Primer on Tariffs and Their Impact on Manufacturers and Distributors [Video]
The Trump Administration’s imposition of tariffs on Chinese raw materials and imports has tremendous implications for U.S. manufacturers, distributors, suppliers, and investors.
We recently sat down with Omar Nashashibi of the Franklin Partnership and recorded a series of short videos that can help you better understand the goal of tariffs, their likely impact on inflation, the current and near-term trade environment, potential global quotas, and strategies for staying competitive.
Current tariff exposure
Here’s a short summary on the U.S. tariffs on raw materials and imports, as well as the retaliatory tariffs from other countries on autos and automotive parts. There are currently tariffs from all over the world on virtually all steel and aluminum entering the United States.
End game for tariffs
The goal of tariffs is to level the trade balance with China and the entire globe. Ultimately, however, tariffs are designed to create a global quota system that could control the sourcing of materials like steel, aluminum, semi-conductors, uranium, and artificial intelligence items.
Timeline to tariff relief
No tariff relief is likely coming in the near future. There may be more clarity on what lies ahead after the 2018 mid-term elections, but the trade war is a long-term battle, and any easing up on tariff rates won’t likely come before spring of 2019.
Being globally competitive with tariffs
Omar Nashashibi offers strategies manufacturers and distributors can employ to stay competitive on the world market amid tariffs and quotas, including how to consider customers as well as suppliers.
Tariffs increasing reshoring activity
Manufacturers are bringing operations back to the United States from abroad as China becomes more expensive to operate in, partly because of wage increases and rising transportation costs, as well as tariffs and potential quotas.
Tariffs’ long-term impact on inflation
Surcharges and suppliers’ increasing costs are expected to drive the price or raw materials and create a captive market for the next few years, making greater inflation a likely outcome through 2021.
How we can help
CLA’s manufacturing and distribution professionals and international business advisors can help you assess the impact of tariffs on your operations and craft short- and long-term strategies for competing amid the trade war.