Core Viewpoint - The U.S. is increasing tariffs on imported steel and aluminum products from 25% to 50% starting June 2025, with stricter reporting requirements, significantly impacting over 20,000 small and medium-sized foreign trade enterprises in China, involving exports exceeding $30 billion [1][3]. Tariff Impact - The tariff increase aims to protect domestic steel and aluminum industries and support U.S. manufacturing by raising domestic capacity utilization from 72% to over 85%, potentially creating around 20,000 jobs [1]. - For Chinese SMEs, the increase in tariffs severely compresses profit margins, with an example showing a shift from a profit of $15 to a loss of $5 per unit due to the tariff hike [3]. Strategic Responses - Companies are encouraged to transition from low-cost competition to high-value competition, focusing on upgrading and transforming their operations [3][12]. - Exploring alternative materials, such as replacing aluminum with carbon fiber composites, can help avoid tariffs while maintaining market share [4]. Production Relocation - Establishing production bases or assembly plants in countries like Mexico and Canada, which benefit from tariff exemptions under the USMCA, is a long-term strategy to mitigate tariff impacts [6]. - Companies should consider local regulations, labor quality, and supply chain support when localizing production [6]. Tariff Exemption Applications - Certain steel and aluminum products used in specific fields can apply for tariff exemptions, such as medical devices and aerospace components [6]. - The application process involves checking exemption lists, preparing detailed documentation, and collaborating with U.S. customers to enhance success rates [7]. Market Diversification - Over-reliance on a single market is a critical weakness for SMEs; thus, exploring new markets in Europe, Southeast Asia, the Middle East, and South America is essential to mitigate risks [7][12]. - The European market has lower tariffs (10%-15%) and high environmental standards, while Southeast Asia offers rapid growth and price sensitivity, and the Middle East has strong demand for high-end products [7]. Industry Advocacy and Internal Management - Participation in industry associations for advocacy and negotiation for fair trade conditions is recommended [10]. - Companies should enhance internal management by optimizing supply chain efficiency and securing long-term agreements with suppliers to mitigate market volatility [10].