Zhongxin Faces 646 Percent Tariffs but Counters with 3.5 Million Ton Factory Move

Zhongxin Co., Ltd. (603091.SH) has been hit with a preliminary anti-dumping duty of 470.63% by the U.S. Department of Commerce, as part of an investigation into thermoformed molded fiber products from China and Vietnam. The company, identified as a mandatory respondent, also faces a countervailing duty of 5.99%, pushing the total cumulative tariff burden to 646.62% after including earlier U.S. tariffs of 25% and 145%.

Despite this blow, Zhongxin is already shifting its strategy. Its Thailand plant, with a 3.5 million-ton annual capacity for biodegradable tableware made from bagasse, is now fully operational. The factory began shipping to U.S. clients in mid-April, taking over orders originally intended for Chinese production lines. A second phase expansion—a 6.5 million-ton annual capacity project—is also in the pipeline, aimed at boosting global competitiveness and offsetting trade penalties.

In Q1 2025, 52% of Zhongxin’s domestic output went to the U.S., totaling approximately 11,600 tons. For 2024 as a whole, sales to the U.S. accounted for a similar 52% of revenue, underscoring the strategic importance of this market.

The company has retained a legal team to challenge the ruling and is cooperating with the U.S. Department of Commerce, which plans to conduct an on-site audit in June 2025. Zhongxin expects the final decision to reflect its compliance and has signaled that the tariff impact will be manageable due to global production flexibility.