With tariffs on Chinese imports into the US on the table, shippers need experienced logistics providers to help them make the most of every shipment.
After months of escalating tensions between the United States and China, the Trump Administration has announced a 25% ad valorem duty on Chinese products with a potential value ranging from $34 billion to $50 billion. While some see these steps as protectionist, others explain that they’re necessary to balance the trade deficit and prevent further theft of American intellectual property.
Wherever shippers stand on the necessity of these tariffs, they’re serious business. And while experts disagree on whether this is all just a negotiating tactic, it’s important that companies operating on an international scale have plans in place — and experienced partners at the ready — to maximize value throughout their supply chain in order to offset costs caused by ongoing trade disputes.
Trade Disputes on the Horizon
The 25% tariffs are part of a larger push by the current Administration to rein what it sees as economic abuses by the Chinese government. From the theft of intellectual and industrial property to inadequate access to Chinese markets, the US trade delegation aims to reduce barriers to American competition in China.
In turn, China is preparing for what many expect will be a drawn-out trade war. For example, China’s commerce ministry plans to lower or completely eliminate tariffs on countless goods from nearby countries, such as India, South Korea, Sri Lanka, Bangladesh, and Laos. By eliminating these barriers, the country seems to be readying access to alternative markets for otherwise American goods.
And while China — a rapidly industrializing economic heavyweight — has received high-profile attention from the Trump Administration, the nation of more than 1 billion people isn’t alone in incurring trade scrutiny from the US; President Trump has also announced steel tariffs on Canada, Mexico, and the EU. However, it remains to be seen whether exemptions will be granted for traditional American allies.
How Businesses Will Respond
While it’d be an understatement to say that there’s been a lot of talk thus far, companies with an international footprint shouldn’t see these tariffs as nothing more than a game of chicken. In fact, President Trump’s tariffs against China will have very real consequences.
It’s up to companies who may be affected to develop realistic strategies for navigating an increasingly tense trade landscape cost-effectively. If businesses source their products in one country and sell them in another, they may begin seeing increased duties — and declining sales as a result of higher prices.
Accordingly, businesses will likely try to diversify globally. By combining sourcing and selling in the same country, for example, it’s possible to avoid some of the effects of steeper cross-border duties.
Where 3PLs Fit In
Companies of every size can expect to feel the effects of developing trade disputes. Even those without an international presence may find the products they source to be more expensive or more difficult to procure. While larger businesses likely have the resources on hand to navigate this landscape, small and mid-sized companies may be left wondering how they can stay competitive.
By partnering with a third-party logistics (3PL) partner or integrated logistics services provider (ISP), businesses can rely on shipping and logistics professionals to maximize value throughout their supply chain. Whether they boost ROI through advanced transportation and warehouse management systems or they take advantage of strategic consolidation during transit, companies that partner with a 3PL or ISP can expect to save — even while trade wars brew.
With more than two decades of experience in shipping and logistics, Primary Freight has the resources and infrastructure businesses need to scale. Thanks to an award-winning customer service team, state-of-the-art facilities, and industry contacts around the world, we can help your organization succeed in a volatile global shipping market. If you’re curious what a bespoke logistics solution for your business might look like, Primary Freight can help.
If you’d like to learn more about Primary Freight’s award-winning shipping services and reliable customer service, contact us today at (800)-635-0013.