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How the U.S.-China Trade War is Affecting Business Owners

Posted by Clarion Safety Systems on 3rd Oct 2019

U.S.-China Trade War

China is one of the United States' biggest trade partners, receiving more than 20 percent of America's exports and among the top three leading countries from which imports derive, according to the U.S. Census Bureau. With the trade war continuing between the world's two largest countries, industries and businesses are feeling the effects, in varying degrees, from the ongoing economic conflict of the tit-for-tat tariff duel.

U.S.-China trade war explained
In a bid to renegotiate some of the long-standing trade agreements between the U.S. and China, President Donald Trump imposed tariffs in early 2018 on a number of different imports originating from the Far East nation. The move resulted in retaliatory levies, setting off the trade war. Although the White House has argued that tariffs are designed to bring China to the bargaining table, a number of Americans – both consumers as well as business owners – say higher tariffs do more harm than good. A survey examining perceptions about the manufacturing industry released last month by Thomas revealed that 46 percent of Americans feel increasing tariffs on imported foreign goods and services are too disruptive for the U.S. economy. 

Trade tariffs and their effects
As of September 2019, the U.S. has imposed tariffs on more than $360 billion of Chinese goods – brought about through three rounds of tariffs in 2018 and a fourth one last month – with China retaliating with tariffs on upwards of $110 billion of U.S. products. When tariffs rise, they can have both short-term and long-term ramifications. Business owners that engage in foreign trade are on the lookout for alternative partners in Southeast Asia, the Journal of Commerce reported. Their successes have largely been hit and miss. Additionally, JOC.com noted that manufacturers are dialing down their rate of hiring – and in some cases laying off workers – due to costly input prices. 

American manufacturers’ take on tariffs
The business owner community has largely been united in their displeasure of the tariff back and forth with many being driven to diversify their sources for imports. In the wake of the escalating trade battle, more and more companies are announcing plans to shift manufacturing from China. As of July, more than 50 large, multi-national companies have moved out or scaled back, from Apple to Nintendo to Dell; U.S. internet giant, Google, also recently announced plans to move most of its American-bound hardware out of China.

“Tariffs on imported goods are hitting American consumers and businesses – including manufacturers, farmers, ranchers, and technology companies – with higher costs on commonly used products and materials. Simply put, tariffs are a tax on American consumers and businesses…Tariffs threaten to derail our nation’s recent economic resurgence,” the U.S. Chamber of Commerce contends, urging for businesses to express to Congress that tariffs are the wrong approach to address unfair trade practices.

Keeping your business ahead of the trade war
The fallout from the trade war is ongoing in terms of the industries it effects and the ramifications. Here are a few recommendations for how business owners can stay ahead of the trade war and soften the blow:

  • Consult with industry experts on what they do to offset tariffs
  • Diversify your supply chain
  • Write letters to legislators and trade associations regarding the effects of tariffs on your business
  • Seek out trade partner alternatives
  • Build regular SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis into your supply chain
  • Run the numbers to see if your supply chain will be adversely impacted by higher trade costs
  • Request a manufacturer's affidavit, or Certificate of Origin (COO), from vendors

Made in the U.S.A. products – including safety labels and signs
Perhaps the most straightforward way to steer clear of tariff trouble is by buying domestic. At Clarion Safety Systems, all of our products are made in the U.S.A., manufactured straight from our state-of-the-art production facility here in Milford, Pennsylvania. However, given the dynamic political environment related to trade and tariffs, we understand that many of our clients need to ensure they have the most current Certificate of Origin (COO) information on file to maintain compliance with all applicable requirements. Please know that this is included with every packing slip with your products, and we're here to help answer any questions or other needs that you may have regarding your label and sign products and their materials. We can also provide North American Free Trade Agreement (NAFTA) certificate of origin forms to customers having products shipped to Canada or Mexico. These types of forms state that safety label or sign products are all of U.S. origin and provides a tariff classification number, allowing for preferential tariff treatment; they can help you obtain duty-free or reduced duty rates for qualified products entering NAFTA member countries (U.S., Canada, Mexico).

This blog was originally posted on 8/24/2018 and updated with new information. 

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