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Laptop Suppliers Not Yet Asking for ODM Relocation Among Tariffs

The trade war with China continues to drag on, but laptop suppliers are holding off on their plans to continue to relocate their ODMs, at least for now. 

According to a report in Digtimes, vendors are taking a wait-and-see approach to the ongoing trade negotiations between the United States and China. This comes despite the fact that last Thursday, President Donald Trump announced a new 10 percent tariff on $300 billion of Chinese imports, including notebook computers, set to go into effect on Sept. 1. 

“We are starting at 10% and it can be lifted to well beyond 25%, but we’re not looking to do that necessarily. But this would be done in stages,” Trump said to reporters last Thursday

Some vendors have plans in place to move their supply chains out of China should the U.S. tariffs hit the 25 percent threshold proposed by the president. However, such plans could be costly and come with their own set of problems. 

Labor costs are rising in Vietnam, according to Digitimes, where companies initially moved some of their manufacturing in mid-May, when the Trump administration proposed 25% tariffs on $250 million of goods, which included smartphones and video game consoles. The labor market in Vietnam is now tight from the influx of manufacturing and the costs will continue to rise should more companies be forced to abandon their infrastructures in China due to the increasing tariffs.

According to Digitimes, Quanta, Compal and other ODMs have moved at least partially into southeast Asia and Taiwan to fulfill orders for US-based companies like HP and Ell.

Despite the uncertainty, suppliers are standing pat. Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, told USA Today that the issue is money.

"It’s very expensive for a company to change suppliers, particularly if quality is an issue – for example with electronic components or machine parts," Hufbauer said.