As soon as he took office, US President Trump used tariffs as a weapon to force other countries to make concessions in business, immigration and other aspects, triggering dramatic fluctuations in the global trade pattern.

Trump's tariff 2.0 has shown a significant escalation trend compared to the trade war in 2018:

Globalization of the scope of attack:

The tariff targets have expanded from China to traditional "allies", and major trading partners such as Canada and Mexico have been included in the scope of attack, forming an indiscriminate firepower coverage.

Lightning policy implementation:

Bypassing the regular process by borrowing the International Emergency Economic Powers Act, the executive order takes effect directly, such as canceling the tax-free policy for small packages from China below $800, which was decided in just 48 hours.

Blurred strategic intentions:

The reasons for taxation are switched arbitrarily from "national security" to "fair trade", and there is a lack of quantifiable termination standards. For example, after Canada made some promises, the 25% tariff was suspended for 30 days, but a few days later Trump believed that Canada had not done enough and might re-impose the tariff after 30 days.

But doing so also brings a problem.

It is easy for the president to write a big letter, but it is difficult for relevant government departments to execute the order.

A typical example is that the policy of abolishing the tariff exemption for small packages from China with a value of less than 800 US dollars was urgently stopped.

Because millions of small packages need to recalculate tariffs every day, and the US executive branch is facing a sharp reduction in staff and budget, whether Trump's frequently changing executive orders can be implemented in time is a big question mark

An official admitted: "The speed of system upgrades is far behind the frequency of the president's tweets."

At this stage, the United States, as the largest single consumer market, remains unchanged. In order to cope with the ambiguous multilateral tariff policy, companies can only give full play to their subjective initiative and flexibly respond, seize the policy window period to actively ship goods, and prepare for transshipment in third countries.

However, companies must also make medium- and long-term strategic preparations:

Reduce dependence on the United States: Actively explore ASEAN, Europe, Africa, the Middle East and other emerging economies to diversify the customer base.

Local production in third countries: As the Trump administration expands the scope of the US Customs and Border Protection's investigation and plugs the transshipment loophole, the practice of simply "transshipment to avoid taxes" may also be difficult to sustain.

In the future, local production in third countries may become the main way for Chinese companies to deal with tariffs.

However, countries that benefited the most from the US tax increase in the last round, such as Vietnam and Mexico, may become risk areas in this round of migration.

As these countries' trade surpluses with the United States continue to rise, they are likely to become one of the next targets of US taxation and face the risk of tax increases.

Therefore, many companies have begun to turn their attention to neighboring Southeast Asian countries such as Thailand, Cambodia, Indonesia and Malaysia.

Southeast Asia is close to China, which helps to reduce logistics costs; and countries such as Thailand and Malaysia have also established a complete industrial ecology. In addition, existing agreements such as the Regional Comprehensive Economic Partnership (RCEP) have also promoted more convenient trade relations between China and Southeast Asian countries.

Southeast Asian countries such as Indonesia and Thailand have seen this trend and actively extended olive branches to Chinese companies that may be affected by tariffs:

Indonesia's new special economic zones: The Indonesian government plans to add 7 to 9 special economic zones in the next four years, hoping to attract industries affected by tariffs by providing multiple incentives such as tax incentives and land support.

Thailand's willingness to cooperate: The Prime Minister of Thailand recently visited China, and the leaders of China and Thailand agreed to accelerate the promotion of long-term investment cooperation, especially in future key areas such as electric vehicles, semiconductors and data centers.

However, Panda Overseas reminds domestic companies that it is still necessary to carefully evaluate the development of new markets.

Taking Thailand and Indonesia as examples, the main disadvantages of setting up factories in Thailand are longer supply chains and higher logistics costs; while Indonesia has lower labor costs and rents, but greater cultural differences than Vietnam.

Despite the tariff risks faced by Vietnam, some companies are still betting on it. Because in addition to being close to China and having lower costs, the culture and values ​​of Vietnamese people are also closer to China, and employees are more organized and disciplined.

For Chinese companies in China, the primary task is to survive, keep their business, keep their markets, and keep their customers under the continued tariff barriers of the United States.

And this butterfly effect caused by tariffs will eventually drive China's manufacturing to complete a historic transformation in the global ecological value chain.

Those companies that build a multipolar survival matrix in the turmoil may reap strategic initiative that is more precious than tariff dividends.

PDAEXSEA, a one-stop cross-border enterprise service platform, is dedicated to tailoring overseas solutions and supporting landing services for Chinese companies, helping Chinese companies to avoid pitfalls when going overseas.

For more details on overseas expansion, please consult PDAEXSEA professional consultants: