By Dan K. Eberhart for CNN Business Perspectives
The Trump administration’s escalating trade war with China has left American companies with little choice. They must either scale back their reliance on Chinese manufacturers or get comfortable with higher costs and slimmer profit margins.
With no end in sight in the tit-for-tat trade war, companies must turn to lower-cost nations in Asia and the Americas to find alternative suppliers. The problem is that it is becoming increasingly difficult to find a nation that is not also a target of President Trump’s tariff stick.
With the recent tariff increase on Chinese goods to 25%, and threats to tariff an additional $300 billion in Chinese goods, companies like mine, Canary LLC, are increasingly looking at new suppliers to avoid levies and preserve profits. Canary is looking at Mexico as a viable nearshore provider of critical equipment for our oilfield services business.
The Trump administration’s decision to threaten Mexico with escalating tariffs — unless it curbs illegal border crossings into the United States — caused us to scramble again. A last-minute agreement between Trump and Mexico has — at least temporarily — ended that trade fight, but not the uncertainty.
We’re not alone in looking for alternative supply chains. Other industries are exploring ways to avoid tariffs and resist pushing the higher cost of products onto consumers. Like Canary, they are finding their choices limited. Trump has threatened to impose tariffs on imported cars and parts, which would hurt European and Japanese automakers, leaving US companies that rely on global supply chains wondering if anywhere is safe.
To be fair to President Trump, a reckoning with China over its trade practices, including allegedly stealing trade secrets and forced technology sharing, has been a long time coming, and, if not under Trump, would ultimately have come to a head under a future administration.Read More
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