So far, the Trump administration has imposed $250 billion in tariffs on imported Chinese products, posing a significant hit to the American economy.
According to a study commissioned by the Consumer Technology Association and the National Retail Federation, if both China and the U.S. impose an additional $100 billion in tariffs, job losses in the American agricultural sector will overpower “any net gains” in the American manufacturing sector. The following examines such central challenges brought on by the China tariffs and how to best overcome them.
Reconfiguring supply chains
As the tariffs have come in waves, so have shifts in supply chains. For instance, the first two series of China tariffs mainly fell on electronics and advanced machinery. Vietnam, which already was selling electronic components to some American companies, became the alternative supplier of choice for many businesses.
Moving production out of China can help make up for the tariffs, and many companies have already acted accordingly earlier this year. Apple’s supplier, Foxconn, is relocating iPhone X production to India. The shoe company Brooks Running is also discontinuing production in China and moving their manufacturing to Vietnam.
Diversifying supply chains is advantageous for global companies regardless of the trade climate. Companies that strategically maneuver within the global marketplace can minimize the effects of natural disasters, geopolitical turmoil, and economic upheaval to their supply chains.
Retraining and education
According to a study by The Trade Partnership, the steel and aluminum tariffs could result in a net loss of over 400,000 jobs in the United States. Out of those, it is predicted 19,000 will be lost in the manufacturing sector.
Agility has never been more imperative for workers in the manufacturing industry. Employers and employees must work together to retrain and educate themselves on how to conquer these new learning curves.
Sector-based partnerships can help bridge the gap between job training and the skills manufacturing employers need now. Moreover, employers that participate in these training programs can actively shape the future workforce.
Tariffs are increasing prices for energy products, industrial equipment, and many other technological components. In addition to that, technology is integral to the inner workings of American businesses, such as research and outreach. The China tariffs are thereby impacting the internal and external operations of U.S. companies—and on a massive scale.
The tariffs are also going to affect emerging technologies, such as artificial intelligence. Companies must decide which innovations they want to make a priority.
While the China tariffs are presenting American companies with newfound challenges, they also offer opportunities for change. How will your business advance in an era where unpredictability is becoming the new norm?
At Pivot International, we’re helping U.S. companies successfully navigate the current trade climate. As a single-source designing, engineering, and manufacturing company with facilities in Taiwan, Manila, the UK, and the United States we bring nearly 50 years of experience with Asian manufacturing and expertise to optimize production for your business. If your company is currently confronting production liabilities and is seeking a viable alternative to your current supplier, contact us today.