However one feels about the politics of it, the ongoing trade war between the U.S. and China has invariably imposed significant burdens on stateside supply chains. Cleveland third-party logistics firms do our best to help insulate our clients from the economic impact – which for now shows little sign of abating – or at least find ways to help offset the costs.

The trade war began nearly one year ago with President Donald Trump imposing tariffs on $250 billion Chinese exports. Administration officials cited China’s alleged theft of U.S. intellectual property (mostly in the tech sector), as the primary catalyst, but also noted a desire to incentivize American companies to bring manufacturing jobs back to the U.S.

The Chinese government retaliated by increasing taxes on American exports and decreasing taxes on most every other country.

This escalation has dragged on for months, with a 15 percent tariff on another $112 billion worth of Chinese goods going into effect early next month, bringing two-thirds of goods imported by the U.S. from China under additional taxation. Another 15 percent tariff on $160 billion in goods is slated to go into effect in December. If that happens, almost all Chinese imports will be under tariff. 

Sharply divided are conclusions about whether this will be effective in bringing back U.S. manufacturing jobs or curbing intellectual property theft. What we do know for certain is that companies in Ohio can’t bank on this simply blowing over. The stakes are too high. They must prepare.

Because U.S. consumers and companies rely so heavily on China (and visa versa), businesses are already feeling the weight of impact. This has the potential to dramatically effect supply chains both in the short- and long-term.

“Companies need to be ready for this.”

Though some executives may be concerned that this isn’t the best time to raise expenditures by partnering with an outside firm on supply chain management, the reality is working with a Cleveland third-party logistics service will help insulate your supply chain from some of the most punishing elements of the ongoing tit-for-tat.

We do this firstly by relying on an expansive network of partners around the globe, which we’ve cultivated over decades. Additionally, we offer clients transparency at every touch point in the chain and work diligently to identify and forecast advantages, pitfalls and alternatives.

One analysis by J.P. Morgan revealed the tariffs will cost each U.S. household an estimated $1,000 annually – and that’s before the Sept. 1st and Dec. 15th tariffs go into effect. Further, the 25 percent tariff on some $250 billion in Chinese imports is slated to rise to 30 percent in October.

As the price of many retail goods in the U.S. is now climbing, slowing exports and dinging both investor and consumer spending (the latter being the main driver of the U.S. economy), the question is less, “Will my costs be higher?” and more, “How can I offset the costs that are coming?” Businesses face tough decisions about whether to pass those prices on to consumers or absorb them.

Cleveland Third-Party Logistics Partner Helps Prepare Your Firm for Tariff Headaches

While some larger retailers are warning suppliers they won’t accept price hikes, smaller corporations don’t kind of bargaining power on their own to stay competitive. Those that aren’t working with a Cleveland third-party logistics provider may quickly find themselves left behind by companies that are, and thus have been better able to adapt.

Adapting could mean:

• Switching suppliers and manufacturing operations to exempted countries Analysis on this cost-effectiveness should be on long-term supply chain risks.
• Engaging in supplier and/or shipping restructuring negotiations to lower costs for products or shipping routes that aren’t. This might not completely offset the tariff costs, but it could help.
• Rushing orders of certain materials to “beat” the tariffs before they go into effect.

Our team works diligently for clients, examining both internal and external data to identify ways to streamline (and, if necessary, alter) supply chains in preparation for these changes. Knowing exactly which items are affected and mapping detailed alternatives is imperative.

If you have questions about our Cleveland third-party logistics supply chain management strategies and solutions, contact On Time Delivery & Warehouse by calling (440) 826-4630 or sending us an email.

Additional Resources:

Trade tension and uncertainty from tariffs puts supply chains on alert, Aug. 27, 2019, Logistics Management 

The Impact of Tariffs on Supply Chain Costs, By Dan Levine, Q4 2018, Area Development

More Blog Entries:

Smart Cleveland Supply Chain Strategies Support Business Growth, Aug. 16, 2019, Cleveland Third-Party Logistics Partner Blog