How the U.S.-China Trade War is Affecting Business Owners
Posted by Clarion Safety Systems | 3rd Oct 2019
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.