United States and China trade relations have gone through unprecedented turmoil. By the end of last week, these issues had caused a dramatic drop off in trade activity. This downturn has particularly impacted American businesses relying on imports from China, which serves as a crucial supplier of everyday essentials such as car seats and umbrellas. A new tariff suspension has offered some temporary relief for importers and exporters alike on either side of the pond.
President Donald Trump has been vocal about his ongoing efforts to persuade China to “open up” its economy for American firms. He was indeed optimistic in the dialogue. He cautioned that tariffs will be raised again if no substantive progress has been made in the next 90 days. Under the agreement as it stands now, it cuts new tariffs on particular services coming into the U.S. from an eye-popping 145% currently to a mere 30%. In retaliation, China has dropped its counterretaliatory tariffs on U.S. products to 10%. China agreed to make unspecified changes to deal with other trade barriers.
Tat Kei, a Chinese exporter based here in Shenzhen, welcomed the recent reforms with open arms. He was able to quickly begin moving the products that had been jammed up inside his warehouse. Kei’s factory, having more than 200 workers, specializes in exporting personal care appliances to the United States. He spoke to the need for smart planning and investment into the future, emphasizing the uncertainty that tariffs bring to business operations.
“From the planning and investment perspective that is the big concern.” – Tat Kei
The damage of the past tariffs has been catastrophic. U.S. ports, shown here, like Long Beach, Calif., are seeing a staggering decrease in activity. According to Vizion’s data, planned arrivals from China have dropped by roughly 60% compared to last year. Morris Dweck, a New York City retailer who operates a 19-store chain of discount stores under the name DII, suffered real losses due to the higher special tariff rates that had been imposed previously. As a result, he had to cancel or suspend orders for 140 containers’ worth of merchandise due to the onerous 145% tariffs.
Dweck acknowledged that the new 30% tariff is still extremely high, but she said it’s better than what it was. He appreciated the clarity this policy change provides to his business planning. Now, he’s able to go back to a normalcy.
“It’s a sigh of relief. Even though it’s very dramatic, business can go on.” – Morris Dweck
He remains cautious about future developments. Dweck is currently looking for suppliers in other countries, just to be safe in the event that tariffs go up or down unexpectedly. He reflected on all that has changed for the better since those incredibly tough conditions only a few months ago, saying,
“If you had told us … even 30% three months ago, we would have said it was insane, that’s crazy, we would never survive.” – Morris Dweck
American and Chinese companies are suffering the short-term impact of these trade measures. They are just trying to navigate the haze of what future negotiations will look like. While the recent temporary truce will surely help reduce short-term pressures, it doesn’t calm fears of higher prices for American consumers. Even with the bad news of a reduced tariff of 30%, still experts on the subject are warning that prices could go up anyway.
Companies have a lot to figure out in this new, complex environment. The next 2-3 months will be critically important in determining whether U.S.-China trade relations can stabilize or whether tariffs are destined to rise once more. While businesses like DII look for alternative suppliers, others hope for a more permanent resolution to ensure smoother operations and better market conditions.