US China Trade Wars: How to Reduce the Impact On Your Supply Chain

Just when the US and China trade talks seemed like they were on the brink of an agreement, the Trade War resumed and its impact on supply chains will be significant. Some companies have already moved their supply chain out of China in anticipation of significant tariffs on their products, but other companies will be caught in the crossfire.

 

On Friday, the Trump administration imposed a 25% tariff on $250 billion of goods and products. Now there is the threat of an even larger tariff on the remaining $325 billion worth of goods and products if a deal is not reached. The financial impact could be significant to many businesses that rely on Chinese imports. Tariffs could reduce profitability by increasing overhead costs. If the additional costs are passed on to the consumers, it could reduce product demand due to increased prices. It is a difficult position to be in.

The freight forwarding experts at Mach 1 Global have 6 tips to help reduce the impact on your supply chain. They are helping clients navigate the trade wars preventing unnecessary costs and maintaining efficiency in their supply chain during these uncertain times.

 

6 Tips to Reduce the Trade War Impact on Your Supply Chain:

  1. Make sure your product is classified correctly. There have been situations where a client was using an incorrect classification, which had a tariff assessed. Mach 1 Global Services can review your product and determine a more accurate HTS number, which may not be impacted by the tariffs.
  2. Negotiate PO’s in Chinese currency, where possible. Since the trade dispute began, the Chinese currency has lost about 8-10% of its value against the US Dollar. This certainly does not mitigate the full tariff amount, but it helps to mitigate the additional cost.
  3. Negotiate with your Chinese suppliers to share the additional cost burden. A successfully re-negotiated cost burden forces the supplier to share the additional expense.
  4. Re-negotiate with your clients so that they are paying for your product based on the updated landed cost. This helps to distribute the additional expenses due to the tariffs.
  5. If cost effective, consider move supply chain out of china. Relocating production to India, Indonesia, Mexico, or other established manufacturing economies can help to avoid tariffs altogether. Of course, you must consider the uncertainty of how long the tariffs will be in effect.
    1. The US and Chinese administrations could reach an agreement.
    2. If no deal, or the deal keeps tariffs in effect, those could be changed if a new US administration is elected in 2020.
  6. Use Mach 1 Trade Services for Customs brokerage. We can assist you navigate federal requirements for importing and exporting your goods.

 

 If you are facing additional tariffs for your imports, contact the freight forwarding experts at Mach 1 Global Services. They can help you navigate the new global trade landscape and reduce its impact on your supply chain.

To learn more about the supply chain and logistics services we offer, visit our page on supply chain and logistics. Contact us to discuss your concerns and see how Mach 1 Global Services can help. Click HERE to plan your shipment today.

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