Even as President Trump heaped additional tariffs on China, his barrage of trade levies on countries across Asia and unpredictability about what he might do next has encouraged some companies to hunker down in China, exactly the opposite of what he had hoped.
Mr. Trump has steadily ratcheted up the pressure on China. As of Wednesday, his new tariffs on China exceed 100 percent, including a last-minute escalation serving as punishment for Beijing’s retaliation on earlier levies.
However, unlike what happened during his first term, Mr. Trump has accompanied the tariff campaign on China with steep import duties on dozens of other countries, including a handful of Asian countries that became popular alternatives in the earlier trade war between Beijing and Washington as a way to circumvent levies and limit supply chain disruptions.
But for some companies, the so-called reciprocal tariffs have had the unexpected effect of making China an even more appealing place to produce in and buy from. It has eliminated some of the motivation to diversify production or sourcing to places like Vietnam, India or other Asian countries.
In addition, the chaos that has followed last week’s announcement has made companies wary about adding more upheaval with a dramatic change to their supply chains. Faced with constant flux and unpredictability, companies are choosing to stay with what they know: longstanding relationships with Chinese suppliers or manufacturing partners.
“Staying in China and making China work is everyone’s strategy right now,” said Travis Luther, founder of MOSO Pillow, a Denver-based maker of bedding made from bamboo fiber.