U.S. manufacturers are moving parts of their businesses out of China to avoid paying U.S. tariffs from President Trump’s trade war.
Yeti Holdings Inc., iRobot Corp., Crocs Inc., and others are moving production out of China to countries such as Vietnam, India, Taiwan, and Malaysia, according to the Wall Street Journal.
“We have been shifting production to Vietnam very aggressively,” said Shawn Nelson, CEO of the furniture-maker Lovesac Co. “Once you move, you don’t go back.”
Companies that relocate from China are unlikely to move production back because of the high cost of moving operations. The cost is worth it to move out, though, to avoid tariff rates that hit as high as 25% for companies without an exemption.
Few companies are moving production back to the U.S., a stated goal of Trump.
“If we were to try to do a factory in the U.S., it would be enormously expensive,” said John Hoge, co-owner of Sea Eagle Boats Inc.
China’s economic growth has slowed significantly as Trump continues to pressure the East Asian power. China’s economic growth posted a 26 year low in the second quarter of 2019.
The trade dispute has had increasing effects on the U.S., as well. American soybean farmers, who send a large amount of their product to China, have been some of the hardest hit. The Trump administration has provided the sector with billions in aid to offset the financial harm from the tariffs.
