Trade disputes between US, China and Europe are very probably not over soon. BCI has identified and developed 12 strategies how companies can cope with importing and exporting trade tariffs around the world.

The impact of trade tensions between the major trading countries/trading blocks is increasing. Not only at the macro-economic level as the International Monetary Fund predicts with warnings for decreasing economic growth. But also at the individual level, where C-level executives have to find solutions for import tariffs.
René Buck, CEO of BCI Global, is convinced that trade disputes are on the rise: “For 5 years now, the number of trade interventions of countries to put constraints on free trade is increasing and the number of new trade liberalisation measures is at best stable. Companies have to implement risk mitigation strategies as the trade wars between for example the US and China will not be gone in a couple of months”. Figures of the World Trade Organization (WTO) show that the average import tariffs into the US are 3.5%, into the European Union more than 5% and into China nearly 10%. In combination with non-tariff barriers (e.g. quotas; more custom controls; additional documentation requirements) these issues are not solved on short notice.

 

Trade Conflicts Around the World

 

A year of Trade Disputes

 

Scorecard Tariffs US-China

 

BCI presented at the largest supply chain conference worldwide CSCMP in Nashville, Tennessee, an overview of 12 strategies how to deal with trade tariffs. “Obviously, it varies on how for example a US company is depending on Chinese products, procured or made in own manufacturing facilities, and whether the products are on the Chinese and US import tariff lists”, says Patrick Haex, Managing Partner. He adds “Classification of the products is key and many companies are trying to lobby for exemption for certain product classifications”.

Strategies

The overview below shows three different types of strategies:

  • Absorbing the tariffs: accepting the tariffs, building stock and incorporating the tariffs as much as possible in the product price;
  • Adjusting sourcing: find different suppliers who produce in less tariff risky countries;
  • Changing the manufacturing footprint: shifting value adding activities/manufacturing of products/components now being produced in China to less trade tariff risky countries

 

 

Do you want to learn more about the 12 strategies and how to implement them? Ask for our dedicated presentation by contacting René Buck or Patrick Haex, Managing Partner.

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