So, what is latest on US-China trade war & tariffs imposed by both countries?
End of globalization? One of the concerns on U.S.-China trade war was that it will damage the international economy and bring an end to globalization. Why? because the United States and China are the two largest global partners. Well, not even a global pandemic could totally destroy the integrated economies of the world. Globalization is pretty much alive.
The lucky ones… It was not surprising to see that other countries who were originally hurt due to movement of their businesses to China, back in the day, would fill the void after the trade war. Countries like Mexico, Malaysia, India and Vietnam benefited the most. However, more surprisingly is that global trade, in products affected by the trade war, increased 3% relative to products not impacted by tariffs. So, not only did imports from other countries increase, but overall global trade increased.
Reshoring/ near shoring of manufacturing, but not jobs…The efforts on bringing back manufacturing to US or closer to US are gaining momentum with some substantial investments which will surely help domestic employment. However as expected, that it would result in the reshoring of U.S. jobs, that never really happened. In the end the trade war did not result in massive amounts of jobs returning to the United States. Overall, third countries were the main winners as they replaced Chinese imports with their own. Bystander countries benefited the most, especially those with a high degree of trade integration & agility.
Impact on prices, consumer, inflation & what not…The ultimate loser in this war is consumer , who are also impacted by sometime fair, but mostly unfair price hikes during covid & which fueled the ongoing inflation & loss of consumer affordability. Organizations tried to balance the price hikes to their best but it did place them in a complex situation while also trying to maintain quality & consistency of the imported product from elsewhere….
Way forward….Knowing your position is ultimately important for anyone dependent on offshore manufacturing. What is going to happen in short to long term…where the geo politics is going? Do you have all your eggs in one basket? Do you have trustworthy partners? Question the strategy & keep questioning….Todays organizations have to be on their toes but when it was not?
Some examples: PPE was one of the most affected areas with huge surge in demand during covid times & a nose dive after that coupled with inflation & slowing down of global economy.
During covid, duty on disposable gloves was taken off , China included, but it is now back to nearly 29% from China & almost zero from most of the other countries. (3% from some countries). Similarly current duty on leather gloves from China is nearly 28% while from rest of the countries its nearly half. Same with other technical industrial gloves made with polymers & textile…
