US companies are rapidly shifting production out of China, bolstering inventory and weighing price increases as they prepare for potential tariff hikes from a second Trump administration. The move is in response to increased duties on imports from China, Mexico, and possibly other countries, which would significantly impact the cost of goods for US businesses.
Industry leaders say many companies are already diversifying their supply chains, with some even negotiating contracts that shield suppliers from tariffs altogether. For example, EV maker Rivian has secured deals that absorb the costs of increased tariffs on its suppliers.
However, shifting production out of China won’t be easy for companies with significant investments in the country, such as automakers with sprawling plants. Experts warn that alternatives like Vietnam and India may not have enough infrastructure to meet current demand from China and Mexico.
To mitigate potential risks, companies are taking defensive measures, including acquiring additional inventory before tariffs hit. Lifetime Brands, which owns KitchenAid and Farberware, has increased its inventory levels as a hedge against potential tariff increases.
Ultimately, businesses are already proactively addressing the issue, rather than waiting for higher tariffs to take action.
Source: https://www.axios.com/2024/11/12/trump-tariffs-china-mexico-supply-chain