Trade Deadline
May 8, 2019 — MakeMine Minute | By Landon Hinote

On Friday, May 10 at 12:01 AM, the United States will place a 25% tariff on nearly all goods imported from China. US importers will be responsible for paying the 25% tax to the US government.

If US companies determine that the 25% tariff is too high, they may be faced with a decision to take their manufacturing operations elsewhere. Companies could look to South East Asia as an alternative. However, China represents a large share of global production capacity. South East Asia cannot be the solution for all product manufacturing. The reason being, these countries can only support a portion of China’s current production due to their limited factory and port infrastructure.

In the end, what China would pay for the tariffs going into effect on Friday is the potential for lost business and revenue. US companies and consumers will end up paying the 25% tax in the long run.

Bottom Line | There is still hope for an agreement to reverse the tariff in the coming weeks if the US and China fail to reach a deal by Friday. Either way, companies should contemplate a “China plus one” strategy. The goal is to have a secondary factory option outside of China as a backup plan if trade negotiations continue to sour.
['Landon Hinote']
['Trade', 'Trump Administration', 'Xi Jinping', 'Trump', 'China']