How to survive in the US-China trade war?

Tariffs impact both the US and China

It’s been more than 1 year. What impact do the tariffs have on the US and China? There are many articles and research discussing that. For sure, both the US and China are suffering. Enterprises are struggling to avoid the tariffs. There are a couple of ways below.

1. Requesting China suppliers to cover it, it means to request China suppliers to make a price reduction.
2. Transfer orders to other regions such as Taiwan or Southeast Asia.
3. Building new plants in low-labor-cost regions to reduce supply dependence on China
4. Doing nothing and sticking to the current business situation, expecting the war to end ASAP.

 

 

American Dream?

Although the US President, “Donald J. Trump,” wants Made in America, in fact just a few US manufacturers moved back to America “symbolically.” For now, most American companies use way 2. It makes Taiwan benefit, as shown in the figure below.

 

We can see clearly that before and after the trade war, the export from Taiwan to America increased. Because thousands of Taiwan manufacturers keep producing high-quality, fast-shipping, and fair-priced products. It’s very easy to find replacements in Taiwan; that’s why Taiwan is a good choice to help American companies get through it in a short period of time. With the tariffs, Taiwan companies take advantage of it. Besides, the Executive Yuan proposed a plan, ”Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” to encourage manufacturers to come back to Taiwan. They expect it to bring high-tech manufacturing industries such as Industry 4.0 or 5G related products back.

The Taiwan Body parts manufacturers are the real beneficiary in the US-China trade war

Let’s focus on the auto body parts categories (HS code 8708): the U.S. has imposed 25% tariffs on China since June 2019. In the chart below, compared to 2017, sales in 2018 increased only 0.4%, but 2019 increased 4.1% compared to 2018. It was significant growth. It means auto body parts exporting benefited from the trade war. At the same time, it also implies that, in both price and capacity, Taiwan manufacturers are very competitive and flexible, so they won clients’ trust soon and received orders successfully.

Everyone knows these orders are just temporary. I believe American companies will have their backup plan for the future. Taiwan has been the first of the “Four Asian Tigers.” It has indeed been the best opportunity in the last 20 years. Taiwan manufacturers must hang on to it. All of us should consider how to move on and keep our items competitive after the war.

Reference from: https://cus93.trade.gov.tw/FSC3010F/FSC3010F

After 1 year, we keep the data updated

Read here!

https://www.buyntryparts.com/the-effects-of-us-china-trade-war-on-taiwan-auto-parts-exports-2/