Third wave of Chinese tariffs have potential to further disrupt supply chain
The first wave of Chinese 25-percent import tariffs landed on the aftermarket’s shores in July. A second was cresting at the time of this writing for August, and another — a third wave — is building offshore for September.
What does it all mean?
Whether or not the outcome of a trade war with China is beneficial or detrimental to the automotive aftermarket remains to be seen in the long run, though at first blush it appears there will be ramifications as they affect a wide-ranging number of products from bearings to battery components (a complete list can be found at autocare.org/trade).
Tariffs on Chinese imports affect the manufacturers that depend on products sourced solely or primarily from China and not easily sourced or readily available elsewhere. Perhaps they will initially absorb the cost, though that likely will be a short-term solution, before costs will ripple through the supply chain and, ultimately, into shop bays and their customers’ wallets.
As the third wave of new Chinese tariffs is expected to be implemented in middle to late September, manufacturers and suppliers concerned about those tariffs have possible recourse to have products they need excluded, according to a recent webinar sponsored by the Auto Care Association, which featured experts from the law firm Denton US.
U.S manufacturers and suppliers should argue three points to the U.S. Trade Representative (USTR): that imported products in their business interests are not strategically useful to China’s industrial objectives that threatens to overtake U.S. economic interests; the tariff imposed on the affected products will not offset any harmful Chinese policies or practices that have damaged U.S. economic interests (particularly regarding harm to U.S. intellectual property interests); and the tariff will ultimately burden — and not help — U.S. manufacturing, business and consumer interests.
Manufacturers and businesses need to make a case to the USTR during the comment period before September’s implementation of additional tariffs as to how they will significantly reduce their operating budget to the point where expansion isn’t possible, innovation will be affected, and the workforce will be reduced. A sound, convincing argument can lead to a product being excluded from the import tariffs.
We hope the trade war can be solved and will recede in a manner that protects U.S. interests and, at the same time, protect the interests of the aftermarket in instances of being unnecessarily burdened.
Let’s hope so, because a fourth and final tariff wave is also on the horizon.