The US-China trade war 1 year on: who really holds the upper hand? - South China Morning Post

One year after the United States (US) and China first exchanged blows in their escalating trade dispute, the question of who truly holds the upper hand remains a complex and evolving debate. The trade war officially commenced on July 6, 2018, when the US imposed an initial 25% tariff on US$34 billion worth of Chinese goods. China swiftly retaliated with equivalent tariffs on US products, marking the beginning of a tit-for-tat exchange that has significantly reshaped global trade dynamics.

Since that initial salvo, the scope of tariffs has expanded dramatically. As of July 5, 2019, the US has levied 25% tariffs on US$250 billion worth of Chinese imports, while China has responded with tariffs on approximately US$110 billion worth of US goods. The conflict saw a temporary de-escalation at the G20 summit in Osaka on June 29, 2019, where a truce was declared. The US agreed to halt plans for additional tariffs on a further US$300 billion of Chinese goods and eased restrictions on US companies selling components to Chinese telecommunications giant Huawei. Despite this pause, core issues such as forced technology transfer, intellectual property theft, and state subsidies remain largely unresolved.

The impact of these tariffs has been felt across various sectors and economies. US consumers have increasingly borne the cost of tariffs through higher prices, while US companies face elevated input costs, disrupted supply chains, and a loss of market share in China. Many American businesses are actively exploring or undertaking the relocation of their manufacturing operations out of China, seeking alternative sourcing destinations like Vietnam, Mexico, or Taiwan. On the Chinese side, companies are grappling with reduced demand from the US and are pressured to diversify their export markets. While both sides claim resilience, economists and analysts largely agree that the trade war is a net negative, slowing global trade and economic growth, and creating significant uncertainty for businesses worldwide.

Navigating the Evolving Trade Landscape: Advice for Importers

• Monitor Developments Closely: The recent truce and the easing of Huawei restrictions demonstrate the fluid nature of the trade war. Importers must stay informed about ongoing negotiations, potential new tariffs, or any tariff exclusions that may arise.
• Assess and Diversify Supply Chains: Given the significant tariff costs and the trend of companies relocating production, importers should critically evaluate their current sourcing strategies. Diversifying supply chains away from heavily tariffed regions can mitigate risks and potentially reduce costs.
• Understand Tariff Costs and Product Classifications: Continuously calculate the landed cost of goods, factoring in current and potential future tariffs. Ensure accurate Harmonized Tariff Schedule (HTS) classifications for all imported products to avoid compliance issues and unexpected duties.
• Engage with Stakeholders: Stay connected with industry associations, customs brokers, and legal counsel to understand the broader implications of trade policy changes and to identify potential advocacy opportunities.