US tariffs are pushing Chinese manufacturers to consider repatriating offshore production

Trump promised to bring back manufacturing to the US, but it seems like China may be the one leading the push to onshore production. With the Trump administration’s decision to impose new tariffs on more than 90 countries starting 7 August, Chinese manufacturers are finding that the logic of offshoring production to avoid long-standing China tariffs — including from previous US administrations — may no longer make financial sense, the Financial Times reports.

Chinese factories abroad now face incoming US tariffs — some of which are higher than those imposed on China. The “China plus one” strategy had seen Chinese companies — often with state support — invest bns in opening up shop abroad in nearby countries to circumvent US trade restrictions and tariffs, which came to a crescendo under Trump’s first term. But with China now facing a much less severe 30% tariff — down from 145% — it makes little sense to stay in countries with higher tariff rates like Laos and Myanmar.

The impact may be felt further afield, possibly here in the MENA region. In addition to countries like Iraq facing significantly higher tariffs from China, all countries face a 40% tariff on goods understood to be transhipped from China to the US via a third country. The problem is that what qualifies as transhipped goods is not completely clear, with Chinese factories abroad that use inputs from China for production potentially falling prey to the rule. While many Chinese companies with existing operations here may stay put to wait and see, the move by the US will certainly weigh on Chinese investor sentiment for investments abroad.

But some think the move could also push Chinese companies to seek low-tariff markets outside of Southeast Asia, which is good news for countries in the region assigned the US’ baseline 10% tariff like the UAE, KSA, and Egypt. While some companies may move production back to China, others “will seek new manufacturing bases further afield,” according to Oxford Economics Asia economist Louise Loo.

MARKETS THIS MORNING-

It’s another morning with Asian markets in the green — South Korea’s Kospi is looking at gains of 1.5%, Japan’s Nikkei is up 0.6%, and the Shanghai Composite is up 0.4%. Meanwhile, the Hang Seng is in the red, down 0.2%.

THE CLOSING BELL-

The ADX fell 0.2% yesterday on turnover of AED 994.1 mn. The index is up 9.3% YTD.

In the green: Bank of Sharjah (+3.6%), Burjeel Holdings (+3.4%) and Rapco Investment (+3.3%).

In the red: E7 Group PJSC Warrants (-9.8%), Abu Dhabi National Takaful (-9.7%) and United Arab Bank (-5.3%).

Over on the DFM, the index rose 0.2% on turnover of AED 501.6 mn. Meanwhile, Nasdaq Dubai was down 0.1%.

CORPORATE ACTIONS-

Amlak exits KSA stake for AED 197.3 mn: Amlak Finance sold its 18.7 mn shares in Saudi-based Amlak International Finance Company for SAR 201.7 mn (c. AED 197.3 mn), according to a DFM disclosure (pdf). The stake, originally acquired for AED 163.1 mn, was offloaded in three tranches between June and July following shareholder approval in April.

Bigger picture: The sale is part of Amlak’s ongoing strategy to shed non-core assets and redirect capital into growth-focused investments. The company has already received the proceeds, with the financial impact set to appear in its 2Q and 3Q 2025 results.

REMEMBER- The move is the latest in a series of steps to shore up Amlak’s balance sheet. The company recently cleared AED 898 mn in debt 15 months ahead of schedule, funded by land sales including a AED 2.9 bn agreement with Emaar for plots in Ras Al Khor. It is also drawing on reserves to offset AED 406.7 mn in accumulated losses and has formally moved to exit the real estate financing business.