Newell, the manufacturer of markers, will move part of its production out of China.

Amid escalating tensions between the United States and China, as well as the shift away from risk in Europe and America with the “China+1” strategy, European and American companies are increasingly moving some of their production capacity out of China. Some are relocating to Southeast Asia, while others are attempting to reshore production back to the United States. Newell Brands is the latest American company reported by the media to be moving some of its production out of China.

CEO Chris Peterson of Sharpie marker manufacturer Newell Brands, in an interview with Reuters, stated that the company is facing tariff “uncertainties” ahead of the U.S. presidential election. Newell Brands is in the process of moving some of its kitchenware production lines out of China and shifting its writing business manufacturing to Tennessee.

According to Reuters, Peterson made it clear in the interview that the changes in the company’s supply chain are not in response to the campaign promises of Republican presidential candidate Trump. Trump has promised that if elected, he will further increase tariffs on Chinese-manufactured goods and many other products.

“Trump talks about imposing very high tariffs on imported goods from China,” Peterson said. He also added that the Democrats are discussing keeping the tariffs that were initially implemented during Trump’s first term as U.S. president and expanded this year.

“There is a lot of uncertainty. Regardless of the outcome, we just want to minimize the risks,” he said.

Peterson continued, stating, “It is difficult to move the supply chain in real-time.”

He mentioned that Newell is automating its U.S. manufacturing operations, and shifting production to the United States can also save time and reduce fluctuating shipping costs.

“If your factory is highly automated, the economic benefits will be significant,” he said. “This is our best choice.”

In recent years, U.S. companies importing goods from Asia have faced a series of risks, including tariffs, transportation delays, cost escalation during the pandemic, and the recent Houthi armed attack on a container ship in the Suez Canal.

The “China+1” strategy aims to diversify manufacturing operations by moving part of the production to other countries, reducing the risks associated with fully relying on the Chinese market or supply chain.

Having previously served as a senior executive at Procter & Gamble, Peterson became CEO of Newell last year.

Reuters reported that Peterson stated that Newell has been producing most of its writing business products, including Paper Mate pens, Expo markers, and Elmer’s Glue, at its factory in Maryville, Tennessee. He mentioned that earlier this year, the company transferred more manufacturing of the writing department from China and Korea to Tennessee, where the factory can be expanded.

Given the geopolitical tensions between the U.S. and China, Southeast Asia has become the preferred destination for companies looking to relocate their production lines from China to other regions. Peterson noted that the company has other ongoing projects to move kitchenware manufacturing from China to countries like Vietnam, Thailand, and Indonesia.

He explained that Newell is not looking to completely exit China, but rather to “reduce reliance on China.”

On July 26, during an investor conference call, Peterson mentioned that the company is accelerating efforts to reduce reliance on Chinese manufacturing this year. He stated that by the end of next year, Newell expects that less than 10% of its U.S. business would rely on Chinese manufacturing, down from the current 15%. He mentioned that this figure was around 35% five years ago.

However, Peterson also noted that finding finished goods manufacturers close to component manufacturing facilities outside of China is not easy. The company is implementing a productivity plan, including automated manufacturing, with the aim of turning around the business and improving profit margins.

A spokesperson for the company stated that earlier this year, additional writing business was moved back to the United States, creating approximately 70 new job positions at the Maryville factory.