The downstream effects of a trade war impact everything within the supply chain, both at home and abroad
SUMMARY
The Friday, July 5 deadline of US president Donald Trump’s $34 billion USD tariffs on Chinese goods has already started causing trouble for American businesses in China. Smaller firms have been struggling with new obstacles in customs, regulations, inspections, and licensing applications. The increased hurdles at the border are causing shipping delays and, as a result, are hurting sales. Jake Parker, Vice President of Chinese operations at the US-China Business Council, has pointed to tariffs as a potential cause for increasing regulations and difficulties from China on US companies. No actual regulatory issuance have been implemented for Chinese inspectors, but officials say that the recent ramp up of trouble can be related to the US $34 billion in tariffs soon to take effect.
FAO Global Assessment
Such stoppages in shipping can be very costly to food or other expiration-prone businesses, as timely export is crucial for foodstuffs and ultimately sales. Smaller businesses may need to increase the prices of its goods or, should they have the resources, can move some of their operations to China to avoid potential tariffs. Additionally, American firms can consider entering joint ventures with Chinese companies, as that can help soften some of the scrutiny from Chinese customs agents. For many firms, it would be prudent to start seeking new markets in South America, Southeast Asia, or even South Asia in order to avoid being in the direct line of fire of US-China tariffs.
Related Links
- Bloomberg – Trade War Threat Gets Real as Trump Confirms China Tariffs
- Business Insider – China may be disrupting US companies because of Trump’s tariffs threats
- Washington Post – U.S. companies in China think the government is already messing with them
- South China Morning Post – Trump may pull the trigger on tariffs but China will pick its battles, sources say
About the Author
Dillon Billingham – International Business Associate
Dillon Billingham is currently studying at University of South Carolina’s Darla Moore School of Business, majoring in international business and finance while minoring in Chinese studies with a data analytics concentration. His focus is on the promotion of US-China business through mutually beneficial relationships.
