Planet the planet is watching the American president, Donald Trumpto announce sweeping dutiesto recall them, to increase them and then to “freeze” them, they are not unjustly concerned. These moves are departed from any previous one in American political history. At the same time ‘Chaos of duties’ by Donald Trump threatens the global supply chain, the New York Times.
Jacob Rothman believed he had found the golden intersection: a global productive strategy stretching from Vietnam to India and Cambodia, offering American retailers quality products without dependence on China. But the new Trump government’s duties wave overturns everything – and himself, from a candidate rabbi, is today to fight with Cancelled orders, warehouses full of unauthorized goods and a future uncertain even for US production.
The 52 -year -old businessman, who grew up in California but spent more than two decades in China, manages factories that produce barbecues and kitchens for the Walmart and other large retail chains all over the world. Early on he had realized the growing tensions between the US and China, where his business is based.
During his first presidency, Donald Trump imposed duties on Chinese imports. His successor, Joe Biden, continued the same policy. The pandemic has highlighted the dangers of US dependence on the Chinese industry, whether it is respiratory spare parts or basic drugs.
Rothman, owner of Velong Enterprises, provided in time: he set up a consortium in Vietnam and two in India, and founded his own production unit in Cambodia. He had bet that whatever happened, he could carry his production and bypass duties, crises and natural disasters.
‘I thought I had predicted everything’, said last week. But what he had not seen was coming was a “tsunami” of new duties – this time not only in China, but in dozens of countries. “It’s revealing,” he said. “No one knows what to do.”
Even when the White House decided to temporary suspension of most duties For countries other than China, Rothman remained shocked. “What does” safe “mean?” wondered.
“With an external policy proposed by chaos, nor Southeast Asia seems now protected.”
He fears that duties may be extended to this area as well.
One of the long -term consequences of Trump’s aggressive trade policy is the collapse of the concept of “Safe shelter”. In recent years, through repeated crises – duties, pandemic, blockages on the Panama and Suez channels – multinational businesses have tried to distribute their production to various countries to reduce their exposure to dangers.
OR Apple conveyed production iPads and AirPods to Vietnamwhile increasing the construction iPhones to India. OR Walmart Transferred orders from China to India and Mexico. OR Nikethe Samsung Other large brands have removed part of their production from China to avoid US duties.
But the new move of the Trump government this week seems to have destroyed this strategy. US imports from China are charged with duties reaching 125%, from Vietnam with 46%, from Cambodia with 49%, while products from India have additional burdens of 27%.
Although new duties have currently been frozen for most countries outside China, many importers are afraid that they can come back at any time – especially for Southeast Asia. The result? Chaos, uncertainty and delays, expected to be translated into price increases for consumers.
“Supply chains need long -term planning – something that is almost impossible today,” says Ryan Petersen, chief executive of FLEXPORT, a global transport company based in San Francisco. ‘Many businesses are in deadlock and they are looking for stability.ยป
This is the situation for Mr. Rothman and the kitchens produced by his factories.
He studied theology for the purpose of becoming a rabbi, but today he has been found to be called ‘Rabbi of the Spatula’, Responding daily to phone calls of anxious customers from every corner of the world. Just last month, he was in a large trade fair of household items in Chicago, behind a kiosk with his Indian partners and a banner that advertised the benefits of geographical differentiation of their production: “We are building the safest log in the world.” “I thought we would be the solution,” says Rothman.
And then Donald Trump announced the new wave of huge taxes to US imports.
Rothman was particularly shocked by the duties in Cambodia, given the country’s past with the United States.
As he says, the announcement of duties had a direct consequences: a large retailer frozen order of $ 5 million, While other customers are already keeping products ready in its warehouses, waiting for a possible lifting of measures. Rothman estimates his orders will be reduced by 30% in the next 6 months.
He finds it difficult to reconcile this disruption with the official targets of duties policy: The restriction of US dependence on China and the return of production within US territory.
He has accepted proposals to set up a factory in the United States – in Mississippi, Utah or Pennsylvania. Walmart has a support program for factories opening at its headquarters, Arkano. But making a factory in the US seems extremely risky.
How can a production unit in America are equipped when large duties are imposed even on imported equipment and machinery? How to find workforce, in a time of mass expulsion of immigrants?
Creating a factory is a accurate and long -term investment. If a next government changes politics, then its competitors will be able to build their products in cheap markets abroad, while he will be trapped in an expensive and stiff system – a recipe for failure.
“We are elected president every four years,” Rothman says. “A factory is at least so needed to depreciate its cost. And if the data change and production in the US cease to be viable, What will the factory do in America then? ” wonders to New York Times.