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Trump Tariffs Hit Chinese Firms in Vietnam, Chip Prices to Rise

2025-04-07 14:49:11Mr.Ming
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Trump Tariffs Hit Chinese Firms in Vietnam, Chip Prices to Rise

On April 2, US President Donald Trump signed an executive order at the White House, announcing the implementation of reciprocal tariffs on imports from several countries and regions. These include a 34% tariff on goods from mainland China, 32% on Taiwan, 20% on the European Union, 24% on Japan, 25% on South Korea, 46% on Vietnam, 36% on Thailand, 26% on India, and 24% on Malaysia. Additionally, some US trading partners will face a minimum "baseline tariff" of 10%. When combined with the existing 20% tariff on Chinese imports, the new 34% reciprocal tariff will result in a total tariff rate of 54% on goods from China, effective from April 9.

President Trump also stated that tariffs on semiconductors will soon be enforced, with the pharmaceutical industry expected to face similar measures in the near future.

Earlier this year, Trump suggested imposing tariffs ranging from 25% to 100% on semiconductors produced in Taiwan. However, the decision was put on hold after Taiwan Semiconductor Manufacturing Company (TSMC) pledged to invest an additional $100 billion in the United States for production and R&D centers.

Industry analysis indicates that comprehensive tariffs on all chips produced outside the US would significantly impact major American chipmakers, including AMD, Broadcom, Intel, NVIDIA, and Qualcomm, as a large portion of their products are manufactured by TSMC. For example, if an NVIDIA AI GPU is priced at $50,000 with a gross margin of 75%, a 25% tariff would result in a $12,500 tariff, plus an additional $3,125 in import taxes. This could either reduce NVIDIA's profit margins or lead to higher consumer prices. Similarly, a $200 CPU with a 40-50% margin could see its retail price rise to $225 due to the 25% tariff if manufacturers and the supply chain do not absorb the cost.

It is important to note that mainland China remains a key production hub for smartphones and PCs globally. The US's substantial tariff increase on goods from mainland China will place significant cost pressure on Chinese manufacturers, especially those with major US-based clients or production in China. In response, companies may have to raise prices, which could affect future orders.

In late February, Acer's chairman, Chen Junsheng, stated that the company would increase prices by 10% on products affected by the tariffs, with price hikes for laptops made in mainland China expected to begin in March.

If the US tariff policy on China remains long-term, it is expected to encourage manufacturers to shift production from China to regions with lower tariffs. However, Vietnam, which has become a popular manufacturing destination for Chinese and Taiwanese companies, faces an unexpected challenge, as tariffs on Vietnamese imports will rise to 46%.

According to TrendForce, 20% of global laptops are expected to be produced in Vietnam in 2024. The shift in the supply chain towards diversifying production across Southeast Asia has made Vietnam an attractive manufacturing hub, due to its reasonable labor costs and skilled workforce. Major Taiwanese companies, including Foxconn, Quanta, Hon Hai, and others, have already invested in factories there, further boosting the country's role in global electronics manufacturing.

Taiwanese communications equipment manufacturers, such as CENS, Arcadyan, Accton, Gemtek, Alpha Network, CyberTAN, Senao, and others, also have production bases in Vietnam, with many serving major US clients. Some companies, like Shenzun, which previously paused operations in Vietnam following Trump's election, have shifted their focus to the US market, with plans to establish a factory in Southern California later this year.

Chinese mainland manufacturers, including Longcheer, Sunny Optical Technology, DBG, Luxshare Precision, Lens Technology, LY iTech, Goertek, SPEED Technology, and others, have also invested in factories in Vietnam. Additionally, companies like BOE, Goertek, and others are expanding their operations in the country.

In Thailand, Taiwanese companies like Quanta and Inventec have established factories producing server systems. Additionally, 14 Taiwanese PCB manufacturers have invested in Thailand.

The new US tariffs, which impose rates of 46% on Vietnam and 36% on Thailand, will undoubtedly affect Chinese and Taiwanese companies operating in these countries. To avoid the impact of the tariffs, some businesses may consider relocating their manufacturing operations to the US.

Some Chinese manufacturers in Vietnam expressed surprise at the high tariff rates, as they had initially moved operations to avoid tariffs. However, with the new tariffs in place, these companies are now forced to reconsider their strategies. At this point, many are taking a wait-and-see approach.

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