Trump’s tariffs will come back to haunt him

Author : Chris Wootton, CEO of Chemigraphic

21 September 2018

Credit: Shutterstock

As the trade war between the USA and China ramps up, with President Trump continuing to impose tariffs on imported products from China, the EU and others, businesses across all industries are naturally starting to feel nervous about the implications of such a move.

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"These tariffs," Chris Wootton, CEO of Chemigraphic asserts, "will no doubt lead to a multitude of industrial and economic complications, especially within the import, manufacturing and retail sectors.

“If the Chinese tariffs are imposed, costs of goods in the US will rise and, although the consequences won’t be apparent immediately, within 12 to 18 months, the landscape will likely shift: consumers will start to see prices rise and there will be unrest and backlash. We are starting to see this now, with big US automotive manufacturers becoming more vocal about their concerns.

“The fact remains that no country is self-sufficient, and the isolation of any nation, whether physical or in terms of trade, is a dangerous proposition. China itself is simply too large – and too successful – to be isolated; it makes too much, and we buy too much of what it makes for it to be effectively cut off.

Even if the US administration does go ahead with its plans, other nations will doubtless take advantage of the low costs, better pricing and widespread manufacturing capabilities that China offers.

This in turn will drive the success and popularity of other low-cost regions, and effectively, the US itself will become the isolated nation, as countries start to shift their focus elsewhere.

“As an EMS, the benefits that China offers in terms of manufacturing and sourcing electronic components are simply too extensive to ignore. We opened our new sourcing office in Shenzhen in January, and already, our customers are benefiting from the higher volumes and lower costs of component parts thanks to the improved access to China’s pricing structures we can now offer.

“With regard to the future, I’m sure the situation will continue to produce fireworks for some time to come, as political tensions rumble on and industry faces up to the consequences of decisions made by the US leadership. But I’m also confident that it will normalise and calm down over time. Probably via a change in that very leadership…”

One of the latest developments in the tariff debate has seen China attempt to calm the waters by offering to buy US goods to the tune of $70 billion over the next year if the tariffs are called off, so a resolution could be on the horizon – although this offer is still a long way off Trump’s demand for China to reduce its trade surplus with the US by $200 billion. It seems inevitable that at some point, Trump will have to back down and come back to the table to discuss the issue further, even if it’s not immediately.

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