Trump’s tariffs leave no safe harbor for importers in U.S.

ECONOMY

Southeast Asia ventures are also left vulnerable

For American companies that have shifted factory production from China to other countries, the Trump administration’s latest tariffs have undermined their strategy while sowing paralysis, according to industry experts. PHOTOS BY ROMAN KNERTSER — THE NEW YORK TIMES

A Velong Enterprises factory worker makes kitchen utensils in the Svay Rieng province of Cambodia on Wednesday.

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By Peter S. Goodman

The New York Times

In a world besieged by turmoil, Jacob Rothman thought he had secured a refuge.

Rothman, 52, grew up in California but has spent more than two decades in China, overseeing factories that make grilling accessories and other kitchen items for Walmart and retailers around the globe. Well before the rest of the business world, he grasped the pressures bearing on the relationship between his native country and the one where he runs his business.

President Donald Trump used his first term to impose tariffs on imports from China. President Joe Biden advanced that policy. The pandemic exposed the pitfalls of American reliance on Chinese factories for an array of goods, from parts for ventilators to basic medicines.

Rothman and his company, Velong Enterprises, had correctly anticipated demand for alternatives to Chinese industry. He had forged a joint venture in Vietnam, and two more in India. He had set up a wholly owned factory in Cambodia. Come what may, he figured, he could shift production to limit his exposure to tariffs, conflicts and natural disasters.

“I thought I was really ahead of the game,” Rothman said, still absorbing the shock of the one thing he had not seen coming — a veritable tsunami of tariffs that hit dozens of countries at once. “It’s apocalyptic,” he said. “People don’t know what to do next.”

Even after the White House last week paused most tariffs on every country except China, Rothman remained shaken. “What does ‘safe’ even mean anymore?” he said. “With a chaos-first foreign policy, even Southeast Asia may no longer be immune.”

He assumed that tariffs could eventually be imposed on the region as the Trump administration treated Southeast Asia as an extension of Chinese business interests.

Among the enduring impacts of Trump’s sharply escalated trade war was the effective foreclosing of safe harbors. In recent years, as global supply chains have confronted a series of crises — from tariffs, to pandemic disruptions, to obstructions to shipping in the Panama and Suez canals — multinational companies that sell their goods to the United States have sought to limit their vulnerability to trouble in any single place by spreading around their factory production.

Apple shifted the manufacture of some of its iPads and AirPods to Vietnam, while making more of its iPhones in India. Walmart moved orders to India and Mexico from China. Nike, Samsung and other major brands transferred production from Chinese factories to other countries to avoid American tariffs.

The Trump administration’s broad salvo appeared to decimate that strategy. American imports from China face duties reaching 125%. Duties on imports from Vietnam were set to increase to 46%, and Cambodian goods confronted tariffs of 49%. India faced 27% levies.

For the moment, the pausing of many tariffs has left China uniquely vulnerable. But importers are cognizant that levies on the rest of the world — and especially Southeast Asia — could be revived. The result is chaos, bewilderment and delay that presages rising consumer prices.

“Supply chains require long-term planning that is nearly impossible in the current environment,” said Ryan Petersen, CEO of Flexport, a global logistics company based in San Francisco. “So many businesses are paralyzed and craving stability.”

That described the state of play for Rothman, and the kitchen items his factories make. A college religion major who considered training to be a rabbi, he now finds himself serving as the “Spatula Rabbi,” fielding calls from anxious customers around the world. As recently as last month, he was attending a major housewares trade show in Chicago, manning a booth with his Indian partners behind a banner heralding the benefits of their geographic diversity: “Building the safest supply chain on the planet.”