Stockpiling is the reflex response by firms to the imposition of tariffs, but with the rapidly changing position of US President Donald Trump’s administration, companies are finding that it is not so straightforward this time around.
Whether it is the luxury, electronics or pharmaceutical sectors, Trump’s unpredictability complicates the calculations of firms. Some companies did not wait for Trump’s April 2 announcement of massive “reciprocal” trade tariffs: They had already begun shipping more of their goods to the US.
In the end, Trump backed down quickly on the “reciprocal” tariffs, pausing them for 90 days except for China. That still left the global 10 percent tariff in place, as well as the 25 percent tariffs on European steel, aluminum and cars.
Photo: Bloomberg
French cosmetics firm Clarins did not hesitate and stepped up shipments to the US at the beginning of the year.
“We’ve built up three months of stocks, which represents US$2 million in goods,” Clarins North America president Lionel Uzan said.
With all of its products made in France, Clarins had few other options to mitigate the tariffs.
Even if they do not all acknowledge it so openly, firms in many different sectors are stockpiling their products in the US.
Last month, exports of Swiss watches to the US jumped about 14 percent compared with the same month last year.
More striking is Ireland, which plays host to a number of international pharmaceutical firms. Its exports to the US jumped 210 percent in February to about 13 billion euros (US$14.79 billion), with 90 percent of those being pharmaceutical products and chemical ingredients.
Fermob, a French manufacturer of metal garden furniture that sells about 10 percent of its products in the US, said it began planning for the tariffs once the result of the presidential election became known in November last year.
It stepped up production in January and February.
“We’ve sent around 30 percent of our extra stock to the United States,” Fermob CEO Baptiste Reybier said.
That extra production has benefited transportation firms.
Lufthansa Cargo AG said it has seen in recent weeks “an increase in demand for shipments to the United States.”
The trade war “has incited companies to accelerate certain stages in their supply chains,” the company said.
“A similar trend was seen for the delivery of cars from the EU to the United States,” it added.
The phenomenon also concerns US-made goods.
The Japanese newspaper the Nikkei reported recently that Chinese tech firms were snapping up billions of dollars of artificial intelligence chips made by US firm Nvidia Corp in anticipation of Washington imposing export restrictions.
However, stockpiling is not a solution, analysts said.
McKinsey & Co partner Matt Jochim, who helps companies with supply chain issues, called stockpiling “a very short-term opportunistic” move.
The practice has limits, as tariffs are constantly changing and it is not always practicable, he said.
“In a lot of the electronics space, it’s also hard to do, because the technology changes so quickly; you don’t want to get stuck with inventory of chipsets or devices that are the prior version,” Jochim said.
Fermob said it was taking a measured approach to stockpiling.
“Otherwise, you’re replacing one risk with another,” Reybier said. “You have to finance stocks and there is also the risk of not having sent the right product.”
Having a local subsidiary with warehouses also helped, Reybier added.
“It’s too early to say whether we should have sent more or not,” he said.
STRONG INTEREST: Analysts have pointed to optimism in TSMC’s growth prospects in the artificial intelligence era as the cause of the rising number of shareholders The number of people holding shares of chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a new high last week despite a decline in its stock price, the Taiwan Depository and Clearing Corp (TDCC, 台灣集保) said. The number of TSMC shareholders rose to 2.46 million as of Friday, up 75,536 from a week earlier, TDCC data showed. The stock price fell 1.34 percent during the same week to close at NT$1,840 (US$57.55). The decline in TSMC’s share price resulted from volatility in global tech stocks, driven by rising international crude oil prices as the war against Iran continues. Dealers said
Taiwan’s natural gas supply remains stable through the end of May, despite rising concerns about potential disruptions to Qatari liquefied natural gas (LNG) supplies due to escalating conflicts in the Middle East, the Ministry of Economic Affairs said yesterday. The ministry in a statement said that Taiwan has completed preparations for natural gas supply and shipping schedules through the end of May. It has also made plans to increase natural gas imports from regions outside the Middle East in June to ensure a stable supply, it added. Taiwan sources natural gas from 14 countries and is not solely dependent on the Middle East,
China is clamping down on fertilizer exports to protect its domestic market, industry sources said, putting an additional strain on global markets that were already grappling with shortages caused by the US-Israeli war on Iran. China is among the largest fertilizer exporters — shipping more than US$13 billion of it last year — and it has a history of controlling exports to keep prices low for farmers. Shipments through the war-blocked Strait of Hormuz account for about one-third of the sea-borne supply. This month, Beijing banned exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources said. The ban, which has not
Grab Holdings Ltd agreed to buy Delivery Hero SE’s Foodpanda operations in Taiwan for US$600 million, a deal that marks its first foray outside of its Southeast Asian base. The cash acquisition will allow Grab to expand into 21 cities across Taiwan, the Singapore-based ride-hailing and delivery company said in a statement yesterday. Grab expects the transaction to be completed in the second half, subject to regulatory approvals. The purchase will give Grab a presence on the island of about 23 million people, helping it to expand beyond its intensely competitive home market. Grab has seen growth slow dramatically as it takes
RSS