On Monday, February 24, 2025, the China General Chamber of Commerce-USA (CGCC) partnered with EY to host a timely webinar, “U.S. Investment Considerations in the Trump 2.0 Era: Tariffs and Location Selection.”
The webinar provided insights into recent US trade policy developments and key considerations for companies regarding tariff planning and site selection.
Kindly find the key takeaways prepared by the EY team below.
If you have any questions, kindly contact Michelle Wang at michelle.wang@ey.com.
If you are interested in viewing the event recording, kindly contact CGCC at contact@cgccusa.org.
KEY TAKEAWAYS
Global Trade
It is critical to stay on top the frequent tariff developments and understand the impact to your business models and plan accordingly. Key planning considerations include:
-Chapter 98 Special Classification Provisions (e.g., Ch. 9802)
-Customs valuation analysis (e.g., first sale planning, transfer pricing and customs value optimization, bifurcate dutiable and non-dutiable products)
-Country of origin planning (e.g., alternative supply from current suppliers located in countries not in scope of EOs)
-Store goods in FTZs or bonded warehouses to defer duties
-Evaluate cash flow and ancillary corporate income tax, transfer pricing and indirect tax implications
Investment Environment & Location Selection
The U.S. presents a significant opportunity for Chinese companies. However, it is important to utilize a defined process to evaluate your options efficiently, mitigate potential hurdles, secure a strong ROI through incentives, and find a site that will allow you to have short/long term success.
-The political landscape (federal / certain states), unemployment rate, availability of land, access to utilities and other factors must be evaluated and weighted to identify potential jurisdictions to locate your proposed investment.
-Spend the time to evaluate current state legislative landscape (e.g. prohibitions on Chinese land ownership) to initially identify states that are open to or neutral towards Chinese investment.
-Once sites have been identified, proactively look to determine if CFIUS will be a potential consideration due to proximity to military installations as well as other critical US infrastructure.
-Maintain 2-4 active location options as political landscape can quickly change as well as to create leverage between competing states to drive a higher ROI in terms of incentives.
-Model out operating / financial / tax costs to better understand the cost of doing business in each location and to drive discussions with state / local economic development agencies.
-When finalizing incentives, a company should make sure they have aligned all interested / relevant government authorities, draft incentives agreements that have flexibility in project commitments, and maintain coordinated public communication between the company and 3rd parties.