As the China-U.S. trade war continues, companies shift their production out of China. Previously, many were always mentioned Vietnam as the largest beneficiaries of the trade war. However, the current report shows that investors are moving to Thailand to avoid tariffs.
The U.S.-China trade war has lasted over a year. Through the war, both countries impose duties on billions of dollars worth of imports from each other.
Moreover, in a tweet last Friday, after announcing more tariffs on Beijing, U.S. President Donald Trump ordered American companies to immediately start looking for an alternative to China.
Also read: Trade War Heats Up, Is Huawei Getting Worse?
Why They now Choose Thailand?
Many worries that Vietnam growing trade deficit with the U.S. may possess a threat for their business. In June 2019, the U.S.-Vietnam trade deficit increased by 22.9% compared to a year ago. Last year the deficit stood at approximately $3,049 million.
When the U.S Commerce Department slapped import duties, the investor becomes more afraid of the U.S probable sentiment to Vietnam. In July, the department rejected import duties of over 450% on Vietnam steel.
Moreover, Vietnam’s tightening labor market and business have made businesses to look for other countries. Those two are essential for business operation. Thus, if companies get more difficulties to access those two, they will run for other countries.
Also read: Trade War, iPhone Sales Down 12 Percent to 26 Billion US Dollars
Moreover, there are several big companies that have been successfully operated in Thailand. One of those big companies is Harley Davidson. In May 2017, motorcycle maker Harley Davidson already began moving its production into Thailand.
The company did the move even before U.S. President Donald Trump started imposing additional tariffs on China. Consequently, Harley Davidson announced its increased sales. Especially, in Malaysia, the company experiences a 181% increase in sales.
Therefore, many big companies plan to move their production process in Thailand hoping that they will get increasing profit as Harley Davidson.