Crux Systems Insights

What to do with the US-China trade war

May 28, 2019 by Kathleen Kong |

Logistics

The US-China trade war has escalated since President Donald Trump raised tariffs from 10% to 25% on $200 billion worth of Chinese goods on May 10. More products will be added to the list in the upcoming months. As a result, China has retaliated with 5% to 10% tariffs on $60 billion worth of US goods, which will become effective on June 1st.

Trump has stated that China will bear all the costs from the tariffs while the US will benefit from them. However, the trade war is not a one-way street. In fact, consumers from both countries will eventually bear the burden of the costs in the long term.

It may take three to four months for the goods that are being imported now to be distributed and displayed at retailers. As a result, consumers may not see the impact immediately as imports from China will likely continue at the same level through spring and the upcoming summer.

On the other hand, on the Chinese side, we’ve been seeing more Chinese manufacturers moving their factories to southeast Asian countries to avoid the US tariffs.

If you are a US company that imports Chinese goods, it's vital to understand how your suppliers could be affected by future trade tariffs, directly and indirectly. You can then consider what measures you can take to address any potential risks.

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