Tariff Agreements with the U.S. Bring Mixed Fortunes for Textile Manufacturers

With various countries finalizing tariff agreements with the United States, textile companies are facing mixed outcomes. Manufacturers located in low-tariff regions are expected to benefit from order transfers, while upstream and midstream textile firms or those operating in higher-tariff regions are responding by diversifying product lines, moving toward high-value products, or adjusting production locations to mitigate tariff impacts.

Indonesia and Vietnam have secured reciprocal tariff agreements with the U.S., featuring relatively low rates of 19% and 20%, respectively. Compared to China, these rates offer a significant incentive for global fashion brands to shift their orders. Textile giants like Eclat (儒鴻, 1476), Makalot (聚陽, 1477), and Grand Twins (廣越, 4438), which have major production capacities in these two countries, are already experiencing the benefits of order transfers.

Eclat noted that Vietnam is currently its largest production base. With tariffs now settled, the company will begin renegotiating contracts and prices with clients, leading to greater order clarity. The tariff advantage in Vietnam has made Eclat cautiously optimistic about client order growth in the second half of the year.

Over 70% of Makalot’s total capacity is based in Indonesia and Vietnam. The company stated that with the finalized tariff announcements, it expects brands to redirect orders from high-tariff regions to these low-tariff production bases, especially orders that were previously on hold.

Grand Twins has its largest production site in Vietnam, which accounts for 55% to 60% of its revenue. As the U.S. announces reciprocal tariffs for other Southeast Asian nations like Cambodia, Vietnam’s 20% rate is seen as even more advantageous. The company anticipates a surge in transferred orders starting from Q3.

Shinkong Syntex (新纖, 1409): AI Server Components Drive Growth

Shinkong Syntex has been actively entering the AI server market since last year, focusing on engineering plastics for connectors and cooling fans. With certifications completed for major clients, shipments began in Q4 of last year and demand has increased significantly in the first half of this year. The company expects this growth trend to continue into the second half.

They also noted that certification standards for AI server plastic components are stricter than for automotive parts, with higher physical property requirements. As a result, profit margins and earnings are expected to surpass those of general engineering plastics.

Chia Her Industrial (佳和): Automotive Textiles Power Strong Profits

Chia Her, a maker of industrial fabrics and functional wool textiles, has seen a 40% YoY increase in net profits for 2024, thanks in part to its composite tech materials entering the Tesla supply chain.

The company has also developed high-end, eco-friendly interior materials for luxury European car brands like Audi, BMW, and Mercedes-Benz. These innovations are expected to boost this year's performance.

Chia Her is establishing a subsidiary in Mexico to focus on the EV supply chain business.

Chih Sheng (集盛): High-Value Nylon Line Brings Turnaround Potential

To escape the competitive commodity textiles market, Chih Sheng has completed a new production line for high-value PA66 nylon pellets. Shipments increased in the first half of the year, and further growth is expected in the second half and into next year. This new business line could help offset losses in Chih Sheng’s traditional textile segment and improve overall operational performance.