Deal or No Deal? China Tariffs After the 90-Day Pause - Apr 2019

The entirety of 2018 was marked by a near-constant stream of retaliatory tariffs levied in both directions by United States and China as each country tried to scare the other into backing down. At the end of the year, President Donald Trump and Chinese President Xi Jinping agreed to put new tariffs on hold for 90 days while they tried to hammer out a trade deal. 

That 90-day deadline has since passed, but new tariffs remain on hold as the White House cited progress toward a resolution. Even if a deal happens, however, President Trump claims that tariffs against Chinese goods won’t be lifted for some time to come.

Tariff Impacts on American Industry

So far, the impact of tariffs for American businesses has been mixed. Some of the most notable affects – some positive, some negative – are as follows: 

  • Ford CEO Jim Hackett claimed that the tariffs have cost Ford more than $1 billion in profits and will result in massive layoffs if the trade war isn’t quickly resolved. Harley Davidson said the tariffs cost the company nearly $50 million in 2018. 
  • Steel/Aluminum. Tariffs of 25% and 10% on steel and aluminum, respectively, have been a boon for American steel and aluminum mills. However, a wide range of other American industries that require affordable raw materials have suffered under the new tariffs, such as manufacturing
  • Supply chain. Third-party logistics firms, risk management firms, and supply chain consultants have benefited from tariffs in many ways as shippers seek help navigating the supply chain volatility brought on by the trade war. However, imports have declined as retailers and manufacturers wait to see what happens with the pending trade negotiations. This decline may have a negative impact on truckers and other freight movers.

What Now?

The 90-day countdown has come and gone and negotiations are ongoing between the U.S. and China. Until a deal is struck, the existing tariffs remain in place. Even if a trade deal is reached, President Trump has vowed not to immediately lift  more than $50 billion of the tariffs on China for “a substantial period of time” to ensure China holds up its end of the agreement. 

So what happens next? Unfortunately the answer isn’t very satisfying: Not much. 

The same limbo that stakeholders have been in for the last 90 days will likely continue for the near future. Assuming negotiations go well between now and then, a summit is scheduled for late April to seal the new deal. The developing terms of that deal have remained private, however, making it difficult to predict impacts on American businesses—or even to plan ahead. 

Even so, shippers can take steps that will help them regardless of the outcome of trade talks with China. These include: 

  • Seek alternate suppliers
  • Update existing risk management plans
  • Examine forecasts and consider how ongoing tariffs may impact them
  • Communicate with trading partners/suppliers about their plans regarding tariffs
  • Hire staff or consultants that can help navigate rapid shifts in international policy

Navigating the Trade War with WSI

At WSI, we have a broad network of international partners across more than 55 countries. We have a great deal of experience helping our customers navigate trade regulations and volatile global markets. If the trade war with China has impacted your business, contact us online or call us at 920.831.3700 to discuss how we can help you mitigate the risks of an uncertain global supply chain.