Over the past year, I have spent much time focusing on the topic of international trade and tariffs. You can read many of my blogs on this topic at https://blog.xportforwarding.com/. In the context of the recent announcement by the United States to increase tariffs to 25% on $200B in goods from China, I feel that it is important to continue to focus on this issue of Trade Wars.
After this past Friday’s failure to obtain resolution between the US and China over their ongoing trade war, the US escalated the trade war with China. After taking a strategic pause to consider its options, yesterday China increased tariffs on $60B in US goods in retaliation, covering more than 5,000 products with tariffs as high as 25%, duties as high as 20%, each of which is an increase from previous tariffs of 10% or 5%. In response, as reported by CNBC’s Jacob Pramuk, the US signaled it would potentially “put 25% tariffs on $325 billion in Chinese goods that remain untaxed.”
Right now, it appears that the ball is in China’s court to decide about how to proceed. Will there be further retaliation by China? In a tweet released on May 13th, President Trump has said that if the Chinese do not come to the table to reach an agreement, then things will escalate. Today we do not know where things will go, but my prediction is that if China continues to retaliate, then we will see an intensified diversification of supply chains and a shift in product manufacturing to other countries before goods come to the US. However, it takes time to restructure a supply chain and, in the meantime, there could be a glut of empty containers looking to be filled paired with a potential downtown in US imports if US business and consumers prove unwilling to pay the increased costs for doing business with China.
Time will tell where things end-up. As in the past, I am optimistic that trade will not stop. However, I know that the “game” of international trade will evolve. As this evolution plays out, I know I will be watching, as I hope you will be too!