U.S. manufacturing plants being rapidly established by Chinese companies to evade extensive tariffs
In a flurry of activity since April, Ryan Zhou, the head honcho of an east China-based novelty gifts business, has been figuratively burning the midnight oil, setting up a new factory in an entirely unknown territory: Dallas, Texas.
Age hasn't slowed down this 38-year-old, who's been pulling 14-hour shifts, week after week, as he hunts for warehouses, negotiates shipping arrangements, and battles for US work visas for his employees. The grand opening is set for May, under the shadow of escalating trade tensions.
Shifting production to the American South is no walk in the park, but Zhou feels cornered: unless he can devise a cunning strategy to dodge a crippling wave of US tariff hikes, his business might not survive.
"The US market accounts for a whopping 95% of our orders," he stated bluntly. "It's a market we can't afford to lose."
Zhou is far from the lone wolf in this trade war dance. Manufacturers across a gamut of sectors – from petrochemicals to printed mugs – have been stealthily setting up new US facilities, desperate to dodge the brunt of an escalating US-China trade war.
These recent tariff hikes on Chinese goods are no joke. Under President Donald Trump, US duties on Chinese imports skyrocketed to a whopping 145 percent[1]. This staggering figure is the result of a 125 percent increase, layered on top of a previous 20 percent rate. This aggressive move is part of a bigger trade war, as China has retaliated by imposing tariffs on various US agricultural products, ranging from 10 to 15 percent[1].
These tariffs can wreak havoc, disrupting supply chains, jacking up costs, and potentially forcing store closures due to stock shortages and price hikes[2]. Retailers are growing increasingly anxious, with fears that these tariffs could lead to a shortage of goods and skyrocketing prices.
- Ryan Zhou, in an attempt to circumvent impending tariff hikes, has been applying diplomatic efforts, attempting to secure US work visas for his employees.
- The economy of Zhou's east China-based business heavily relies on trade with the United States, with 95% of orders originating from there.
- Given the escalating trade tensions, Zhou is forced to make a shift in his business strategy, setting up a factory in Dallas, Texas, amidst the uncertainty.
- To save his business, Zhou is trying to mix finance and industry, seeking to invest in a new petrochemicals division, hoping it may provide a shield from the looming tariffs.
- Manufacturers all over various sectors, from printed mugs to petrochemicals, are attempting similar shifts in their business locations, due to the detrimental effects of the US-China trade war on their economy.
- The US government, under President Trump, has increased tariffs on Chinese goods drastically, making them approximately 145% more expensive through a 125% surge in duties, based on a previous rate of 20%.
