Issue link: https://iconnect007.uberflip.com/i/1531014
34 SMT007 MAGAZINE I JANUARY 2025 We don't know how long those tariffs will last, but we know that Trump uses them as a nego- tiating tactic to get these countries to make cer- tain trade concessions and for other foreign pol- icy aims that have nothing to do with the prod- ucts on which the tariffs are being imposed. I would expect the same this time around. The electronics manufacturing sector is pri- marily concerned with China, although we have a growing amount of activity in Mexico. Many companies—including Chinese ones— are moving operations to Southeast Asia. How will they be affected by tariffs? China is looking to get around these tariffs in several industries by setting up manufactur- ing in third-party countries in Southeast Asia and Mexico. Solar panels are a good example of this. ere has been a lot of trade action behind those products and China has moved into South- east Asia to produce them. Because of that, trade investigations have been initiated in those coun- tries to address that import surge. Even though China may be moving into these other countries, it doesn't mean that the imports from those other countries won't be affected by these tariffs. It comes down to determining the country of origin of that product and how much pro- cessing is happening in those countries. If Mex- ico, for example, is acting as an export platform and the products are just passing through Mex- ico without much processing happening there, then it could still be a Chinese-origin product, and it would still be hit with that same Chinese tariffs. e mere fact that you have production in a different country doesn't mean you're com- pletely safe. at analysis needs to be done: Is my product really Chinese or is it the origin the country from where it's being shipped? Is China Plus One a solution for de-risking anything? Maybe it's China's aim to get some attention off products coming directly from China. But I think the U.S. understands this is China's strategy for setting up production in these other countries. at alone will not completely de-risk the sup- ply chain. It's smart for companies that want to diversify their supply chain to look outside of China at some other countries for their produc- tion. But you have to pay attention to the nature of the production happening there. ere's always a concern that products are just being shipped through other countries, meaning they're made in China, and shipped through a different country. I used to work for U.S. Customs, and they are well aware of what's happening. So, trying to get around the tariffs by shipping through another place really doesn't protect you? If the product comes from China first, there's still potential liability? Contrary to what some people think, the importer actually pays tariffs, and has certain responsibilities to make declarations to U.S. Customs on imports. One of those declarations is country of origin; the tariff amount could be based on country of origin. If China is the coun- try of origin, you could be hit with a 25% tariff. But if the country of origin is different, you may have lower or no tariffs at all. e importer is obligated to report to the government, but the government can check the paperwork aer it's cleared for import to verify country of origin. ey can require you to prove it. James Kim