US China Trade War’s Impact On Logistics: Part 2

| By: DGDtransport

Tariff War’s Effect On Your Supply Chain

Experts who have been closely following the development of the US-China Trade War, are saying that it’s looking like the tariffs may be permanent. This has many investors and owners in the supply chain industry concerned that the impact of the tariffs will be irreversible. With that in mind, some are viewing China as the “winner” of this business war.  Many American businesses are feeling the effects in their bottom line.

Supply chains shifting out of China
Image Source.

If you’re a business who has tried to wait out the tariff war, hoping relations improve, you may have absorbed the increases.  Your customers may have felt the effects because you had to raise your prices. Some owners protected customers and ate the added expenses. With the trade war showing no improvement, owners are now trying to move their supply chains away from Chinese vendors. 

It’s important to note that the impact of the trade war on your supply chain depends a lot on your industry and business model.  China is the second largest trade partner for PortMiami.  This means many South Florida business owners are evaluating the impact of the tariffs. 

Components in the Supply Chain 

Those in the electronics sector have deeply felt the impact of the Trade War because many devices are built on along a global supply chain.  Some components are created in China, then shipped to Mexico for assembly and parts then arrive in the US. The tariffs are now causing electronics distributors to rethink their model. In some cases, the tariffs are causing owners to rethink the industry they are in altogether. 

American Businesses Are “Losing” the Trade War

Chinese businesses and workers have certainly experienced their share of drawbacks from the tariffs, but most are saying that the American business owner has been the most adversely affected. Chinese businesses have been getting around the tariffs in some instances by moving to Southeast Asia, in places like Vietnam. 

Keep Your Business Agile During Trade War

For larger companies, flexibility in the midst of the Trade War is a bit easier because they have a larger financial cushion.  Smaller buyers who are not switching industries or business models are looking into supplier financing. This allows businesses to minimize cash flow and supply chain disruptions. Supplier financing ensures that suppliers are paid in advance. 

While things remain uncertain from week to week, many are projecting that in 10-15 years America will lose its competitive edge in the global marketplace. 

Part three of this series will take a look at the US-China Trade War’s impact on fuel costs.

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At DGD Transport, we pride ourselves on disrupting the ever-changing logistics industry by developing tools and solutions that meet our customer’s needs. Through our on-demand proprietary technology, DGD Transport offers cost-effective and eco-friendly solutions. As the premier 3PL company in South Florida, our team is comprised of forward-thinkers who value efficiency and doing things differently.

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