Navigating the 2019 tariff increases
The US is "getting tough on China" and is causing panic in the world of product. Backpacks, leather bags, steel, aluminum, carbon fiber, etc. While the world is adjusting to these new policies, we're putting into place legal solutions to keep the cost of tariffs "normal." Here are the 3 lists of tariff codes that are being impacted with an increase for now. Stay tuned as the US & China trade discussions are ever fluid and ongoing.
Effective July 10, 2018 (+25%): List 1
Effective August 23, 2018 (+25%): List 2
Effective September 24, 2018 (+25%): List 3
Effective September 1, 2019 (+10%): List 4
Updated August 4, 2019
Patrick Soong, March 5, 2019
US-China Trade War: OK, Progress is being made, what’s next?
Nobody can predict the future, especially not with Trump or Xi. This trade war can end at the whim of one man’s mood that morning, or it can prolong for years until 2020 or 2024 depending on who is the Commander-in-Chief. So what happens now?
Companies are apprehensive of keeping their manufacturing in China, and rightfully so. 10% is no small amount. 25% is even worse. Everybody and their grandparents can agree that these tariffs don’t do anybody any favors. They’re not protecting domestic manufacturers from losing out on purchase orders to China (the main cause for implementation of tariffs). These are punishment tariffs. Punishment laid upon China for Intellectual Property indifference and forced technological transfers. Now, you may not agree with President Trump on the enforcement of these tariffs, but his agenda against China is working. Here’s why: China’s governing powers have seen country-wide popularity due to its economic rise over the past 3 decades (putting aside that genocidal matter that is the current persecution of the Uyghur people going on the Xinjiang Province). Talk to anyone who was in Shenzhen in the 1990’s and they’ll tell you that everything about the city is brand new, the buildings, the homes, the people. It wasn’t even an official city until 1979. Deng Xiaoping & Xi Jinping’s political popularity within China is a direct result of the economic growth that China has seen under their administrations, and Trump’s tariffs are threatening that growth. China’s growth in 2018 was 6.6%, their lowest annual GDP growth rate since 1990. While that’s still growth, businesses are going bankrupt, employees are being laid off, the RMB got weaker, and investments have stopped pouring in. There is global hesitation in regards to China’s economy, something that hasn’t even been thought about for the past 2 decades.
Presidents Trump & Xi are set to hold more summits in mid-March to continue their discourse, but thus far, it is China who is suffering more and making the concessions in order to appease the US. The US holds all the leverage in these discussions as they’re forcing China to implement punishing laws on their citizens and companies who engage in IP Theft (knockoff products and copyright infringements). China most recently committed to purchasing $1.2 trillion of US soybeans over the next 6 years as part of the negotiations as well, and what did the US do? Said they wouldn’t raise the tariffs on List 3 to +25%, instead keeping it at +10%. (List 1 & 2 remain at +25%). Any parent or dog-owner or adult human knows well the difference between positive reinforcement and negative reinforcement, and the US is dangling threats of increased tariffs at every milestone date. The US holds all the power in this discussion and if China backpedals or retaliates, the US is willing to add a 4th list to the trade war and make List 3 jump to +25%, thus further damaging the relationship. And if you think that this is purely a partisan point of view on trade, think again, Senate Minority Leader, Chuck Schumer, has fully backed Trump’s course of action to date saying he believes that “President Trump must have the courage to do the same thing with China as he's done for North Korea.” He added “The president must be willing to hold the line and walk away if China does not agree to meaningful, enduring, structural reform of its unfair trading policy."
It certainly looks as if these negotiations are destined to continue for a while, but both parties clearly have a list of demands that seem to be mutually beneficial. While the current state of US-China trade is a massive financial inconvenience of the citizens of both countries, there is optimism that we might be better off in the long run from, dare I say, a moral perspective. That is, if these two global personalities can keep each other happy, and that’s a $250 billion if.