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Trump dims hopes of China trade deal with fresh tariff threat on Apple phones

The real cost of Trump's tariffs

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The real cost of Trump’s tariffs 03:09

Washington (CNN Business)President Donald Trump appears to be shutting the door on a temporary ceasefire in an ongoing tit-for-tat trade war with China just days ahead of an upcoming summit in Argentina.

The President told the Wall Street Journal in an interview published Monday that it was “highly unlikely” he would accept an offer by Chinese leader Xi Jinping aimed at averting Trump’s plan to raise tariffs on more than $ 200 billion of Chinese goods to 25% in January.
He also warned once again he was poised to slap a third round of tariffs on Chinese goods if the two leaders fail to broker an end to the trade rift when they meet later this week in Buenos Aires, Argentina, on the sidelines of the G20 summit.
    “If we don’t make a deal, then I’m going to put the $ 267 billion additional on,” said Trump in the interview, adding the tariff level could either be 10% or 25%.
    Trump said in the interview that could include tariffs on Apple products imported from China, including iPhones and laptops. Apple’s stock fell 1.5% in after-hours trading, erasing earlier gains from the day.
    “Maybe. Maybe. Depends on what the rate is,” the president said. “I mean, I can make it 10%, and people could stand that very easily.”
    The tariffs have drawn complaints from American businesses, who are responsible for paying the import duties. It’s also spurred concerns about renewed inflation, just as the Federal Reserve is set to raise interest rates in December.
    More than 100 S&P companies have already pre-emptively telegraphed during the third quarter earnings calls the damage further tariffs would impose on the US economy. Multiple companies including Walmart, the country’s biggest retailer, have warned that prices on everyday goods like shampoo, detergents and paper goods — such as napkins — will get more expensive for consumers.
    In the lead-up to this weekend’s leaders meeting, Trump surrogates have continuously warned Beijing negotiators that threats by the President should be taken seriously.
    Vice President Mike Pence said earlier this month that Trump wasn’t in any rush to end the trade war and was willing to “more than double” the tariffs it has already placed on $ 250 billion in Chinese goods. The United States “will not change course until China changes its ways,” Pence said in his speech at the Asia-Pacific Economic Cooperation summit in Papua New Guinea.
    The upcoming meeting is the only imminent opportunity for a direct encounter between Trump and Xi before the January 1 deadline, and investors are eagerly looking for signs for a truce between the two sides.
    Speaking on the South Lawn with reporters, Trump hedged bets on any possible deal making with his Chinese counterpart. “It could happen. They have to treat us fairly,” he said.
      While so far much of the attention on the undo harm of the existing tariffs has fallen on China, political scientists and economists also warn there could be deeper ramifications for American corporations, if the Chinese opt to restrict American investment.
      “A lot of the problem for business is uncertainty,” said David Dollar, a senior fellow in the John L. Thornton China Center at the Brookings Institution and a former economic and financial emissary to China for the Treasury Department under President Barack Obama. “They can live with whatever policy regime there is whether we are taxing everything from China or not. They just hate the uncertainty.”

      Why Dolce & Gabbana’s China blunder could be such a disaster

      Dolce & Gabbana forced to cancel show in China

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      New York (CNN Business)Dolce & Gabbana needs to clean up the mess it made in China, or get left out of the country’s luxury boom.

      Over the past several days, the Italian fashion line has been trying to manage a crisis caused by an ad campaign that critics called “disrespectful and racist.” It’s also reeling from offensive comments allegedly sent from co-founder Stefano Gabbana’s personal Instagram account. The Italian designer has denied writing the messages.
      Fallout from the controversy has been swift and harsh. Celebrities called for a boycott. Chinese e-commerce sites pulled D&G products from their virtual shelves. The brand canceled a major fashion show in Shanghai that the ads, which featured an Asian model struggling to eat Italian food with chopsticks, were designed to promote.
        “This is a big brand crisis,” said Tulin Erdem, a professor of marketing at NYU’s Stern business school. “Sometimes brands do recover … but on a scale of 1-10, [this is] really high up.”
        Alienating customers is always bad for business. But for luxury brands, pushing away Chinese shoppers is a disaster.

        A taste for luxury

        Chinese consumers that abandoned luxury brands during a government crackdown on corruption are now delivering a wave of sales to high-fashion brands.
        Kering (KER), the owner of Gucci and Alexander McQueen, said that sales in China soared 30% in the first half of 2018. French fashion house Hermes credited sales in the country for record profits over the same period. D&G is a private company that does not share its sales figures with the public.
        Overall, Chinese consumers spend over $ 7 billion each year on luxury goods, according to the consultancy McKinsey. That’s nearly one-third of the global market.
        Dolce & Gabbana may have seen the Shanghai show as a way to win over those consumers.
        The company had promoted the canceled event with the hashtags #DGLovesChina and #DGTheGreatShow on its social media accounts.

        View this post on Instagram

        Future. #DGTheGreatShow

        A post shared by Dolce & Gabbana (@dolcegabbana) on

        As criticism poured in, co-founders Domenico Dolce and Stefano Gabbana tried to explain their thinking.
        “Our dream was to bring to Shanghai a tribute event dedicated to China which tells our history and vision,” the founders said in a statement posted to Instagram and Twitter on Wednesday. “It was not simply a fashion show, but something that we created especially with love and passion for China.”
        The company also said that Gabbana’s account was hacked, and that the offensive messages were unauthorized. “I love China and the Chinese Culture,” Gabbana wrote on his personal account. “I’m so sorry for what happened.”
        The company did not immediately respond to a request for comment from CNN Business.

        Missing the mark

        Some didn’t find the apologies sincere.
        Chinese-French model Estelle Chen, who withdrew from the show, wrote “you don’t love China, you love money,” in an Instagram post tagging both the brand and Gabbana directly.

        Chinese consumers are particularly sensitive to criticism that goes viral online, said Thomai Serdari, a strategist in luxury marketing and branding who teaches at NYU’s Stern business school.
        “People are really influenced by what’s happening online,” she said. “They do shop primarily online, and they’re excellent researchers,” she said. They “have experience in the luxury market and they really know what they’re buying.”
        And the way young, wealthy Chinese consumers are thinking about luxury is evolving, said Sun Baohong, a marketing professor at Cheung Kong Graduate School of Business.
        “Before it was more for showing off social status,” she said. Now, it’s about “making a personal statement.”
        Even if Dolce & Gabbana hadn’t offended people with its ads, she added, it probably would have missed the mark with the campaign.
        “The ad is really showing a very old-fashioned” image of China, she said. “Chinese consumers still love foreign brands, but things are changing.”

        Making amends

        Now, D&G has to figure out how to win back Chinese consumers.
        “It’s not going to happen overnight,” said Andrew Gilman, founder of the crisis communications firm CommCore Consulting Group. The brand will have to “find the biggest influencers they can … [and] get back in their good graces,” he said.
          The company must also share a consistent message across its social media platforms and any other channels it uses to communicate with customers, he said.
          Moving forward, it will have to do a better job of understanding Chinese culture. “You can be a global brand,” Gilman said, “but you have to have local sensitivities.”

          China should free Christian pastor unjustly imprisoned

          For one Christian pastor, Thanksgiving was spent in a Chinese prison cell, separated from his wife and children in America.

          Pastor John Cao – a lawful U.S. permanent resident – has faithfully served the people of China and Southeast Asia for decades, conducting humanitarian efforts and building schools for impoverished children.

          Now Cao has been wrongfully convicted and sentenced to seven years in prison. His arrest and conviction seem to be a part of an ongoing crackdown on Christians by the Chinese government.

          His heartbroken wife and two sons – all of whom are U.S. citizens from North Carolina – desperately miss their husband and father.

          Cao was arrested on March 5, 2017 and detained for over a year before being convicted on false charges of organizing illegal border crossings. The charge is often used to convict human traffickers.

          The 59-year-old pastor is now locked in a cell with a dozen other prisoners who must all share the same 26-foot slab as a bed. On average, he has less than 14 meals per week. As a result, his health is deteriorating.

          Cao became a Christian in his 20s and came to the United States over 30 years ago, where he met and married his wife. He has spent the last 30 years sharing the Gospel and serving in the U.S., China and Burma.

          The pastor has devoted his life to sharing God’s love by providing food and necessary supplies to the severely impoverished.

          Cao also worked diligently to establish schools in Burma and provide education and better opportunities to the disadvantaged – building 16 schools in three years.

          “My father always tried to save as much money as possible, so he could give it away,” Cao’s son Ben said.

          Now, despite his years of service and concern for the less fortunate, Cao is being imprisoned simply because he is a Christian.

          One of Cao’s Chinese attorneys, Li Guisheng, has stated that Cao’s conviction is puzzling, because there was no evidence provided against the pastor.

          “Based on my thorough review and investigation of this case, I truly believe Pastor John Cao is innocent,” Li said. “He was wrongfully convicted and punished for saving lives and providing education for the poor.”

          The Chinese government has been systematically cracking down on Christians and churches throughout the nation.

          At the American Center for Law and Justice, we have been raising the alarm about how churches have been forced to close due to persistent government pressure. Christians in China have been increasingly facing arrest for sharing the Gospel.

          We’ve taken direct action at the U.N. Human Rights Council, calling attention to China’s persecuted Christians. We recently delivered a written legal submission – through our European affiliate, the European Centre for Law and Justice (ECLJ) – asking for international pressure on China to stop this continued crackdown on religious liberty.

          It appears Cao is just the latest victim of this crackdown on Christianity. The pastor and his attorneys have filed an appeal, but to date the appeal has not been heard and the deadline has been delayed over and over again.

          The current situation looks grim.

          Cao has been locked away in an overcrowded prison for over 20 months and his physical and emotional health are suffering. He has lost over 50 pounds and has been denied medical treatment. He has also been denied contact with his family.

          U.S. officials have been alerted to and are concerned about Cao’s situation. A spokesman for the U.S. State Department told The Associated Press that the American government is “deeply concerned” about Cao’s sentence and echoed our request for China to release him on “humanitarian grounds.”

          And members of Congress have sent a letter to Vice President Mike Pence asking him to intervene and work to secure Cao’s freedom.

          No civilized nation should tolerate such treatment. That’s why the ACLJ is now representing Cao’s family and mobilizing our global resources in an effort to secure his freedom.

          We are actively and aggressively urging the Chinese government to release Cao and allow him to return home to the United States to be reunited with his wife and sons.

          Cao should not spend another night in a prison cell because he is a Christian and feels a moral obligation to help others in dire need.

          In just the last a few days, over 63,000 individuals have signed our new petition demanding Cao’s release. Christians all over the world should be free to teach, worship and live out their Christian faith without fear of persecution or imprisonment – including in China.

          Dolce & Gabbana has a big China problem after ad causes outrage

          Hong Kong (CNN Business)Dolce & Gabbana is facing a major crisis in China where top e-commerce sites are dumping its products over accusations of racism.

          Thousands of D&G goods have disappeared from platforms run by companies like Alibaba (BABA) and JD.com (JD).
          The backlash against the Italian luxury fashion brand began earlier this week after it launched video ads featuring a Chinese woman struggling to eat pizza and other Italian food with chopsticks. The situation was then made worse by offensive comments that were allegedly sent from co-founder Stefano Gabbana's personal Instagram account.
            The videos and comments spread rapidly on Chinese social media, drawing accusations of racism and calls for boycotts from celebrities. The furor forced D&G to cancel a high-profile fashion show in Shanghai hours before it was due to start on Wednesday.
            The scandal could deliver a heavy blow to the company, as Chinese consumers account for more than a third of global spending on luxury products.
            A video ad showing a Chinese woman struggling to eat pizza with chopsticks has unleashed a firestorm for D&G.

            The fashion house is now trying desperately to limit the fallout. On Friday, Gabbana and co-founder Domenico Dolce appeared in a video message posted on social media to apologize to "all Chinese people around the world."
            "Our families taught us to respect all cultures of the world," Dolce said. "We hope to receive your forgiveness for our cultural misunderstandings."
            The company has apologized previously and also said the offensive messages sent from Gabbana's Instagram account were the result of hackers. But that hasn't stopped the backlash so far.

            Retailers yank D&G products

            E-commerce company Yangmatou said in a social media post Wednesday that it had removed 58,000 D&G products, declaring that "the motherland is more important than anything else."
            Lane Crawford, a Hong Kong-based fashion retailer with several outlets in mainland China, said Friday that it is halting the sale of the Italian brand's goods in stores and online after customers started returning them.
            "We believe that brands need to be aware of the cultural implications of their actions and understand the potential backlash when customers feel their values have been disrespected," Lane Crawford said in a statement.
            Pages for D&G products on shopping sites operated by Alibaba and JD.com have been taken down, and the brand's products weren't showing up in searches on the sites. Alibaba and JD.com did not respond to requests for comment.
            D&G products were also unavailable on other online retail sites in China, including those of Yoox Net-A-Porter. A spokesman for Yoox Net-A-Porter acknowledged Friday that the brand's products were unavailable on the company's China sites but declined to comment further.

            'I don't think anyone will touch them'

            Analysts warned that D&G's apologies may not be enough to prevent a sharp drop in sales in the world's second largest economy.
            "The damage to the brand in the eyes of Chinese consumers has already been done," said Ben Cavender, a senior analyst at China Market Research in Shanghai.
            On social media, people posted videos of themselves burning the brand's clothes or cutting them into pieces and using them to wash their toilets.
            Cavender suggested another risk is that shopping malls in China choose to start shutting down D&G stores.
            Hung Huang, a prominent Chinese fashion commentator and magazine publisher, said the Italian brand's use of celebrities to help market its products is likely to encounter difficulties.
            "I don't think anyone will touch them," she told CNN.
            Chinese celebrities are already "under pressure" to demonstrate their patriotism following movie star Fan Bingbing's recent temporary disappearance and allegations against her of tax evasion, according to Hung.
            "China is on a very patriotic bent right now so it's going to very difficult to get support," she said.
              But Hu Xijin, the editor-in-chief of nationalistic Chinese tabloid Global Times, wrote in a social media post that D&G shouldn't be too heavily penalized because of the incident.
              He argued that China needs to be more tolerant in order to show the world it's an open market.

              China builds new platform on reef in South China Sea, satellite photos show

              China appears to have constructed a new platform at a remote part of the disputed South China Sea that could be used for military purposes, according to satellite images reviewed by a U.S. think tank on Tuesday.

              The Asia Maritime Transparency Initiative of Washington’s Center for Strategic and International Studies said the “modest new structure” appears to be anchored on Bombay Reef, and is topped by solar panels and a radome. A radome is an enclosure that protects radar equipment.

              “The development drew attention given Bombay Reef’s strategic location, and the possibility that the structure’s rapid deployment could be repeated in other parts of the South China Sea,” the group said in its report.

              The new structure on Bombay Reef has been spotted in satellite photos.

              The new structure on Bombay Reef has been spotted in satellite photos. (CSIS/AMTI)

              Bombay Reef, a remote, undeveloped outcropping, is located on the southeastern edge of the Chinese-controlled Paracel Islands in the South China Sea. Vietnam and Taiwan also claim the reef, which already has a lighthouse to serve as an aid to navigation. The new platform first appeared at the reef in satellite imagery dated July 7, 2018, and was not present in earlier shots from April.

              Unlike China’s large man-made islands created by piling sand on top of coral reefs, installing the modestly-sized Bombay Reef platform did not mean inflicting major environmental damage, CSIS said. The installation, however, shows how easily China could expand its footprint to other features such as Scarborough Shoal, which it seized from the Philippines in 2012, it added.

              The Asia Maritime Transparency Initiative of Washington’s Center for Strategic and International Studies said it's likely the purpose of the platform is "military in nature."

              The Asia Maritime Transparency Initiative of Washington’s Center for Strategic and International Studies said it’s likely the purpose of the platform is “military in nature.” (CSIS/AMTI)

              “The more likely possibilities, given Bombay Reef’s strategic location, are military in nature,” the group said in its report. “The reef is directly adjacent to the major shipping lanes that run between the Paracels and the Spratly Islands to the south, making it an attractive location for a sensor array to extend Chinese radar or signals intelligence collection over that important sea lane.”

              CHINA, US SPARRING CONTINUES OVER SOUTH CHINA SEA

              Chinese Foreign Ministry spokesman Geng Shuang said Wednesday at a daily news briefing in Beijing that he had no information about the details of the report, while reasserting China’s claims to the island group it calls Xisha, according to the Associated Press.

              “The Paracel Islands are China’s territory. This is indisputable. China’s construction on its own territory is beyond reproach,” Geng said.

              On Wednesday, the USS Ronald Reagan docked in Hong Kong days after a pair of American B-52 bombers flew over the disputed South China Sea. The recent tensions come ahead of a planned meeting later this month between President Trump and Chinese leader Xi Jinping.

              In late September, a Chinese destroyer came close to the USS Decatur in the South China Sea in what the U.S. Navy called an “unsafe and unprofessional maneuver.”

              US BOMBERS FLY OVER S. CHINA SEA AHEAD OF CARRIER’S ARRIVAL

              Rear Adm. Karl O. Thomas, commander of Carrier Strike Group 5, said Wednesday that the “vast majority of our interactions out there at sea are very professional.”

              “That was a rare, unusual occurrence,” Thomas told reporters at a ship-board news conference. “In that particular case, the ship made some aggressive, continuing aggressive maneuvers and our ship warned them and had to maneuver to prevent a collision. It was unfortunate and I’d like to see that not happen again.”

              The Associated Press contributed to this report.

              Tesla is slashing its prices in China again

              New Delhi (CNN Business)Tesla is slashing prices in China for the second time this year, taking a bigger hit from the country's trade war with the United States in a bid to protect sales.

              The electric carmaker announced Thursday that it will slash prices of its Model S sedan and Model X SUV by between 12% and 26%, even though higher Chinese tariffs on US autos have made it more expensive to import cars.
              "We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China," a Tesla (TSLA) spokesperson said in a statement.
                The basic version of the Model S now costs 782,900 yuan ($ 113,000) — down from 849,900 yuan ($ 122,525) — while the most expensive version of the Model X has gone from 1.57 million yuan ($ 227,000) to around 1.2 million yuan ($ 171,000).
                Its cheapest car, the Tesla Model 3, will be launched in China with a starting price of 540,000 yuan ($ 78,000).
                Tesla is cutting its prices in China for the second time this year.

                Tesla's prices in China have fluctuated wildly this year. It slashed them in May after Beijing announced it would cut tariffs on car imports from 25% to 15%. But the company raised its prices in July after Beijing imposed a new 25% tariff on US cars, retaliating for America's decision to target Chinese goods with its own tariffs.
                Now, Tesla says it will bear most of the cost of tariffs in an effort to woo customers in the world's biggest market for electric vehicles.
                  China accounts for about half of global sales of electric vehicles, and other big companies like Volkswagen (VLKAF) are investing billions to increase their footprint in the country. Tesla's revenue from China doubled last year to more than $ 2 billion, accounting for nearly 20% of the company's total.
                  And Tesla will be hoping that one day it will be able to sell cars in China without paying import taxes. The company is building a factory in Shanghai that it says will eventually churn out 500,000 vehicles a year, about five times the number it currently produces in the United States.

                  Carlos Ghosn in trouble; Brexit business; China tech earnings

                  London (CNN Business)1. Trouble for Nissan, Renault and Mitsubishi: Nissan says that an internal investigation into its chairman, Carlos Ghosn, has turned up evidence of "significant" financial wrongdoing.

                  The revelation has major implications for the global auto industry. Ghosn is also chairman of Renault and Mitsubishi Motors (MMTOF), and the driving force behind an alliance that links the three carmakers.
                  Nissan (NSANY) said in a statement that Ghosn has for years been under-reporting his income in Japan. It said "numerous other significant acts of misconduct have been uncovered," including personal use of company assets.
                    The Japanese carmaker said it would seek to remove Ghosn as chairman. Japanese media reported that Ghosn was being questioned by prosecutors and could be arrested.
                    "Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation," Nissan said in a statement. "We will continue to do so."
                    Stocks had stopped trading in Japan when the statement was released, but Nissan shares listed in Frankfurt dropped over 10%. Renault (RNSDF) shares trading in Paris plunged as much as 13%.
                    2. Brexit support: Prime Minister Theresa May is likely to find a receptive audience Monday when she talks up her Brexit deal at a meeting of the Confederation of British Industry.
                    John Allan, president of the influential business lobby, will endorse her deal to withdraw from the European Union, saying it "minimizes the damage to our economy," according to a copy of his remarks released in advance.
                    "While companies in this room would be the first to say that it is not perfect, it does open a route to a long-term trade arrangement and unlocks transition — the very least that companies need to prepare for Brexit," he is expected to say.
                    "So our message to the politicians is this — listen to the businesses in your constituencies — and everyone who depends upon them," he will add.
                    The pound strengthened 0.2% to trade at $ 1.28 on Monday, clawing back some of the losses suffered last week when key UK government ministers resigned and said they would not support the deal. It still needs to be signed off by the other 27 EU member states and the UK parliament.
                    3. Global market overview: US stock futures were little changed.
                    European markets opened with gains of roughly 0.5%. Stocks in Asia had a solid session, advancing by as much as 1%.
                    The Dow added 0.5% on Friday and the S&P 500 gained 0.2%. The Nasdaq shed 0.2%. For the week, all three major indexes declined about 2%.

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                    4. Earnings and economics: Xiaomi earnings beat estimates Monday, in what should be a boost for the company's beleaguered Hong Kong-listed shares. The Chinese smartphone maker posted profit of 2.5 billion yuan ($ 360 million) for the three months ended in September. Revenue grew 49%.
                    Chinese e-commerce firm JD.com (JD) will publish earnings before the US open.
                    L Brands (LB), the parent company of Bath and Body Works and Victoria's Secret, will release earnings after the close. The retailer's stock is down 40% for the year.
                    One big problem is Victoria's Secret, which younger customers have abandoned in favor of cheaper brands. Last week, unconfirmed reports indicated that CEO Jan Singer has resigned as head of the brand.
                    Intuit (INTU) and Urban Outfitters (URBN) will also report after the close.

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                      5. Coming this week:
                      Monday
                      — L Brands (LB), Urban Outfitters (URBN), JD.com Inc. (JD) earnings
                      Tuesday
                      — BJ's Wholesale Club (BJ), Best Buy (BBY), Barnes and Nobels (BKS), Campbell Soup (CPB), Target (TGT), TJX (TJX) and Gap (GPS) earnings
                      Wednesday
                      — Deere & Co. (DE) earnings
                      Thursday
                      — US markets closed for Thanksgiving
                      Friday
                      — Black Friday; US markets close early

                      The trade war is pushing business out of China, but not into America

                      Hong Kong (CNN Business)US tariffs are prompting companies to move some production out of China, but it's not going where President Donald Trump would prefer.

                      The trade war has made more than $ 250 billion of Chinese exports more expensive for Americans — from leather belts to refrigerators to motorcycles. The disruption to the world's biggest trading relationship has electronics manufacturers, industrial machinery makers and fashion brands working on shifting some of their assembly lines.
                      "We are flooded by inquiries," said William Ma, group managing director of Kerry Logistics, a Hong Kong-based firm that helps companies around the world manage their supply chains. "It all happens after the trade war."
                        Many firms are keeping much of their operations in China, which offers a giant domestic market and advantages that businesses struggle to find elsewhere. But those that are moving aren't flocking to the United States. Instead, they're looking to transfer work to other Asian countries.
                        A port in Qingdao, Shandong province, China. US tariffs have made more than $  250 billion of exports from China more expensive, prompting some companies to move production out of the country.

                        In a recent survey by two American chambers of commerce in China, one third of the companies who responded said they were looking to switch to production outside of China as a result of the trade war. Only 6% said they were considering moving business back to the United States.

                        Asia, not America

                        In some industries, the tariffs have accelerated the shift of manufacturing from China to countries in Southeast Asia, where labor is cheaper.
                        Steve Madden (SHOO), whose handbags have been hit by a 10% tariff, says it's moving a significant chunk of its production to Cambodia and other countries. The company currently makes about 85% of its handbags in China, a figure that could drop to 50% or 60% next year.

                        "The shift is almost entirely due to the US-China trade conflict," Steve Madden CEO Ed Rosenfeld told CNN's Alison Kosik. "We have to prepare as though tariffs will be the new normal, but we are hopeful that cooler heads will prevail."
                        Consumer tech brands are also looking to Southeast Asia. Hugh Lo, vice president of the consumer division at Taiwan's New Kinpo Group, which makes electronics for clients such as Toshiba (TOSBF) and Samsung (SSNLF), says he has been inundated with inquiries from companies keen to transfer manufacturing out of China.
                        A year ago, his team got about one inquiry a week, he said. Now, it's "maybe 30 times more."
                        Workers arranging shirts at a factory in Hanoi, Vietnam in 2014. Trade tensions have accelerated the shift of manufacturing from China to countries in Southeast Asia, where labor is cheaper.

                        Lo said that TV and gaming device makers have been particularly interested in relocating. He declined to name individual companies.
                        Big industrial suppliers have been hit hard, too, with many of their products subject to the new tariffs.
                        Toshiba Machine said it's moving some of its production of molding equipment in Shanghai overseas, and machinery maker Komatsu (KMTUY) told CNN that it plans to shift some of its assembly lines to Japan or Mexico.
                        A Komatsu excavator displayed at a construction trade fair in Munich in 2016. The machinery maker told CNN that tariffs could cost its business about $  35 million.

                        Nathan Resnick, whose San Diego-based startup Sourcify helps thousands of businesses place orders with manufacturers across Asia, has also noticed a clear shift away from China this year.
                        In January, Chinese factories supplied as much as 90% of the orders his company helped place in industries like textiles and household appliances. Now, he estimates that figure has plummeted to about 50%, with the focus moving to countries like Thailand, Vietnam and the Philippines.
                        "It's really just been recently," Resnick told CNN. "I didn't go to any of those countries last year."

                        Leaving China isn't easy

                        A lot of companies are unwilling to leave China, which has a range of advantages for manufacturing industries that are spread across Asia.
                        Many of the products US firms export from China have to fit exact requirements, necessitating specialized equipment and highly trained workers, according to Harley Seyedin, president of the American Chamber of Commerce in South China.
                        "Their supply chains cannot be adjusted in short order," Seyedin told CNN.
                        Employees at a facility of Cal-Comp Technology, a unit of New Kinpo Group, in the Philippine city of Lipa. The contract electronics manufacturer is expanding in the Philippines and Thailand to keep up with customers' demands to shift manufacturing away from China.

                        China also boasts better roads, ports and power grids than most Southeast Asian countries.
                        "China just has such a great infrastructure," Resnick said. "You go to some of these areas in the Philippines or Vietnam, and the ground surrounding the factory is not developed whatsoever."
                        Starting from scratch in another country is a major step.
                        Executives estimate it could take up to two years to build a new factory. Then there are the challenges of navigating the local bureaucracy and training new staff to meet the company's standards.
                        "It takes time," said Ma at Kerry Logistics. "Things cannot be done overnight."
                        His company is rushing to help businesses move their supply chains to other Asian countries.
                        "We definitely need to hire more people, rent more warehouses, buy more trucks," he said.
                        Kerry Logistics says it has been "flooded by inquiries" this year to help companies adjust their supply chains.

                        Businesses that want to move their orders outside China face another problem: finding factories in the region that can accept them.
                        "I have factories that we work with in Vietnam that are booked up for the next year," Resnick said. "Their production lines are full. And so you really do, at times, have to hunt and find factories that still have capacity."
                          But when it comes to switching to US-based suppliers, there's little interest.
                          "That's not even been a consideration for any of the companies that we work with," said Resnick.