00:00Did you get any rest over the weekend? How was that like for you?
00:03Not so much. Lots and lots of calls, and particularly with emergency board meetings, which I just came off one.
00:10For M-Chen, particularly our members, many of them have large sourcing positions in Asia.
00:16So it's a lot of goods, consumer goods, apparel of wear, anything they can think of, still shipping to the
00:21U.S.
00:22They're the one who actually paid the tariff, and they're the ones that were really, really concerning what's going on.
00:27They're going to embrace another wave of uncertainty, to say the least.
00:31Is it in some ways still status quo, given the uncertainty then? Or what's changed? What hasn't changed, do you
00:36think?
00:36That's a good question. I know that you had talked about a lot of things that have changed, mostly related
00:40to the IEPA ones.
00:42So these are the fentanyls, as well as the reciprocal ones.
00:45But the things, it doesn't really change. I have calls with companies, board members, saying that it looks like we're
00:51going to take everything, go back to zero.
00:53That's just never going to happen. I agree with many of the people who have said before me, is that
00:57tariff is here to stay.
00:58The ones that are gone, we're all now looking, number one question is, how do you get refund?
01:05Everybody all expect refund, but how or when, which is silent in the Supreme Court's rulings.
01:10But that's the number one question. For many of the companies, those refunds are going to affect their P&L
01:15quite quickly as well.
01:16So they definitely wanted to manage that. The ones that have not changed, if you look at 232, the steel
01:23and lumina, it's still there.
01:24And not only that, it's actually compounded to whatever things that President Trump is currently announcing.
01:29And 301, if we focus on China, it's still not changing. It's been around for years, starting 2018, particularly sector
01:38tariff is very related to product.
01:40If you're in EV cars, batteries, solar or in the semiconductor, you're still going to be paying quite high duty
01:49as well.
01:50Does it make planning businesses easier?
01:54I think the smart companies, the ones that we work with in chamber, they all have a tariff task force
02:01ready for a long time.
02:03So they know how to play the scenario outright. Tariff, unlike tickers, is up and down.
02:08It's actually can be quite scientific. It's a number.
02:10So they already have these game plan, what we call playbooks ready as to 10% and then 12 hours
02:17later become 15%.
02:18How much that really does change their position and that impact their bottom line.
02:22So most of the company that we work with are quite savvy at this point in time.
02:28What are some of the unintended consequences that we might not be focusing on right now?
02:34One of the ones that we're seeing is that as we in sourcing industry know that a lot of people
02:39like adopt the China plus one plus two strategy for quite some time now.
02:44But we're now seeing a lot of companies actually thinking about sourcing back to China.
02:49And this is perhaps not 100% due to tariff.
02:51A lot of them is because the AI movement, particularly related to the robotic and, you know, the improvement in
02:58the industry process that make it much more efficient to produce product.
03:03And it costs quite competitively if you consider the current ones that the current tariff that China is getting.
03:09So we are seeing quite a few companies are thinking about maybe I would just go back to China where
03:14the supply chain is much more stable and the price is still very competitive.
03:18As long as, you know, things are, you know, going the ways that they're planted.
03:22How close are these companies to pulling that trigger?
03:26Already.
03:27Already.
03:27Already. We're seeing them already.
03:29Okay. Can you give us a sense?
03:30I know you can't get into specific company names, but you mentioned AI.
03:33Right.
03:34What parts of the AI value chain are already sourcing from China?
03:38Right. So we're seeing a lot of those like electronic parts that currently in China, there's a lot of a
03:44light cell factory.
03:45So they can probably produce goods much faster with higher quality, with shorter period of time.
03:50And I wouldn't say low cost, but at least a very competitive cost.
03:54And those are the ones that company that wanted to resource back to China.
03:58They move out, David, because some of the tariff issue.
04:01But now if looking like total, the total costs from China may not be as high or as bad, then
04:06it makes sense for them to continue to go back to China or even stay to China.
04:11They may have some plans about about moving out because of the tariff issue, but that plan just so far
04:17has been tabled.
04:18Interesting.
04:19Can we also just assume that tariff rates have peaked now moving forward?
04:25It's hard to say. I think with this administration, everything can change.
04:29I think that as everyone told you that tariff here to say, we're going to see a lot of a
04:35more focused tariff action on product specific.
04:39You have 232 are coming more and then 301 can come more as well.
04:43And these can be a large number as well.
04:46It's not going to be a small number like five or 10 percent.
04:49It could be quite, quite big.
04:50It can be big.
04:51Mm-hmm.
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