HOW TRADE WARS ARE EFFECTING BUSINESS AND COMPANIES
World trade has been experiencing the biggest trade wars in its history. It is taking place between the world’s first and second largest economies. United States’ step for imposing the tariffs of $250 billion on Chinese goods got respond from China. Because Chinese Government imposed tariff of $110 billion of USA goods. These moves result a great effect on the value of the goods. As well as values, they effect international trading and global economy.
While US Government is in preparation of enabling new taxes, several company representatives are stating positive comments on the taxes. On the new tariffs, some executives are in the opinion that this will help eliminating the bad practices of China. Also this will happen without any economic damage to the interests of the United States. It will also boost growth with bringing back jobs and allowing US companies move to a more competitive level. However there are also alternative opinions approaching the situation more cautious. Such that, they think this may bring slower growth for US manufacturing sector. The big differences between opinions depend on the import export rates of the companies for their markets and their supply chains.
TRADE WARS ARE EFFECTING MANUFACTURING SECTOR
This process much affects manufacturer companies that are importing their supplies from China. Because the new taxes are resulting a boost on production costs. Also the taxes push them to raise the prices, as a way of reflecting the situation to the customer. This doesn’t always seem to be a solution. Because at that point customers are heading to more economical alternatives unless they have high brand loyalty. So this means companies have to find a more certain solution to handle this negative effect. Otherwise it’s obvious that the profit levels may noticeably decrease. Consequently, it would bring a great risk for low profit companies of being pushed out of business.
ADVANTAGEOUS PARTIES THAT BENEFIT FROM TRADE WARS
On the other hand companies that are not using Chinese imports for their production are more likely to benefit from the tariff. Especially the companies manufacturing articles of steel and iron are on the advantageous side against Chinese companies. Because they will be able to charge higher prices.
Globalized companies take steps to relocate their manufacturing plants overseas as a way of adjusting themselves. Finding new locations to avoid the tariff effect is not a cheap and easy step for companies. Because they would face labour costs and huge expenses. However this shows that a solution for the conflict is not expected in the short term.