IRobot started making some models of its Roomba vacuum line in Malaysia as part of an effort to shift away from China, the company said in a Nov. 21 news release. “Establishing manufacturing operations in Malaysia is a fundamental component in our initiative to diversify iRobot's manufacturing and supply chain capabilities, while also mitigating our exposure to current and prospective tariffs on products that are imported from China," said Colin Angle, CEO at iRobot. The company previously announced the plans to begin a production line in Malaysia (see 1910230027).

Consumer electronics company Sonos forecasts a $30 million blow to fiscal year 2020 profits, resulting from the 15 percent Section 301 List 4A tariffs that took effect Sept. 1, Chief Financial Officer Brittany Bagley said on a Q4 call Nov. 21. Most of the impact will be in the holiday quarter, she said. Citing “frequent speculation” about trade negotiations, Bagley said, “We are assuming for the purposes of this call that this remains in effect for the full year at 15 percent.” To mitigate tariff exposure, the company is diversifying its supply chain out of China and has accelerated production of U.S.-bound products in Malaysia. That capacity is “ramping up quickly, and we believe we will have largely eliminated the go-forward impact of tariffs by the end of the fiscal year,” Bagley said.

Timing of List 4B Section 301 tariffs, due to take effect Dec. 15 on smartphones, laptops, tablets and other goods, “could not have been worse" for a consumer tech sector already facing product innovation and demand pressures, Futuresource Consulting blogged. Tech companies need to be agile and resilient as global trade and geopolitical tensions have disrupted technology supply chains that were optimized for long-term cost efficiencies, the researcher said. Companies have to optimize for the disruptions, while using trade uncertainties as an opportunity to create a strategic competitive advantage, it said. Global consumer electronics supply chains are at increased risk of “fracturing” as a result of the U.S.-China trade dispute, said Futuresource, which sees a “short-term fix” as a survival strategy, allowing companies to re-evaluate classification and product routing of key components. Long term, tech firms should consider a “China Plus One” strategy whereby companies active in China augment existing investments with a second facility to diversify risk, cut costs and reduce over-reliance on China. That’s beginning to happen, with some companies announcing they’re transferring production facilities to Vietnam, for example, it said.

Almost half of companies that responded to the U.S.-China Business Council's annual survey on the business climate in China said they have lost sales in China since the trade war began. The most common reason is because of retaliatory tariffs on U.S. imports to China, according to these 100 multinational firms based in the U.S. Another third said they lost sales because of U.S. tariffs.

Five trade groups, representing domestic shoe manufacturers, shoe importers and shoe retailers, are telling President Donald Trump that putting 25 percent tariffs on Chinese shoes, shoe components and machinery used to make shoes would have catastrophic consequences for the industry. "Although our members have been diversifying from China, that process cannot take place overnight," the letter said. "The U.S. footwear domestic manufacturing and U.S. footwear import industries stand united in expressing our grave concerns these tariffs won’t help any segment of our industry," the American Apparel and Footwear Association, the Rubber and Plastic Footwear Manufacturers Association, the Outdoor Industry Association, the Sports and Fitness Industry Association and the Footwear Distributors and Retailers of America wrote in a letter sent May 30. The increased costs of shoe components could drive American factories out of business, they said. And AAFA talked about the U.S. jobs in design, logistics and compliance that could be lost if fewer shoes are purchased because of increased costs for consumers.

Six weeks ago, the senior vice president of the U.S.-China Business Council believed the Trump administration's pressure was successfully empowering Chinese officials who believe in reforming China's capitalist/state-controlled hybrid economy. "I was pretty optimistic that we were, as a consequence, going to be able to say that the administration had achieved things that probably no previous administration had genuinely been able to achieve," Erin Ennis told an audience member at the Washington International Trade Association China trade panel May 29.

GoPro will move most of its U.S.-bound action-camera production out of China by summer as a hedge against its products’ exposure on “any new” Section 301 tariffs list, the company said on Dec. 11. GoPro escaped tariffs through the three rounds of duties imposed between July and September. “Today's geopolitical business environment requires agility, and we're proactively addressing tariff concerns” with the move, Chief Financial Officer Brian McGee said. “This diversified approach to production can benefit our business regardless of tariff implications.” McGee spoke on a quarterly earnings call in early November of GoPro preparations to move production out of China if “necessary.” President Donald Trump threatened Sept. 17 to "immediately pursue" a fourth tranche of tariffs on $267 billion worth of additional imports if China retaliated for the duties that took effect Sept. 24. China did retaliate, but Trump never acted. GoPro didn’t comment on where it’s moving production to.

Chern-Chyi Chen, deputy representative for trade and economic affairs for Taiwan in Washington, said "witnessing a trade paradigm shift" has been very interesting. Taiwan, the 11th-largest trading partner with the U.S., is accelerating its investment outside of China as the U.S.-China trade conflict builds, according to Rupert Hammond-Chambers, the president of the U.S.-Taiwan Business Council. The two were guests at a Heritage Foundation event on U.S. trade with Taiwan on Nov. 13. The event was timed to a new report on Taiwan from Heritage researcher Riley Walters.

Reclassifying Chinese imports into Harmonized Tariff Schedule codes for goods not exposed to Section 301 tariffs is perhaps the least understood, most underused strategy that companies can try for minimizing the duties’ impact, a UPS executive said during an Oct. 3 webinar on high-tech supply chains. “If you’re not participating in what that classification process looks like, you’re taking a risk, I would say, at a minimum,” said Ron Shepherd, vice president at UPS Trade Management Services.

The two rounds of Section 301 tariffs, implemented July 6 and Aug. 23, account for less than 10 percent of the shipment volume FedEx does in the “China-U.S. lane bidirectionally,” and that volume represents about 2 percent of total revenue for the “whole enterprise,” said Raj Subramaniam, FedEx chief marketing and communications officer, on a Sept. 17 earnings call. New tariffs on the $200 billion worth of imports would raise the impact to a quarter of the commerce FedEx does between China and the U.S., he said. “The uncertainty around the issue and the potential for additional tariffs is affecting the market and we're beginning to see some of the economic activity in China starting to moderate as a result of that,” Subramaniam said about an hour before President Donald Trump announced the third tranche of tariffs would take effect Sept. 24. FedEx hasn’t yet seen “any significant shifts in the customer supply chain” as a result of the tariffs, he said. “However, if the situation continues for any amount of time, we do expect customers to diversify their supply chains and perhaps some of the trade patterns might change.” Subramaniam is confident that “the scale and flexibility of FedEx will enable us to deliver strong results in enterprise despite any uncertainty on trades and tariffs,” he said.