Each day brings new developments for U.S. tariffs on Chinese goods. Although this week’s G-7 summit suggests a possibility to lessen the trade war with China, negotiations have been anything but smooth. For instance, two new rollouts of tariffs are coming on September 1st and December 15th. Also, the current administration recently demanded for FedEx, UPS, Amazon and the Postal Service to find alternatives from China 1 . The mandate was made in retaliation to China’s announcement of tariffs on $75 billion of American goods and cars. For this reason, organizations need to be aware of near-term impacts that may immediately affect their operations.
Here are three short-term implications of China tariffs today.
Seek Sourcing Guidance
Before your organization makes any sudden moves, it’s a good rule of thumb to consult a sourcing expert (if there isn’t one within your organization). An outside viewpoint may help your organization see the larger tariff impacts to come. Ask the right questions to benefit your business and lessen risks.
Alternative Sourcing Shifts
Some organizations may have to find alternative sourcing for goods, to mitigate tariff costs. As a result, China will have to seek other customers for its products. However, finding demand elsewhere in other countries may not be an easy feat. China manufacturers could be forced to reduce their pricing to U.S. customers to keep their plants running. Nonetheless, alternate sourcing may be difficult to find until other countries ramp up facilities and investments.
A Phased-In Approach
Although alternative sourcing may be a necessity for some organizations, the implementation will likely be incremental. The tariffs on China manufactured products currently apply to only select items. Organizational leaders should be facilitating discussions of who and how to mitigate tariff risks for applicable products. Proper planning will be critical to ensure that business operations don’t suffer as a result of current or pending tariffs.
Despite the ever-changing specifics of the current China tariffs, your organization must plan ahead. Understand how existing segments of your business are affected and what future scenarios could arise. Review the details to determine what existing and upcoming tariffs mean for your daily operations.
To gain additional insights on how to alleviate tariff risks, read our latest whitepaper, “Navigating the Impact of China Tariffs”.
1 Trump to Delivery Companies:’Start Looking’ for China Alternative by Lisette Voytko