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Trade War With China Affects U.S. Supply Chain

By October 29, 2018 January 29th, 2020 No Comments

Due to new tariffs implemented earlier this year, a majority of U.S. businesses are feeling repercussions of the current trade war with China, according to a report from AsiaInspection. The report further deduces that most U.S. businesses are aiming for more cost-effective solutions—rather than completely restructuring their supply chains—to account for the recent change.

What are some cost effective solutions to combat the new supply chain tariffs?

One solution to maintain your company’s profit margins and minimize new costs is to raise prices on goods. However, this could trigger a domino effect across the entire business model, potentially driving consumers away. Furthermore, more than half of U.S. businesses report being affected by the tariffs, which means consumers can most likely expect an increase in the cost of goods.

Another solution to combatting the new tariffs is sourcing products from alternative suppliers in different countries, especially Vietnam. Vietnam is a particularly attractive prospect, as it is located along one of the world’s main supply routes and harbors one of the world’s fastest growing economies. Last year, the United States imported roughly $46 billion from Vietnam, and that number is expected to rise to over $51 billion by the end of 2018.

In an interview with reuters.com, the CEO of Ingersoll-Rand, Michael Lamach, stated that the unpredictable nature of whether the trade conflict with China will be resolved may result in affected companies becoming reluctant to restructure their supply chains. Only time will tell.

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