Blog: The US-China Trade War Is Back On. Or Is It?
The US-China Trade War Is Back On. Or Is It?
When we last updated everyone on the US-China trade war, there was a 90-day hold on the tariff increase that would have taken effect on January 1st.
We weren’t sounding the alarm, but we thought it would be helpful to start looking at ways in which sellers could adapt their FBA businesses in case tariffs skyrocketed. We considered:
- renegotiating with Chinese suppliers;
- starting price wars with our competitors;
- using other global manufacturers to avoid the tariff altogether.
And yet the 90-day suspension came and went without a resolution. Sellers were left wondering what was going on, as there were no major updates. Until now, that is.
Originally, the tariff increase was going to start at a minimum of 10%. We were also told it could go as high as 25%, depending on the type of product being exported.
Now, however, we’re hearing that tariffs will start at the 25% mark.
What does this latest update mean?
It means, at this point, that you can’t read too much into presidential tweets.
This is standard business protocol and, whether you’re a seasoned pro or new to Amazon FBA, there’s really no need to panic. The possibility of an even larger trade war than we might have expected has greater implications for global financial markets more than anything else.
Consequences for FBA sellers? Not so much.
But we totally get it if you’re boarding up your windows, preparing for an imminent storm. Just know that the easiest place to start is to evaluate your product manufacturer.
Start by asking yourself the following questions:
- What is the quality of your factory’s workmanship?
- How strong is your supplier-customer relationship?
- Is there an ease of communication with your contact?
And if any of the above-areas can be improved, you might want to consider investigating a new supplier in a different country.
One way to explore your manufacturing options is to do a little digging in Jungle Scout’s Supplier Database. See what other options are on the table for your specific product and materials. Find out where your competitors are sourcing their products from.
If it turns out there’s a way for you to avoid a Chinese supplier and the new tariffs, weigh the financial cost of switching your operations to a different country. Just make sure you take into account any tariffs that might apply in the other regions you’re considering.
Still concerned?
Don’t worry! We have you covered.
Greg spoke with expert Gary Huang, from 80/20 Sourcing, and he has some great advice for Amazon sellers regarding the potential increase in tariffs:
So what’s next?
On Thursday, May 9th, negotiators on both sides of the trade war will meet in Washington for the next round of talks, hopefully reaching a consensus and a new trade deal. Plus. sources say China’s Vice Premier Liu He will be in attendance.
As soon as we confirm any of the speculated details, we’ll update you right here. Stay tuned!