Malaysia and Thailand. 'Haiphong is experiencing an increase in direct service offerings, particularly on Transpacific routes,' he said of the Northern Vietnamese port city. Transpacific Eastbound trade lane Poskus added that the wider China's market share of US imports along the Transpacific Eastbound (TPEB) route – a trade lane that stretches across the Pacific Ocean between Asia and the US, and arguably the most important to American importers – has gradually been declining. The market share of China, Hong Kong and Taiwan combined fell to 61.7 per cent in the year to date, from 62.8 per cent last year and 74.6 per cent in 2016, he said. Meanwhile, Vietnam's share of the TPEB market grew to 15 per cent this year from 6.2 per cent in 2016. Poskus noted that Vietnam has more than doubled its share to become the second-largest source of US imports. Thailand's market share increased to 5.5 per cent this year so far from 3.1 per cent in 2016, he added. Indonesia also achieved 'modest growth' to 2.9 per cent in the year to date from 2.4 per cent in 2016, and Flexport has recently received 'a lot of interest' in the largest South-east Asian economy, said Poskus. Congested ports But increased throughput comes with a price tag for the region, and its perennial struggle with infrastructure financing gaps is coming back to bite. South-east Asia is experiencing a level of port congestion not seen since the pandemic, said Lockton Singapore's head of protection and indemnity, Freddie Hawke. 'In Thailand, Indonesia and Vietnam, we're seeing a surge to expedite cargo within the 90-day implementation window (and) we expect to see further congestion for ports in this region as importers look for alternatives to Chinese suppliers,' he noted. Said DHL's Gregory: 'Infrastructure gaps remain a challenge (for regional ports), and congestion resurges where capacity lags demand.' The global story Observers across the board maintain that the outlook for the shipping industry remains murky, with much hinging on the trajectory of trade and tariff policies in the coming months. The shipping industry is often seen as a proxy for global economic growth, and freight rates are viewed as a barometer of the sector's health. Jayendu Krishna, director – head of maritime advisers at Drewry, noted that freight rates from Malaysia and Vietnam to the US have 'increased considerably, (which) is reflective of surging volumes'. Then again, that of other major US-bound routes have been falling, he added. 'It tells a global story of a steep decline in freight rates, mainly because of oversupply in the container shipping market,' warned Krishna. 'With a fall in US-bound trade, container shipping may be facing a double whammy.'
Indian Express
15-05-2025
- Business
- Indian Express
As Beijing, Washington dial down, Piyush Goyal to lead team for US trade talks
A 'large Indian trade' delegation led by Union Commerce Minister Piyush Goyal is set to visit the US for talks next week to potentially finalise the contours of an interim trade agreement between the two countries, a senior government official said Thursday. The fresh round of trade talks with the US assumes significance as it follows the conclusion of a surprise US-China trade deal that saw substantial reductions in the 'tit-for-tat' tariffs. 'The deal has only resulted in a de-escalation of tensions. But substantial tariffs on China remain. India is focusing on its competitiveness,' an official said in response to a question on the impact of the US-China deal on India. On the recent action by India to propose retaliatory tariffs against the 25 per cent US duties on steel and aluminium at WTO, the official said that India aimed to reserve the right to retaliate even as negotiations with the US were ongoing. Another official explained that India needed to approach the WTO within 90 days of the US tariffs to retain its right to retaliate. Notably, Indian steel exporters had told the government that US tariffs have impacted nearly $5-billion worth of exports. The thaw in US-China tension, which came as a surprise to many in trade policy circles, is seen as a setback for 'China-plus-one' countries — such as India — which may now see fewer benefits from a trade deal with the US than previously anticipated. Though New Delhi initiated trade talks with Washington DC earlier than Beijing, China quickly resolved key sticking points with the US and sealed an interim deal. Earlier on Thursday, US President Donald Trump claimed that India had 'offered to drop all tariffs' on the US during negotiations. However, External Affairs Minister S Jaishankar said that any trade deal must be mutually beneficial. 'A trade deal has to work for both countries. That would be our expectation from any trade deal. Until that is done, any judgment will be premature,' Jaishankar said at the opening of Honduran embassy in New Delhi. Speaking at a business leaders' forum in Doha earlier in the day, Trump had said, 'It is very hard to sell in India… they are offering a deal… willing to literally charge us no tariffs.' The Indian Express had reported that US demands during the negotiations centred on greater market access, particularly for automobiles, whisky, and certain agricultural products. Indian negotiators, meanwhile, sought improved access for labour-intensive sectors such as textiles and leather. On digital trade, the US is pushing for greater data access and is challenging India's strict data localisation rules, which require Indian data to be stored domestically. During Trump's first term, disputes over data localisation were a major source of friction between the two nations. Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More
Time of India
13-05-2025
- Business
- Time of India
Rules of the game are still uncertain and ... Why US-China tariff pause may be bad news for these countries eyeing 'China-plus-one' strategy of American companies
Representative Image. (AP Photo/Matt Rourke) The new America-China agreement to pause tariffs on each other is reportedly pressuring manufacturing hubs such as Vietnam and Mexico to make their own, better deals with the US to continue benefiting from a 'China-plus-one' strategy of American companies. According to Reuters, in the volatile trade landscape shaped by President Donald Trump 's tariff announcements, countries gauge their success by how their trade terms stack up against others. For five weeks, nations facing Trump's "reciprocal" global tariff regime, announced April 2, found relief in having lower rates than China, which faced U.S. tariffs soaring from 20% to 145% between March and May. Vietnam, for instance, had a 46% rate, Thailand 36%, and Malaysia 24%, giving them a comparative advantage. Reuters reports that these manufacturing hubs expected multinational corporations to further shift supply chains away from China, bolstering the "China-plus-one" trend. However, a breakthrough in U.S.-China trade talks has introduced a 90-day tariff reprieve, reducing China's import tax to 30%. While still higher than the 10% rate for competing hubs during the pause, experts suggest this could slow the momentum of supply chain diversification. Uncertainty persists "The rules of the game are still uncertain," Diego Marroquin Bitar, a North American trade consultant, told Reuters. "I think companies are just going to delay their investments as much as they can." Since Trump's first term, tariffs on China aimed to drive manufacturing back to the U.S., but "reshoring" largely failed. Instead, companies like Apple sought alternatives in low-cost countries like Vietnam, Thailand, and Mexico. Reuters notes that if the U.S.-China tariff pause extends, these nations risk losing their edge. Vietnam, Thailand, and Malaysia ... Vietnam, Thailand, and Malaysia are now negotiating their own tariff deals with the U.S., while Mexico seeks to lower duties on products like automobiles. Wu Xinbo, director of the Center for American Studies at Fudan University, told Reuters that companies may slow offshoring from China, maintaining it as their main hub while making partial arrangements elsewhere. Sun Chenghao, a fellow at Tsinghua University, highlighted to Reuters that Trump's unpredictable policymaking creates uncertainty, leaving companies hesitant to fully engage in China. Vietnam, which has attracted Chinese manufacturers since Trump's first-term tariffs, faces pressure to secure better deals. Leif Schneider, head of Luther in Vietnam, told Reuters that if Vietnam negotiates a better deal than China, it could solidify its role as an alternative investment destination. Reuters also reports that Vietnam's foreign investment pledges fell to $2.84 billion in April, down 30% from March and 8% year-on-year. In Mexico, President Claudia Sheinbaum has emphasized its tariff-free advantage under the U.S.-Mexico-Canada trade deal, though steel, aluminum, and auto tariffs remain. Jorge Guajardo, a former Mexican ambassador to China, told Reuters that despite the U.S.-China deal, companies like Walmart and Target, rattled by recent trade tensions, will continue seeking alternative supply sources, with Mexico poised to benefit. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Hindustan Times
13-05-2025
- Business
- Hindustan Times
Temporary pause in US-China trade war
The US and China, the world's largest and second-largest economies, have agreed to bring down their tariffs on imports from the other from 145% and 125% to 30% and 10%, respectively. The arrangement, which was reached by the two countries in Geneva on Monday, is for 90 days as of now, a period during which they are expected to arrive at a more detailed arrangement. The latest détente between these two countries marks yet another turn in the ongoing drama between the US and China, where each side was expected to suffer heavy losses as they indulged in brinksmanship over complete economic decoupling — which is what would have happened had the tariffs stayed in three digits. To be sure, it is premature to see the current arrangement as something cast in stone or restoration of status quo ante. Experts have pointed out that even the current tariff levels are higher than what they were before the second Trump presidency. There is no reason to believe that an agreement will be worked out in the next three months. What does all this mean for US-China and the world at large? Three things can be flagged at the moment. Trump's mercantilism was not just a challenge to the multilateral global order but also the American financial markets. Big Finance has made a fortune for itself despite a lot of working-class Americans becoming worse off with a rise in US trade deficits. The fact that Trump has had to back off by quite a few steps because of the financial market meltdown shows that Wall Street has not lost its power in the US. China, if the current tariff levels persist, will still enjoy a large advantage in bilateral talks vis-à-vis the US and in the global manufacturing landscape. But the events in the last couple of months are only likely to further spook non-Chinese manufacturers into finding locations that are less likely to draw the ire of US mercantilism than China (which should help boost India's China-plus-one appeal). To be sure, the world will increasingly have to deal with China's home-grown brands which have emerged as able competitors in many sectors. The rest of the world, India included, will face both headwinds and tailwinds from this ongoing churn. The investment climate will continue to be uncertain thanks to Trump's flips-flops, but like the Sino-US thaw shows, the world can't go on without trade. It's just that it will become more transactional at a multi-dimensional level.
The Hindu
13-05-2025
- Business
- The Hindu
U.S. tariff pause on Beijing puts pressure on 'China-plus-one' countries
In the new world order dictated by President Donald Trump's shifting announcements of tariffs, countries measure their success not by the terms of their trade deals with the U.S. but by how they compare to other countries. For the last five weeks, many nations facing significant duties under Trump's now-paused "reciprocal" global tariff regime announced on April 2 took solace from having better rates than China, which saw U.S. tariffs on Chinese imports ratchet up from 20% to an embargo-like 145% from March to May. Vietnam, for example, was better off than China with a 46% rate, while Thailand was at 36% and Malaysia at 24%. Given their comparative advantage, manufacturing hubs anticipated further moves by multinational corporations to set up shop in their countries and decrease their dependency on China, potentially adding to a years-long trend known as "China-plus-one". Now, everything is up in the air again following a breakthrough in U.S.-China trade talks that resulted in a 90-day reprieve from the astoundingly high tariffs on China, leaving a base 30% import tax rate for made-in-China products. Tariffs on China still remain higher than competing industrial hubs paying 10% under Trump's 90-day pause on the reciprocal duties, but some experts said the deal could halt some of the momentum pushing multinationals to further shift supply chains outside of China. "The rules of the game are still uncertain," said Diego Marroquin Bitar, an expert on North American trade who also works as a consultant. "I think companies are just going to delay their investments as much as they can." Starting in his first term, Trump sought to leverage tariffs on China to force companies to relocate manufacturing to the U.S. The "reshoring" to the U.S. largely did not materialise, but over the past decade companies such as Apple did start looking for alternatives to China, with a focus on countries that offered relatively low labour costs and smaller tariffs. Southeast Asian nations were among the biggest beneficiaries, along with Mexico, but if the U.S.-China tariff pause is extended, those countries could see their comparative advantage dissipate. Vietnam, Thailand and Malaysia are currently negotiating their own tariff deals with the United States. Mexico, which avoided reciprocal tariffs, is also seeking to reduce separate import duties on specific products such as automobiles. Sweeter deals The U.S.-China trade thaw means companies that had considered speeding up efforts to offshore production from China may now tap the brakes, said Wu Xinbo, director of the Center for American Studies at Shanghai's Fudan University. "They will maintain their current situation, keep China as their main operations hub and make appropriate partial arrangements in neighbouring countries, but the bulk of their business will remain in China," he said. Sun Chenghao, a fellow at Tsinghua University's Center for International Security and Strategy, said the uncertainty of Trump's policymaking was "very painful for companies" trying to decide whether or how much to decouple from China. "The current cooldown in tensions does not mean that U.S. firms dare to boldly engage in business activities in China," he said. "Everyone is still waiting for the possibility that tariffs might be imposed again." For countries like Vietnam, which had also attracted Chinese manufacturers since Trump imposed tariffs in his first administration, the unexpected U.S. rapprochement with Beijing ratchets up pressure to reach their own sweeter deals. "If Vietnam manages to strike a better deal than China - which is more than likely after today - it will present itself as an attractive alternative to China in regional investment strategies," said Leif Schneider, head of international law firm Luther in Vietnam. "This was already the outcome of the 'First Trade War' introduced by the first Trump administration," he added. Trade tensions and uncertainty have already reduced pledges for new foreign investments in Vietnam, which in April fell to $2.84 billion, a 30% drop from March and a decline of about 8% year-on-year. In Mexico, President Claudia Sheinbaum has repeatedly emphasised Mexico's comparative advantage on U.S. tariffs. Most exports to the U.S. under the U.S.-Mexico-Canada trade deal are tariff free, although Trump has imposed sizeable levies on steel, aluminium, vehicles and auto parts. Jorge Guajardo, a former Mexican ambassador to China and a consultant on international trade, said even if Monday's trade deal with China sticks, multinational companies will still be wary of depending solely on Chinese manufacturing - and Mexico stands to benefit. "If you are Walmart, Target, Home Depot or any other important importer who just went through five weeks of hell, you appreciate the reprieve but you are looking for a different supply source," he said.
