On Sunday, the US enacted new tariffs on Chinese goods. Consequently, Japanese factories suffer from new tariffs.
An additional 15% tariff was imposed on 3,243 items. That includes many consumer goods like clothing, watches, photocopiers and all-in-one printers.
The suffering of Japanese factories
Uniqlo, one of Chinese fast retailing has based much of its production in China. After that, the company ships good from there to 52 stores it operated in the U.S. as of the end of July.
The North American market as a whole accounted for about 90 billion yen ($847 million) in sales for the company. The number equals to 5% of its total for 2018. This new tariff is expected to hit the business badly.
The company is looking at moving some production to Southeast Asian nations like Vietnam and Cambodia.
Read also: Investors Are Moving to Thailand
However, Uniqlo shift comes with its own challenges. The company still relies on China for raw materials. Therefore, moving the production will result in higher costs in procurement and in shipping the finished products to the U.S.
Besides Uniqlo, many photocopiers and all-in-one printers are also now subject to higher tariffs.
Kyocera, a Japanese big photocopiers company, mentions that they will switch the output at its Chinese and Vietnamese plants.
Read also: US-China Trade War: How Will Malaysia Benefit From It?
The Chinese factories currently make items for the American market, while the Vietnamese plants produce those for Europe. The goal is to swap them by the end of March.
Meanwhile, Seiko Holdings, Japanese watch factory, is considering moving the production of certain items, mostly watches priced under $500, to Japan from China.
Besides, Kasai Kogyo which currently ships molds for car door parts from China to its American plant estimates millions of dollars in added costs.
Even if the factories can move their production, yet, they still have to suffer from the cost of moving the factories and shipping process.
