A trade war, a skirmish or just plain tension?

Shanghai Supply Chain Summit panel discussion on punitive tariffs
A panel discussion on trade tensions at our 2018 Supply Chain Summit in Shanghai

There’s no question that the word “tariff” has dominated the headlines in news outlets and online publications around the world since early 2018. Additionally, we’ve heard a great deal of talk about the respective trade positions of the US and China, with accompanying terms including war, skirmish, and tensions. We at BDP have, in the past two months, sat down with our customers in both the US and China to discuss the critical trade issues that are impacting their export or import business. 

Throughout these conversations, there has been a common thread: the issues concerning companies are very similar, whether their geographic location is in the US or China.

Our customers have overwhelmingly voiced that their business has been and continues to be, directly impacted by increased costs for their goods, and they need to examine their options to continue moving forward. 

Simply absorbing the increase in the tariffs is not an option, and lowering prices to sell goods is not a part of any ongoing supply chain strategy.

When we polled the audience at our recent Supply Chain Summit in Shanghai, an interesting fact surfaced: 69% of respondents answered that they have already changed several of their procurement strategies for sourcing materials as a way to mitigate tariff impact and that 60% have changed their Sales Strategy.

Companies are examining new solutions, such as seeking new markets for their product or finding alternative uses for some of their products.

This echoes the sentiments expressed by our audience at Houston’s Supply Chain Summit, where 73% of respondents answered that Free Trade Agreements would play a crucial role in developing a strategy for managing tariff impact. Companies are challenged to develop new ways for lessening the effects of the tariffs moving forward. 

In studying the current situation, reading the messaging used by each government, and listening to customers at the summits that have been impacted, I feel confident to say that no party will win this game of tariffs. My (imported) tea leaves tell me that this phase will last for quite a bit, but not forever.

This journey has been a bumpy one with many twists, turns, and unanswered questions, leading to more work hours for many companies.

Audience listening to panel discussion at Shanghai supply chain summit

Stay tuned, and stay diligent, and rest assured that BDP will keep you updated as we navigate this path together. There is a light at the end of the tunnel; these are tariff tensions, not tariff wars.