After US President Donald Trump launched a trade war against Beijing during his first term in office, many multinationals adopted a “China+1” strategy as they attempted to navigate a turbulent new environment.
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The idea was to shift parts of their supply chains away from China’s factory hubs and into new investment hotspots such as Vietnam and Mexico, so they could mitigate the impact of US tariffs directed at Chinese imports.
Now, some businesses are realising they will need to rethink their strategies once again to cope with an even bolder second Trump administration.
Since returning to office, the US president has already announced plans to slap 25 per cent tariffs on Mexico and Canada and hike duties on Chinese goods by 10 per cent.
Though the US has since agreed deals with its North American neighbours to avoid a tit-for-tat tariff war – for now, at least – the moves have heightened anxieties among multinationals and their suppliers.
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With many investors worried the US will take further measures against markets it suspects of acting as transshipment hubs for Chinese goods, some are looking to diversify into a range of new markets – from India to Ethiopia.